Starting mortgage repayments early

mish79

Hi all,

I've been looking at this forum for ages, so thought I should join in.
I bought a house last year and hate the idea of paying out so much money (mainly interest for the first 5-7 years) for the next 25 years. So I have been decisive and decided to start overpaying. So far I've put away £100 a month for the last 4 months (it's funny how I've not missed it).

We have two spare rooms in our house (no children as of yet) so we are planning to rent them out to foreign students and use some of the money to put £200 aside a month (in an ISA) and the rest will go to house rennovations. If we manage to do this we will have paid the dreaded mortgage off in 12 years. I'll be 43 and my partner will be 50. That would be SO GOOD!

My only question is when is the best time to pay the money onto the mortgage? We have a 4 year fixed mortgage with Santander (expires in July 2014) and I think the interest is calculated daily (I will need to check). Is there a good time to pay it in? I was planning to do it every March (just before end of tax year). Is this a good idea?

Any help would be appreciated.

Thanks

:cool:

BaconandEggs

I'm sure someone who knows more than me will be along shortly, but with regard to the best time to pay, I think the earlier the better if interest is calcualted on a daily basis.

lulabelle1

Hi there and welcome to the forum....
I would highly recommend that you make OP's every month as this will reduce your capital o/s immediately, thus you will then pay less interest....

Best, L

collen

Exactly on paying off your mortgage early is one of the best investments you can make.You get rid of your biggest debt fast, you are no longer at the mercy of the up and down property market and you can put the money you are no longer paying on the mortgage to good work.

jonny2510

mish79 wrote: »

My only question is when is the best time to pay the money onto the mortgage?

Yesterday!

Things to check before starting though are that the mortgage provider allows overpayments on your particular deal (as otherwise you risk being hit with an Early Repayment Charge). Most providers I've come across allow you to overpay 10% of the balance a year (or £500 per month).

Also, if you've overpaid on the mortgage there'll be no temptation to spend it on some other "must have" in the meantime.

It's also wise to have an emergency fund built up, though only you can decide the amount that should be. Some say 3-6 months expenses, others say just £1000.