Overpayments

millstone_et_al

I have just taken out a 10 year fixed rate repayment mortgage at 4.89% which allows overpayments of 10% each year. The total term for the mortgage is 15 years. Can any mathematician out there tell me by how much I could cut the term if I took full advantage of the 10% overpayment facility?

tonydee

Overpayment calculator

Money_Watch

Or similarly: mortgage overpayment calculator

millstone_et_al

Many thanks to tonydee and Money Saver. As I suspected, the 10% overpayments result in roughly a 10% reduction in the term. I was rather hoping that there would have been more of a cumulative effect so that the 15 year term could have been reduced to something like 10 or 11 years or so.

Joe_Bloggs

If you have a calculator that lets you input individual overpayments throughout the life of the mortgage you may get a more accurate answer. A 100K mortgage @4.89% over 180 months would be £785 per month. Were 10% of the capital outstanding, overpaid in a lump sum every twelve months, then the term would be 104 months (8 years 9 months from fifteen years).
Towards the end the allowed overpayments are very small per annum when compared with those at the start. Eg initially; £9537, £8053, £6650, £5323, £4070, £2284, £1763, and finally £703.
J_B.