Incredibly Low rate - Should I Overpay

Denzel09uk

Hi MSE peeps

Back in 2008 my fixed term ended and I opted for the lifetime Tracker mortgage with Barclays at .69% above based rate.
Since the rates reduced we were overpaying by £250 a month until August last year when we upgraded to a 2 bed house and took out an additional 55k @ 3.29% Fixed for 2 years.

Total mortgage todate 99.6k @ 1.19% Lifetime Tracker
Total 2nd Mortgage todate 53.2k @ 3.29% Fixed 2 Years

My Question is:-
Should I overpay on these mortgages like I did before. My loan has finished so I have a spare £200 a month.

Any help will be appreciated.

Regards

Denzel

Marksy

I'd reply to your question with the question 'Why should you not?'

If you can afford to, and that £200 is now "disposable" then I definately would, yes.

Do you have two mortgages, I didn't quite follow what you meant. If so, whichever is costing you more I'd personally tackle first - you'll save more interest in the long haul then.

Denzel09uk

I ported the 1.19% mortgage to the new house as it was so low and borrowed the extra basically. Thanks Marksy.

abouttimetoo

Hi Marksy

I hope you don't mind me mentioning but I noticed you were tracking your credit card balance in your signature.

If the interest rate you are paying on your credit card is higher than your mortgage rate then my advice would be to clear that first and then turn your mind to perhaps overpaying your mortage.

The reason I say perhaps is that if you can earn more interest saving the amount you would overpay than you are paying on your mortgage then financially it could make better sense to build up your savings and in time use them to pay off your mortgage.

Others (myself included) know that finacially it would be better to save the overpayments but we prefer to see the balance of our mortgages going down rather than seeing the savings going up and also we don't have the temptation of dipping into the savings.

Have a play with some of the mortgage overpayment calculators to see what difference your OP's could make

Finally, due you have any emergency savings built up?

Oops, i fibbed, that wasn't 'finally', do you know the terms of conditions of overpaying on your own mortgage e.g.

- is there any limits?
- would they charge you to overpay if it was below or above a certain limit?
- would they give you some or all of the overpayments back should an emergency arise?

Good luck with your plans

originalmiscellany

Well said abouttimetoo.
Clear your credit card debt, then if it's spare, save it either in the mortgage or into a saving scheme that pays a higher interest rate than your mortgage, and you have easy access to, should you have an emergency..

Denzel09uk

Great advice guys thanks, Im trying to pay off my card but things keep popping up. Im paying £100 over the minimum payment every month but my car broke this month costing me £270 and had to use that as had no funds, Im back to the same level I was at in February.
So dissappointing but got to keep going.
I have £112 in £2 coins but didnt want to dip into that.

atush

Always pay the CCs off before trying to go mtg free- unless they are at 0%. But look ahead to clear them before they finish.

I am totally with the MF thing and do overpay each month and have done for a numbe of years now. But am mystifed why some think you can't overpay AND save? WE do both. Makes sense really, like hedging your bets. Just because you want to OP each month, doesn't mean you don't need savings for emergenices, opportunities, treats, retirement, University fees etc. f you have 600 a month extra, OP 300, save 300.

ViolaLass

atush wrote: »

Always pay the CCs off before trying to go mtg free- unless they are at 0%. But look ahead to clear them before they finish.

I am totally with the MF thing and do overpay each month and have done for a numbe of years now. But am mystifed why some think you can't overpay AND save? WE do both. Makes sense really, like hedging your bets. Just because you want to OP each month, doesn't mean you don't need savings for emergenices, opportunities, treats, retirement, University fees etc. f you have 600 a month extra, OP 300, save 300.

Why would you save for emergencies when you have credit card debt? You could always use the card in an emergency (assuming they don't lower your limit). If you save instead of paying off a card, you are paying to have easy access to that money.

atush

I have no CC debt or any debt apart from mtg.

And I did say clear debts first- it is right there?

ViolaLass

atush wrote: »

I have no CC debt or any debt apart from mtg.

And I did say clear debts first- it is right there?

My mistake, I thought you were talking about the fact that the OP should be overpaying the credit cards.