Overpayment query

Ivrytwr3

Hey all,

I have never overpaid on my mortgage (i know!) and having read these boards, i feel i need to start doing so. But could someone help with some figures for me please?

We currently have 1 x mortgage with A&L with 2 x sub accounts. Part 2 is a very good rate, but part 1 is:

Loan Amount: £69,955.00
Repayment Term: 25 years
Repayment Method: Repayment
Initial Rate Payable: 4.24%
Product Description: Porting Lifetime Tracker
The Base Rate Tracker rate is a variable rate which is 3.74% above the Bank of England base rate,
currently 0.50%, for the remaining term to give a current rate payable of 4.24%.

I would like to make overpayments with this one.

If i were to make overpayments of say £100 per month for 6 x months:

a. Is it worth doing so?

b. How much would we save in interest?

c. What is the formula for working out different amounts etc?

d. Is there an overpayment calculator i could use?

Thanks all!

ladylouise62

There's a calculator on this site : http://www.moneysavingexpert.com/mortgages/mortgage-overpayment-calculator and this one shows savings vs Mortgage http://www.moneysavingexpert.com/mortgages/savings-vs-mortgage-calculator#result

Thrugelmir

Savings are made in the longer term. A mortgage is a lifetime commitment. So don't expect fireworks, the payback comes in years to come.

As a simple answer to your question. If you repaid £600 in the next 6 months. This would save you over £800 of interest in the next 20 years. Thereby also shortening the term of the mortgage.

Overpaying is best done in a measured way. Cut out wasteful spending and use this to pay down the mortgage. After a while it does become addictive.

Ivrytwr3

Thrugelmir wrote: »

If you repaid £600 in the next 6 months. This would save you over £800 of interest in the next 20 years. Thereby also shortening the term of the mortgage.

So £600 off the capital and £800 off the interest?

I'm happy with that! That will be an incentive to carry the overpayments on.

Thanks.

Ivrytwr3

Overpaying would save you
£15,085 in interest alone,
and mean you pay it off in full
7 years and 11 months earlier.

Just on an extra £100 per month!

Thrugelmir

Ivrytwr3 wrote: »

So £600 off the capital and £800 off the interest?

I'm happy with that! That will be an incentive to carry the overpayments on.

Thanks.

On a 25 year repayment mortgage. 40% of the original capital advance is repaid in the last 5 years. This often comes a shock to people as they expect their actual mortgage balance to be relatively small by then.

So overpaying in the early years really does make a difference as the interest saving compounds.