Does anyone over pay on their mortgage each month?

danielle21_2

Just done the early re-payment calculator & wondering does anyone over pay on their mortgage each month? As for the first 2 yrs we would prefer to have the money & go out or on holidays etc.

Your views pls, thanks

Debt_Free_Chick

Quite a few people doing this or looking at it over on the Mortgage-Free Wannabe board.

santana-mx3

I overpaid on my mortgage almost every month for a few years to pay it off ahead of time. Part of the reason for doing it that way was that my lender had a minimum for manual overpayments of £500 whereas I could overpay by a lower amount by asking them to increase the amount taken by dd each month. Then whenever I had saved up £500 or more, I could send them a lump sum payment as well.

The reason I said "almost" every month is that I cancelled automatic overpayments when I lost my job and then restarted them later. I could also have borrowed back the overpayments already made if I had needed to.

At the moment I am probably in a similar situation as you in that I am starting a new mortgage but don't intend making regular overpayments for a year or two as I have other priorities.

cattie

I overpay on my mortgage every month. My lender has no mininum overpayment amount, so I have rounded up my monthly payment to a little more than approximate amount the mortgage would be on the SVR.

I tend to make one lump sum payment each year too to reduce the term of my mortgage.

F_T_Buyer

On some mortgages you can over pay, and if you got into difficult times you could delay any payment until it falls back into the normal schedule. Although, I believe some lenders require a minmum payment every month despite what is outstanding.

That is why it's sometimes a good idea to overpay say 6 months ahead, then if you got into financial difficulties (some sort of extra cost) delay payment allowing your salary to pay for such unexpected costs. This is better than having 6months mortgage payments in the bank, earning less interest than your mortgage, and where you will get taxed!

Make sure you have interest calculated daily though!

Does anyone do this?

danielle21_2

Thanks F_T_Buyer, the interest is absolutely unbelievable! out of the monthly £680 payment - only £80 goes to paying my house off! very very annoying!!!!

lilyann1

We're definitely thinking of overpaying on our new mortgage.
We are trebling our mortgage to move house and have had to increase the term from 14 years currently on our mortgage, up to 20 years on the new mortgage.
Any spare money we get each month or in bonuses we'll be putting in the mortgage,so we make sure we curb that interest.Of course I am going to want a holiday with the kids and new things for the house,but I don't want a big mrtge £210k!! hanging over me til retirement.

MORPH3US

I have just brought a house with my GF and we only got the keys a week ago on Friday.

After being inspired by people on these boards, within 2 days of getting the keys I was on to the mortgage company to set up overpayments of the maximum I am allowed to overpay (20%)!!

I will then also save about £100 a month towards a rainy day fund, as a bit of a backup against redundancy (god forbid) etc. If at the end of the 5 year fixed period I haven't needed the £100 a month amount, I will also overpay a lump sum from that!!!

M

Joe_Bloggs

@MORPH3US
Congratulations on your new purchase.
@all
I think if you are on a tracker rate then you have to budget as if the rate had gone up like cattie. Overtime you get used to putting in extra money towards the mortgage. It must be so frustrating to see that only £80 of £680 goes towards the capital as in danialle21. It would take a year to change the capital outstanding by £1000 at that rate. I would find this frustrating.

Overall a balance must be struck. What point is there in overpaying if you are running up credit and storecard bills ? If you were used to a savings cushion then you may feel stressed by not having one after a remortgage or house purchase. If you are on a short term deal then you had better get saving to afford your next mortgage deal.

Don't rush into further debt just because you think you own a property. You may not be eligible for an atractive remotgage if the value of your property goes down or the additional loan repayments affect affordability with a new lender. It is quite easy to get stuck on SVR.
J_B.

akh43

I pay an extra £61 a month (strange sum but it makes my monthly payment £200, which was the figure I was given as my monthly payment when I took out the mortgage) also every so often I pay a larger sum off (usually about £500) and my mortgage is offset against my current/savings account. Due to this I have now paid off over half of my mortgage in just over 4 years and my interest is now down to under £30 a month. Hopefully I will pay it off in approx 6 years or even sooner.

If you can afford to pay extra it does make a difference.

goonernumber1

danielle21 wrote:

Thanks F_T_Buyer, the interest is absolutely unbelievable! out of the monthly £680 payment - only £80 goes to paying my house off! very very annoying!!!!

Where do I go to find this out about my mortgage???!!!!