Is it worth overpaying?

2011_will_be_debt_free

My morgage is very high in interest, like 9%:eek: So will adding the odd bit extra save me much?

Also, I'm out of work so I cant remorgage as I wouldnt have wage slips etc to show. Should I be able to switch to another product with the same bank at a lower interest rate?

If I make overpayments and its a repayment morgage will the overpayment go straight to reducing the amount borrowed?

Andreg

Thats a terrible rate! Who is your mortgage company?

and, if you dont mind, how much is your mortgage and how much is the property worth?

DVardysShadow

2011_will_be_debt_free wrote: »

My morgage is very high in interest, like 9%:eek: So will adding the odd bit extra save me much?

Overpaying is more effective, the higher the interest rate.

Quenastoise

One way of looking at it is that if you have spare cash to invest, you are currently unlikely to find a 9 % return on any deposit, so overpaying is the best return on investment.

Also, when the interest rate goes up, you are reducing a bit of the pain in the future by overpaying now as the increased rate will be applied to a lesser amount of capital.

Check with the mortgage company that the overpayment can immediately be deducted from the capital with the interest recalculated from that date to get the full benefit.

Check that there are no penalties for overpaying.

katsu

In my case an OP of just over 1 month's payment would take 3 months off the length of my mortgage. That sort of saving is a benefit regardless of your rate. In practice you might save even more as your rate is higher.

Hope this example is of some help.

LilacPixie

the higher the interest rate the more effective each overpayment it, no matter how small. Assuming you can overpay without penalty.

originalmiscellany

9%?! Wow. As Andreg said who is the company and how long are you locked into the deal with them for? Overpaying will make a huge difference to you if you can overpay with such high interest rates.
All the best

black_taxi_2

9%:eek:

even !!!!!! turpin wore a mask

RosieTiger

As said already above, you will struggle to find anything that is going to pay you at that rate for savings so anything you over pay must be better than the alternative.
But you need to take a serious look ay why your paying at that rate

2011_will_be_debt_free

Its Bank Of Scotland and the fixed rate runs out in June or July. I had little choice at the time as I was self-employed...the balance/capital is about 48 or 49,000. It's costing over £335. a month on normal repayments.

As I say, Im not working now so if the rate goes up after the fixed term, I'm done for. Can I switch to a better offer with them, since I'm already with them? They have a 'existing Halifax customer coming to end, switch to new deal...' but I'm not sure it will work as I'm Bank Of Scotland. Even though they are HBOS now, I think they keep some stuff seperate.

I looked out my Morgage offer and it seems I can make overpayments but I might go in and ask in a branch to be sure as the usual 'we can change this..' small print. Thanks for your reply's I'm really worried and I'm going to be trying my best to get work but I would still appreciate you advice on this please.

Edit; wow, Iv just been on the site and if the interest stays as it is at the moment it will be going DOWN from what it is! Which means what I'm paying now will be an overpayment? plus whatever else I can when I get a new job.. Bank of Scotland Home Loan Rate, which is currently 4.84%

I'm no longer self-employed so although this one is a self-cert, I'm not sure if that means I can switch to other products i.e. don't want self cert as its not the best deal but not working now (hopefully will be by then), seems they have one that works out about 5% APR fixed for two years that I can apply to switch to as this deal comes to an end.

Again, anyone that knows about this stuff, I really would appreciate some help - I'm determined to sort myself out this year and including getting rid of debt and trying to get my morgage down, plus a new job...