do I pay off the Mortgage?

lisyloo

"Overlooking something here, I think, lisyloo. (Happens to the best of us )."

I don't think so, I had this scenario in mid.
It's how my own mortgage works.
Although I'm quite happy to be corrected if I've miscalculated something.

"The breakeven point, then, is when that £100 payment will cost less than that in interest on savings, which is approximately August, so beginning in August she should make the maximum overpayments allowed each month. "

Ok, yes I think I made a error in my calculations.
I was just looking at a single year in isolation and not considering the effect of extra interest in subsequent years.

My basic principle is correct though.
Sometimes it isn't worth making these payment and other times it is.
You just have to work that out in detail.

Thanks for the correct.
I was considering November as 5/6th of the year but of course there are benefits of overpaying in subsequent years.

Right idea, wrong calculations.

DiggingOut

Yes, your basic principle is correct.

Of course, the whole thing depends on when the calculation year starts. (For most, it is the calendar year.) And how long until the penalty goes away. And the ratio between savings interest and mortgage interest. And tax on interest (none in Julie's case). And whether the penalty declines in a year's time. And so on....

Maybe someone should derive the formula for determining whether it is better to save or overpay (like I did with the offset one). But there are so many variables with that - daily, monthly, annual interest, penalties, etc. In each case, it isn't really that difficult, but to come up with a general formula that handles all eventualities isn't really something to do in my spare time....