Moved the mortgate term from 23 to 10 years!

stphnstevey

Thanks, think I understand it now.

Will just try the normal overpayments for the mo, as I can opt in and out of that, and get my overpayments back whenever I like. If I change the term, it sounds like I lose this flexibilty.

Forgot to mention as well that this is an interest only mortgage. I presume the overpayment then effectively changes it to almost a repayment mortgage as my normal payment pays off the interest and my overpayment the capital.

Financial_Savvy

Hi, no idea about the interest only mortgage. The less interest you pay the better, but you still need to pay into a repayment vehicle for the captial.

There are some very good IFA's that cover these forums that might be able to advise.

Thanks

stphnstevey

I could always do the sensible thing and ask Nationwide!

Emmy

We are with Nationwide and we pay our mortgage amount plus £499.99 a month overpayment we only have 23 months left to go which means in total we will have had (by the end of the term a mortgage that has been paid off in 8 years instead of the 25......ashamed to say we didn't make any overpayments in the begining tho!!!

stphnstevey

To work out how long it would take to pay off my mortgage via overpayments, do I just divide the total by the yearly maximum overpayments (ie 6000 (500X12))?

Therefore 100K in (100 000 /6000 16.5 yrs?

jamesd

stephnstevey, that will give a number that is too high. Use the Egg mortgage calculator to include the effect of not having to pay interest for the remaining years on the amount you've overpaid.

The problem with doing this for an interest only mortgage is that it's not really considering all of the effects. To allow for that, check the monthly payment with interest only to verify that that is correct, then change it to the repayment option. Deduct the extra for the repayment mortgage from your overpayments and that should give you the right figure. This calculation will allow for the overpayments increasing over time, as the interest paid on the reduced capital decreases.

Paulxo

I've written to my mortgage company to ask about overpayments and changing the term too. They called me the NEXT DAY (which I was v impressed by) to tell me the details. I wanted to be able to have the flexibility to make overpayments if I wanted, so they said I can pay up to £1000 extra per month without charge. :j

Plus, if I changed the term to 15 years from 25, I would only have to pay 75% more each month, which really, I can afford. In fact, I can't afford not to, because doing that will save me £80,000. :T

It's pretty exciting really. My mortgage pig has suddenly got a lot of weight on its shoulders! :A

I have a fixed deal until Mar 08, so I might as well make overpayments courtesy of Bacon until then, and at that point decide if I want to alter the term and bump up my mortgage payment. I prefer having the flexibility of making overpayments, and then should I need to borrow for any reason, being able to get it back again!

stphnstevey

Noticed you had more than one mortgage and was interested if this was your plan for each of them?

Paulxo

Good question.

My residential and most expensive BTL will share half the proceeds from Bacon and I will make lump sum payments for the others.

The Egg mortgage calculator really helped me with this. I showed my OH and she was immediately sold on the idea too.

I've sold some stuff on eBay today so that'll go towards the pig & cc too!