Overpayments - which sub-account?

fifeken

Hi,
I don't venture over here much so my apologies if this has been asked before or it the answer is obvious to the regular posters here. My mortgage consists of two sub-accounts and the bank says I must nominate one or the other to make my overpayments to. Both are at the same interest rate but one has a much bigger balance. Does it make any difference which one I overpay?

I have also just been on my provider's website and discovered that my overpayments limit (without incurring charges) is 10%. I had previously thought this restricted overpayments to 10% of my current monthly payment but see now it is 10% of my outstanding balance (much higher). Is this the "usual" rule for overpayments and I've just never understood it correctly?

Gimcrack

From a simpletons point of view (ie mine!) I'd say if the int rates are the same then it doesn't matter - you will be being charged less interest on the same amount on either side. As for the % overpayment, this I think will be PA, so you could pay up to 10k capital off a 100k mortgage yearly, 9k the year after and so on - again,this come with a simpletons health warning and you should double check with your provider.

I have seen this 10% limit on a number of deals so guess it's fairly comon.

ATB

Rob

fifeken

Gimcrack wrote: »

From a simpletons point of view (ie mine!) I'd say if the int rates are the same then it doesn't matter - you will be being charged less interest on the same amount on either side. As for the % overpayment, this I think will be PA, so you could pay up to 10k capital off a 100k mortgage yearly, 9k the year after and so on - again,this come with a simpletons health warning and you should double check with your provider.

I have seen this 10% limit on a number of deals so guess it's fairly comon.

ATB

Rob

That's what I thought as well but being a simpleton too I was looking for back up. Thanks for your thoughts.

gallygirl

I would go for the lower one I think. However, I'd check your mortgage agreement carefully. If you're on a fixed rate etc. and have early repayment charges you don't want the balance to get to £0 on one of your accounts!

Good luck :T

fifeken

That's just made me think. What if they take it as 10% of the sub-account balance?

That would reduce what I could pay if I allocated it to the sub-account with the lower balance so maybe better to pay against the higher balance one or split it between the two.