Help with overpayment sums

josievg

Hi, I've been reading this board. Very useful.

I know I'm being dim but I can't totally figure it all out.

Mortgage just about to start: 99,000
term of mortgage 15 years
6.49% fixed for 5 years
monthly repayment 869.99
maximum permitted overpayments 10% per financial year
early repayment charge 5%

Plan is to pay the mortgage off at the end of 5 years.

So, if we just pay the 869.99 per month we will have 76,626.38 outstanding at the end of 5 years.

This means we need to put by an extra 1277 per month to have enough to clear the mortgage at the end of this five year term.

But if we overpay our 10% per year and then pay the remainder at the end of five years are we better off than if we just wait and pay off the entire outstanding lump sum in five years time?

If so, how? why?

Thank you in advance.

dimbo61

YES YES AND YES !!
You would be much better off paying the 10% overpayment allowed each year.
Check with the lender what you can overpay and pay the 10% allowed as quickly as you can.
You wont earn 6.49% after tax in any Normal savings account so if you have £9900 spare in November then pay that off the mortgage.
most people dont so pay each month