maths help please!

Jonbvn

dllive wrote: »

Hi guys,
Im going to think out aloud here - Im prepared to be shot down in flames!...

If I overpay on my mortgage (especially when interest rates are low), then Ill be paying off the money Ive borrowed (the capital?), which will reduce the interest, and the number of years that I pay it back. Its almost like the opposite of accruing compound interest. Otherwise, all the other people on this forum that are putting all/most of their spare money into over paying their mortgage - wouldnt they just put their money into higher rate interest accounts instead?

It is quite simple. If the interest on your mortgage is lower than the savings rate (less tax) then you should save. If the mortgage rate is higher then you should OP.