Interest only to include overpayments?

indian_jalepeno

Hi all, same old caveat for the start(sorry if this has been asked before) but i've been informed that if I took out an interest only mortgage then made overpayments on this to match what I would be paying if I was on a repayment mortgage then the overpayments come straight off the capital owed straight away, unlike a repayment mortgage where most of your payments made at the start of the term are paying off the interest first, then capital nearer the end of the term.

Is this true, coz if it is then surely the interest only option is the way to go as my overpayments would reduce the capital and hence bring the interest payments down too.

Ta

I J

UK007BullDog

Sorry, but no. Your overpayments would be as if you had a repayment mortgage.

If you really want to make a dent into your mortgage and pay it off quickly then have a repayment mortgage and do overpayments then, or shorten the mortgage term from the usual 25 years to maybe 20 or 15 years depending on affordability.

indian_jalepeno

OK thanks for that. I thought it would be that way as everyone else would be doing it.

I J

Nix

If you fancy a play at Interest Only overpayments, this might helpful to you.

Have fun!