Best mortgage for overpayments

Our current 5yr fixed deal will be up for renewal at the end of the year and due to a positive change in circumstances,we will have extra cash to start overpaying on the mortgage. We will have a mortgage of £78,000 with 17 ys remaining on the original term. Current LTV is approx. 55%

We will have £1,100 available every month to pay towards the mortgage. What is the best way to approach this with regards to type of mortgage. Due to previous credit problems we will probably have to stay with current provider which seems to mean we will have to choose between the following:-

2yr Tracker @2.19%
2yr Fixed @2.99%
5yr Fixed @4.89%
All with 10% overpayment restriction

or SVR @4%
with no overpayment limits



  • dimbo61dimbo61 Forumite
    13.4K Posts
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    IF you really want to get rid of that mortgage ASAP you might ! take the 5 year fix and reduce the term to 8 years ( mortgage cost £983.39 a month ) then overpay by the 10% allowed each year!
    MF in 5/6 years
    Not advice only my thoughts
    It would be nice to be MF 11/12 years early would it not
  • wynnvegaswynnvegas Forumite
    1.4K Posts
    Mortgage-free Glee!
    Hi Tom,

    I imagine you're with HBOS or Lloyds Banking Group or whatever they're calling themselves now with the daft 10% rule. It's well worth checking out the HSBC mortgage range. We've had a good chunk to throw at the mortgage over the last couple of years and HSBC have been more than accommodating with any and all overpayments plus all overpayments are viewable instantly on the online banking bit.

    Best of luck.


    Mortgage Free: 28/10/2010
    Time / Interest Saved: 18.5 years / £61,866.50
  • edited 14 September 2010 at 6:09PM
    Tesco_TomTesco_Tom Forumite
    95 Posts
    edited 14 September 2010 at 6:09PM
    Dimbo61 - We had thought about reducing the term, I guess the only reservation is that it reduces the flexibility to overpay or not. Maybe that's a good thing to help with discipline!!!

    Wynnvegas - We are currently with RBS. Are you saying that with HBOS they allow you to overpay by more than 10% without penalty despite their restriction? Unfortunately RBS don't seem to have online access to view current mortgage balance.
  • Have you considered an offset mortgage , RBS have one

    With an RBS Offset Flexible Mortgage your savings will work harder for you. They could save you thousands in mortgage interest, and help you pay your mortgage off early.
    But your savings won't be locked away - you can still access them whenever you need.

    Good luck
  • if you have that level of disposable income and LTV I persoanlly would be looking at an offset mortgage.
    MF aim 10th December 2020 :j:eek:
    MFW 2012 no86 OP 0/2000 :D
  • Thanks for the feedback, need to do some research into offset mortgages. I always thought that you needed to start with a large amount of savings to make any progress. :doh:
  • Dunno Tom, our LTV will be as such that we can't get one at the moment so we plan a 2 year fix at 5.19% making 10% overpayments then switch to offset saving £1200 a month. Doing that would pull over 9 years off mortgage presuming we had zero savings to start with. and would save us over 30k in interest
    MF aim 10th December 2020 :j:eek:
    MFW 2012 no86 OP 0/2000 :D
  • Regarding the 10% overpaying restriction that is applied to the morgage; Is it 10% of the balance at the start of the year or 10% at the end of the year or something else?
  • mine is 10% of the monthly payment per month on the deal I was looking at.
    MF aim 10th December 2020 :j:eek:
    MFW 2012 no86 OP 0/2000 :D
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