AM i allowed to overpay?

mrsmasterplan

I am just about to take on my first mortgage which is costing me around 250 a month on interest only.
How much am i able to overpay on this? Or am i able to overpay at all?

I've heard of fines that can be given for people overpaying but i am unsure of when or how much these fines can be?

Any help would be appreciated?I have borrowed £105,000 if that helps...

Thanks
A very excited first homeowner

[Deleted User]

You need to ask your mortgage provider for details - different mortgages and different providers are different

happybroker

toward the back of your mortgage illustration (KFI) there will be a section entitled "what if I don't want this mortgage anymore" or "what if I want to make overpayments" and this is where it will tell you if you can overpay and by how much.

Thrugelmir

As your mortgage is on an interest only basis, do you have a vehicle for repaying the capital balance?

Did you consider a repayment mortgage at the outset? As seems strange to opt for interest only to then overpay it!

_Andy_

mrsmasterplan wrote: »

I am just about to take on my first mortgage which is costing me around 250 a month on interest only.
How much am i able to overpay on this? Or am i able to overpay at all?

Not trying to be rude but wouldn't it be best to ask your mortgage provider rather than randoms on a forum?

JA1000

Don't worry about the have you got anything to repay yet. It is an expensive event to buy a house and a lot of people seem to think interest only is the end of the world but it can realy help you get on your feet.

The fact you are already looking at overpaying is excellent, you have the cheap outgoings of interest only but hopefully the flexibility of overpaying.

If not stick it in an ISA and when you do have the availability use this. The interest avaiable will be similar to what you are paying so the net effect will be negligible.

mrsmasterplan

_Andy_ wrote: »

Not trying to be rude but wouldn't it be best to ask your mortgage provider rather than randoms on a forum?

Sorru but i thought this was for advice and help?
So even if you weren't trying to be, that was rude.


I did consider a repayment - but my dads works with these a lot and we figured that when you repay, most of the extra money that you pay off that is supposed to come off the total amount, actually doesnt.

Whereas if you overpay, all of the overpayment comes straight off the balance without any concurrings fees getting in the way...


I think the way to pay off the capital was through overpaying, but this was before i heard about fines..

hwalkerh

Unless you say what company the mortgage with and the exact mortgage deal people aren't going to know what the terms of the deal are!

On an interest only mortgage you would need £105000 of over payments to pay it off. Also it is cheaper in the full term for an repayment mortgage, plus then any overpayment save you even more money.

For example, a £150,000 homeloan at 5% over 25 years would cost £625 per month interest-only, and £877 per month capital repayment. But at the end of the mortgage term, the interest-only loan will have paid off only the interest - leaving the orginal £150,000 debt to be repaid, whreas the repayment mortgage would have cleared the debt. Taking the difference of £877 and £625 over a year would be £3024 a year more which over 25 years is £75600 which is obviously less then the £150000 that you would have to pay on interest only. This is obviously based on the assumption that it is 5% for the 25 years but hopefully gives you an idea

HarveyGal

You should have read the terms and conditions of the mortgage you are about to take on: don't sign for something as big as this without understanding what you are doing. It may seem daunting, but you MUST know what you are signing - I would guess that is all Andy meant by asking your provider. Your contract is with them - they will KNOW what the deal is - the users of this forum can only guess.

Wutang_2

mrsmasterplan wrote: »

Sorru but i thought this was for advice and help?
So even if you weren't trying to be, that was rude.


I did consider a repayment - but my dads works with these a lot and we figured that when you repay, most of the extra money that you pay off that is supposed to come off the total amount, actually doesnt.

Whereas if you overpay, all of the overpayment comes straight off the balance without any concurrings fees getting in the way...


I think the way to pay off the capital was through overpaying, but this was before i heard about fines..

You seem to have it all expertly and meticulously planned....apart from the most important part! Maybe ask your dad.

Thrugelmir

mrsmasterplan wrote: »

I did consider a repayment - but my dads works with these a lot and we figured that when you repay, most of the extra money that you pay off that is supposed to come off the total amount, actually doesnt.

I'm interested to know where the money disappears too. Please enlighten me.