Advice on overpaying mortgage.

FLINT

Hi all I would be grateful if anyone could offer any opinions or advise regarding my mortgage. At the moment I am on a 5 year fixed rate with A&L this is due to expire in October of this year, I called them yesterday to obtain a balance and to get an idea of what they could offer me. To my surprise apparently when this deal ends I will revert to BOE base +0.75% for the life of the mortgage. Before finfing this out I was looking to fix again for 5 years but at this rate I would be foolish to fix, anyway my question is what is the best way to overpay, should I just continue with my existing monthly payment or save the difference in a regular savings account and pay once a year?

My mortgage will stand at just over £47000 at the end of October.

Many thanks.

beecher2

Save the difference as you'll be able to find a savings account which pays more than 1.25%. Keep doing it this way until your mortgage rate is higher than any savings rate you get. I wouldn't even overpay once a year, until this happens.

VT82

Agreed.

Very fortunate position to be in!

dimbo61

Do not use this savings account for anything other than clearing part of the mortgage when rates start to rise.
Some people are very good at saving and some people cant last from one pay day to another!
If you keep your mortgage payment static then you would be overpaying every month and When rates do start to rise you would notice no difference because you are already paying as if the mortgage rate was the same as your old FIX.
It wont give you as good a rate as some savings currently offer but the mortgage balance and hence your debts go down each month.

Peelerfart

Both beecher and dimbo,whose opinions I respect,are both right .

I prefer to overpay because I know I cannot get at the money and so ,

"It wont give me as good a rate as some savings currently offer but the mortgage balance and hence your debts go down each month. "

but how can you argue because beecher is right to because ,

"Save the difference as you'll be able to find a savings account which pays more than 1.25%."

which is true,

I overpay, even hough I know I can get a better rate, because if I had the money in the bank a shiny Harley would come my way.

It's the way I am .

FLINT

Thanks to all who replied, hopefully the interest rates won't have risen too rapidly between now and October.

gizmo111

Keeping payments at current levels how much will you be able to save in a year? Have you any other amounts that you wish to overpay?
Some mortgages only allow a certain % to be overpaid in any one year.