Overpaying our mortgage

gabyjane

How much is a worthwhile amount to overpay your mortgage each month? is there a point in paying say £5 or are we better off paying more..or are we better of saving a big chunk and doing it that way? We have a maximum of £999 each month we can go up to. It is fixed.
Thanks

VIGILANT22

£5 ...did you miss some 0's?

alfiesmum

Might be better to post over in the mortgage free wanabee board. Include a few more details etc for a fuller answer.
xx

gabyjane

VIGILANT22 wrote: »

£5 ...did you miss some 0's?

No that was my point! is there any point in paying a small bit each month or is it better to do it as more or a chunk..

gabyjane

alfiesmum wrote: »

Might be better to post over in the mortgage free wanabee board. Include a few more details etc for a fuller answer.
xx

Ok thanks for the reply x

VIGILANT22

well like any debt the more you pay the sooner it will reduce

gabyjane

VIGILANT22 wrote: »

well like any debt the more you pay the sooner it will reduce

I realise that but to me mortgages are like credit cards! we pay money off and it doesnt always pay it off if you see what i mean! last statement we had we had paid out £6k and only £2k had been knocked off the mortgage the rest was interest..a bit disheartening tbh but i know thats how they work just figured if we could do it quicker if there was a better way?!
Thanks

VIGILANT22

When you overpay a mortgage the amount comes off the capital sum....

spreadsheet to help you

http://www.locostfireblade.co.uk/Dow... Version.xls

Alisonb1975

Earlier on in the mortgage you will pay more interest than capital. The overpayments come straight off the capital so obviously reduces the interest as well. Over time the interest savings could be quite a lot and you will notice the difference on your mortgage statements.

While interest rates are low I would consider overpaying if you can afford it. You can stop at any time if your circumstances change.

northerner999

Every overpayment, no matter how small, is worth it.


When I took out my mortgage the term was 40 years (I needed to keep payments low initially, having wiped out my savings on the deposit), and could only overpay by a tenner or so every few months.

But each tenner has made a big diference. The original poster asks if there is any point, but I saved 39 years of compound interest on each tenner. It's the same with a fiver a time, the price of two pints a month saved could save you hundreds.

Fiver a month may not seem like much, but that's £60 a year which then becomes a significant amount when you add in interest. Depending on the term of your mortgage, an extra five pounds or so early in the life of a mortgage can save a four figure sum over the course of it.

Overpayment, so long as you are not incurring penalties, is always beneficial - no matter how little you overpay. My suggestion is simply to stick in as much as you can afford without leaving yourself short on day to day spending / savings buffer.

Radiantsoul

I think if you overpay even £5 per month you will get into the habit of overpaying. So it is probably a good idea, it is not going to make a massive difference. at 5% interest a £5 payment would save you about £15 off a 25 year mortgage at 5%.