Should I pay off my mortgage? Discussion area

mrs_baggins

timing of overpayment?

just read martins guide to overpaying a mortgage and am confused a bit about when to do it. I am with halifax - started 2 years ago- and looks like its an annually calculated one

(from their blrb Annual interest is calculated and added to your account once a year, on the same date, and is based on the amount of your outstanding mortgage at the start of the mortgage year. Although your mortgage balance may reduce throughout the year as you make your monthly payments, the balance on which interest is charged doesn't change until your mortgage account year starts again.)

so after reading the guide if I wanted to do a one off 1k paymentif interest is calculated on 1st jan should i time it so payment is made in december??

Dolly2010

Have the money to pay off mortgage thru decreasing term policy, claimed upon husbands death. But mortgage interest rate .68 per cent (.18 above base rate), no penalties to paying off/ overpaying. Sensible head says pay off debt, be mortgage free but the interest rate is currently very low. What to do?

Abikaylee

Can you overpay on a repayment mortgage? Or does overpayment only apply if you have interest only product? I just do not understand how this works at all...any helpful response gratefully received! Thanks

JimLad

Abikaylee wrote: »

Can you overpay on a repayment mortgage? Or does overpayment only apply if you have interest only product? I just do not understand how this works at all...any helpful response gratefully received! Thanks

Yes you can.

Lets say you have a regular monthly payment of £1000...most of it will be paying interest...prolly about 75% so infact you are only paying off £250 of the total amount owed every month.

When you overpay, it comes straight off the total owed and therefore you can either reduce your monthly payments, or reduce the term of the mortgage and pay less of them

black_taxi_2

5 years ago I switched from a interest only to repayment mortgage

best thing I ever did

3.29% above Bank of England base rate .50
unlimited over payments
on-line

I'm now 1 month payment away from being MF

on-line made a huge diff,fast track payments,paying a tenner,£50 pound when spare cash is available.

MoneyDummy

I wonder if anyone can help. My husband & I have just moved and now have a much larger mortage than before. We would like to overpay but can not make up our minds whether to do it monthly or save up and make a lump sum. Our mortgage is approx. 1.8% for 2yrs (variable after that, approx. 4.3%) and we have a 123 a/c which earns 3% (before basic rate tax). Do we keep our overpayments in the 123 a/c and earn more interest or do we make monthly overpayments? I have tried to work out the difference using mortgage calculators but because we only have this rate for 2yrs it is difficult to work it out. Which would mean we pay less interest in the long run? Any advice?

INSPIRED

Considering that there are few replies to queries on this thread, posting again may be a waste of time. However, I am not too sure where to seek advice.

Our mortgage is split between Repayment and Interest Only. We want to pay off as much of the Interest only part but are not able to pay off more than 10% of the balance each year unless we are prepared to pay a 2% charge on the difference. That is, if we can only overpay 4000 and want to pay 6000, we will be charged 2% on the 2000 difference.

Our mortgage interest rate is 3.75%. ISAs, savings accounts, TSB, Santander accounts are all maxed out.

Does anyone agree with me that the 2% charge is worth paying? We have over £7000 to spend.

Many thanks.

Thrugelmir

INSPIRED wrote: »

Considering that there are few replies to queries on this thread, posting again may be a waste of time. However, I am not too sure where to seek advice.

Our mortgage is split between Repayment and Interest Only. We want to pay off as much of the Interest only part but are not able to pay off more than 10% of the balance each year unless we are prepared to pay a 2% charge on the difference. That is, if we can only overpay 4000 and want to pay 6000, we will be charged 2% on the 2000 difference.

Our mortgage interest rate is 3.75%. ISAs, savings accounts, TSB, Santander accounts are all maxed out.

Does anyone agree with me that the 2% charge is worth paying? We have over £7000 to spend.

Many thanks.

Why not overpay the repayment part of your mortgage rather than incur a penalty?

tyllwyd

Or pay as much as you can this year without penalty, and then pay more the following year? If the year resets at the end of December, you would only have to wait a month or so before you could pay a second instalment without penalty (although obviously check the actual terms and conditions on your mortgage first).

INSPIRED

Thrugelmir wrote: »

Why not overpay the repayment part of your mortgage rather than incur a penalty?

Many thanks for your reply. We will be paying into the repayment part but just the 10% for this year.

We will need to remortgage in 3 years and would like to have paid off as much of the interest only element as possible. We have been warned that there is little chance that we will get an interest only mortgage. Hence, our wish to pay off as much as possible now - it stands at about £19, 000.