morgage free

roso_2

any advice would be appriciated

i am have a morgage which i cut down to 8 years, 5years of it was fixed and there is 2years left on it which then leaves me 3years left
at the moment i am paying £230 per month on it, it does say that i can make 10% overpayments which i have only just relised as i have never under stood what it all means. i have worked out my money and thimk that i can save an extra £500 per month towards it

should i put this money into overpayments [would it make a big difference the interest rate is at 6.9% and i owe £13.000]or should i save the money up and pay it off in a lump sum which i am hoping to do in 2 years instead of 5years as i would love to be morgage free but i dont really know how it all works .

Tixy

Paying as much off you can earlier will make a difference to the amount of interest you pay, if you save the money up thats likely to be at say 3% max compared to 6.9% you are paying.

If you were in a position to repay the total balance from the lump sum savings before the fixed period is up that would probably incur penalties so prob not a good idea.

Does the 10% overpayments mean you can pay an additional 10% of you repayment each month (ie £23 on top of £230) or that you can pay an extra 10% of the balance each year (ie £1300 each year), either way (and I don't know-sorry) it looks like you won't be able to pay anything like the extra £500 per month towards it, so I guess overpay by as much as possible whilst you are on a fixed rate and save the rest up for when the fixed rate has finished (unless you have any unsecured debts as well, in which case obviously its best to clear those first).

niccatw

Hi Roso, I agree with Tixy.

Perhaps post this on the mortgage free wannbe forum too, if you haven't already. They might have more ideas. Good luck