Every £1 overpaid saves you £5

SAMMYE_2

I heard someone say this on another thread is it true? Anyone know how to work this out more accurately as could be a good motivator even for the smaller overpayments.

LilacPixie

I think that would all depend on mortgage term and interest rate. Brain isn't awake enough yet to work out how to work out the accuracy. I will ponder over a coffee later..

SAMMYE_2

LilacPixie wrote: »

I think that would all depend on mortgage term and interest rate. Brain isn't awake enough yet to work out how to work out the accuracy. I will ponder over a coffee later..

ha ha yeah it will definitely depend on the term and interest rate but I'm a bit of a dunce when it comes to maths!

Israfel

I don't know about that figure and I'm not awake enough either but as a motivation it's well worth having a look at the overpayment calculator here and see how much money and time you'll save.

SAMMYE_2

Israfel wrote: »

I don't know about that figure and I'm not awake enough either but as a motivation it's well worth having a look at the overpayment calculator here and see how much money and time you'll save.

Thanks Israfel...

Just been trying to keep myself motivated to overpay the mortgage so have been trying to work out lots of statistics / figures which show what effect my overpayments have..
So far I have saved myself £34,348.56 in interest payments over the life of mortgage but it will more than double because overpaying will enable me to access lower rate mortgages. Also worked out I am earning £80 a month from renting which isn’t great but will go up to £110 after my next overpay which is better than a kick in the teeth!

davidjwest

I worked out a while back that if I could afford to double my repayments I'd repay the lot in under 8 years as opposed to the 25 year term that was remaining at the time.

If you play around on mortgage calculators that are available online you can see how much you can save by trial and error.

Just Google for it, there are lots.

SAMMYE_2

If my calculations are correct I have overpaid £15,000 which will save me £34,500 I think that means every £1 I overpay saves me £2.30.

Not sure if that is right wonder if anyone knows how to calculate this based on percentages and term length?

Can anyone help a thicko out and tell me how I work out how much I save with every pound I overpay? The reason I ask is I think it will help me scrimp and save a bit harder and not waste even the smallest amount!

Thanks

lincoln-potter

Its impossible to tell. You can get an approximate idea but without knowing how much the interest rate is going to increase and when its just impossible to tell.

Both past, present and future OP's will change each time the interest rate changes AND it will also depend on when you make the OP and how your interest is calculated (daily etc).

JonnyBravo

As posted, it does depend on a variety of factors, but £5 seems high to me.
At the moment I'd say £2-3 is more realistic/usual.

dimbo61

Got to agree with JB on that one
now if the term is 35 years and you are paying 5.99% or above then it may well be possible but I look at the simple figures when i first applied for our mortgage IE X amount borrowed and interest to be paid over 25 years =Y which for us was over £80,000 now I know about inflation over time but I plan to give my lender as little interest as possible and be mortgage free ASAP.
For a normal mortgage over 25 years AT THE CURRENT RATES ie 5/6% its more like £1 overpayment saves £2 over the term

rfowler

That would really good to know even for me