paying off my mortgage earlier?

brenda10

I now have 47,500 owing on A&L mortgage. I am currently paying £396/mth and paying an extra £100 as the interest rate is at 1.5% at present. This is a variable rate which can go up or down as interest rates change. I can make overpayments without charges and can if I am able to pay off the remaining monies with just a £275 charge. I have started paying £100 extra/mth over the last 5 months and have been told my mortgage may now be paid off in June 2018 if I continue to pay that amount. If I wanted to pay a lump sum down in time to help reduce the total mortgage is it better to pay it in a lump or extra amounts per month. Can anyone help atall. Many thanks.:(

davetrousers

Providing you can pay off large lump sums without penalty, then you'd be better off doing just that. Once a sum of money is payed off then they can no longer add interest to it.

Have you used the Martin Lewis Mortgage Overpayment Calculator?

Sorry can't so the maths regarding te £275 fee.

trynsave

I think the argument for repaying lump sums, or even repaying early, at all, depends upon several factors. The OP has mentioned that additional payments are allowed without penalty, but another factor is how much credit interest could be earned after tax on the overpayments as opposed to the amount of debit interest saved by overpaying. A mtge at 1.25% is low so I would probably save elsewhere at the best rate I could and make lump sum payments when appropriate.

However if clearing the mgte is more of a priority than making credit interest gains then I would pay as much as possible asap as like davetrousers said, 'Once a sum of money is payed (paid), off then they can no longer add interest to it'.