Overpayments to interest only?

needingaccountability

This may be a really silly question as I have no idea about such things but can you make overpayments to an interest only mortgage?

We're around £8000 endowment shortfall in 3 years and have started saving in ISA to repay the difference needed at the time but it suddenley entered my head today that it might be possible to actually pay something off the mortgage instead? Ease the pain of handing over a lump sum :rotfl:

so is it possible ?

Thrugelmir

Is the rate of interest on your savings greater or lower than that on the mortgage?

plane_boy2000

Check with your lender, but quite a few now allow 10% capital repayments plus anything you pay of the capital will mean less interest to pay in the long term.

staffie1

Yes, if you overpay on an interest only mortgage you will reduce the capital. However your lender will probably reduce your direct debit payment (as the interest you owe in the month following your overpayment will be less), so make sure you take that into account.
Plus if you are on svr or not locked in and subect to early redemption, you can usually overpay by as much as you like.

originalmiscellany

Yes, and do it! If your mortgage is higher than savings rates, do it. Clear your debts and then start living. again.

needingaccountability

Yes we're on the Halifax SVR currently at 3.5% which is best it's ever been but not sure how long it will stay that way and the ISA is 3.25%. Think I'll pop in and ask about it, just wanted to make sure I wasn't asking a silly question :rotfl: And as I said I think it would be less of a wrench than handing over the savings at the end of it. Also if I work on the worst case scenario predictions we might actually get a wee lump sum at the end of it

Evilm

With Halifax you can overpay up to 10% a year with no penalty. Just go and bank a cheque at the branch with your mortgage account number on it.

getmore4less

Evilm wrote: »

With Halifax you can overpay up to 10% a year with no penalty. Just go and bank a cheque at the branch with your mortgage account number on it.

On SVR they can overpay as much as they like.

how big is the mortgage, LTV, income muliple and term.

There may be a better deal out there

staffie1

needingaccountability wrote: »

Yes we're on the Halifax SVR currently at 3.5% which is best it's ever been but not sure how long it will stay that way and the ISA is 3.25%. Think I'll pop in and ask about it, just wanted to make sure I wasn't asking a silly question :rotfl: And as I said I think it would be less of a wrench than handing over the savings at the end of it. Also if I work on the worst case scenario predictions we might actually get a wee lump sum at the end of it

Let us know what Halifax say if you're going to go in and ask them

Evilm

getmore4less wrote: »

On SVR they can overpay as much as they like.

how big is the mortgage, LTV, income muliple and term.

There may be a better deal out there

D'oh! of course they can!

needingaccountability

staffie1 wrote: »

Let us know what Halifax say if you're going to go in and ask them

I phoned them today and they said it's not a problem can pay as much as I like with no penalties. Offered to up my Direct Debit or give me the bank account needed to sort out a standing order myself. I opted for the second option as would like ability to be flexible with the payments. However when trying to set up the said standing order it said it was an invalid account number. Am going to pop into branch when next in town to sort it out.

I'm aware there may be more MSE ways of dealing with the money involved over the next 3 years but for me the main thing is getting it out of sight. Last thing I want is £1000's I shouldn't spend sitting in the bank tempting me :rotfl: