Increasing interest only payment?

robbiewilliams

Hi, some advice please as this really isn't my field! am currently on an interest only but in a position now to make up the short fall each month. Would it have same effect on balance if I were to just top up my interest only payment to what the repayment one should be? Also when I come to change deals I could switch to repayment and avoid the fee? Any help gratefully appreciated

Peelerfart

Check first if you are allowed to make overpayments without penalty.
Then check if you can get a better saving rate than the rate at which you are paying interest.

robbiewilliams

Thanks. Am able to overpay 10% per annum without penalty. Really I would prefer to put money into mortgage than into savings. Just wondering if by doing this the balance will be similar to what it would be if I was on a repayment

motch

robbiewilliams wrote: »

Hi, some advice please as this really isn't my field! am currently on an interest only but in a position now to make up the short fall each month. Would it have same effect on balance if I were to just top up my interest only payment to what the repayment one should be? Also when I come to change deals I could switch to repayment and avoid the fee? Any help gratefully appreciated

Hi
Whats your mortgage interest rate? If it's low might be worth putting money into savings.

robbiewilliams

Hi it's 5.53% but would feel happier if paid straight into mortgage as I'm not the most disciplined with money

Peelerfart

You won't get 5.3% savings so if you're happy you have an emergency fund, or you're happy you don't need an emergency fund then OP as much as you can.

You can work out the effect of the overpayments here -

http://www.whatmortgage.co.uk/calculators/fleximortgage.html

Enjoy