Overpayments on IO mortgage?

sophievenusdoom

Hi all,

Just a general wonderment really...

We have an IO mortgage. The Halifax had set our direct debit date to the 5th of the month (which is fine by me as this is when the rest of our DD's come out), but when I called them to check on this, they advised if I changed our collection date to the 1st of the month, it would reduce our monthly payment (only by a few quid), and in effect we would be making over-payments.

This has left me wondering, can you overpay on an IO mortgage?

Cheers

User_name_6

depends on your individual mortgage/your lender.

check your mortgage offer, or give your provider a call.

TrickyDicky

You'll probably find it only reduces it for one month. After that it will revert to what it was.

Overpayments are usually allowed and mean you start paying off the capital.

Thrugelmir

Interest is calculated on a daily basis charged calendar monthly. So the earlier in the month you pay the less interest you'll be charged.

So whatever it is you save however small. This could be used to actually start repaying the mortgage.

Unless you have a suitable repayment vehicle. You aren't in reality overpaying your I/O mortgage. As one day the outstanding balance will be repayable in full.

sophievenusdoom

Thrugelmir wrote: »

Interest is calculated on a daily basis charged calendar monthly. So the earlier in the month you pay the less interest you'll be charged.

So whatever it is you save however small. This could be used to actually start repaying the mortgage.

Unless you have a suitable repayment vehicle. You aren't in reality overpaying your I/O mortgage. As one day the outstanding balance will be repayable in full.

We do plan to remortgage in a couple years to a repayment mortgage...but thanks for the info anyway :-)