small overpayments to mortgage are they worth doing ?

short_cake

just a quick question is it worth paying small over payments to a mortgage
ie 10 quid here 20 quid there , those sort of payments as and when ?

ive seen loads of threads on large £500 over payments unfortunately i couldnt do that, but every now and then i think i could at least give £10/£20/ maybe 25 quid extra to the mortgage a month

so what are peoples thoughts good idea or not?

opinions4u

It saves you interest.

So yes.

Derivative

As long as you have enough saved up to pay for repairing the boiler/washing machine/car/whatever and are comfortable with whatever else you might need the money for, yes.

I do find it fairly questionable that you can only find £25 to cut in a month though, unless you're already budgeting hard?

short_cake

EdgEy wrote: »

As long as you have enough saved up to pay for repairing the boiler/washing machine/car/whatever and are comfortable with whatever else you might need the money for, yes.

I do find it fairly questionable that you can only find £25 to cut in a month though, unless you're already budgeting hard?

Yes is the answer to your question up to £25pm is all i can afford as we speak
how thats questionable i dont know - some of us would love to pay 100's a month extra off
im trying my best to keep head floating above water and to make life a bit easier and i thought the saying was every little helps !

so if it does help by paying my £ 10/20/25 a month more then thank you i will try and do that

torbrex

short_cake wrote: »

just a quick question is it worth paying small over payments to a mortgage
ie 10 quid here 20 quid there , those sort of payments as and when ?

ive seen loads of threads on large £500 over payments unfortunately i couldnt do that, but every now and then i think i could at least give £10/£20/ maybe 25 quid extra to the mortgage a month

so what are peoples thoughts good idea or not?

That was how I started my overpayments, I was splitting my extra cash each month into 3, one to long-term savings, one to my holiday fund and the third to my mortgage.
I started at £20/month into each and any left over at the end of the month went into my holiday fund which covered not just the holiday but any emergencies that cropped up like house or car repairs.
As my budgeting got better and I had more left at the end of the month, I increased to £50 in each pot and I had started to notice the difference in my overpayments to my mortgage.
The interest rate had dropped and the required payments had dropped with it but I continued to keep my payment at the same level so the capital sum was being reduced by a bigger amount every month.
I will admit to becoming a bit obsessed at the end and was piling every spare penny that I had into the overpayments but I am reaping the rewards now, my mortgage was paid off 9 years early and I am able to sit back and relax.

If I had to do it all again, I would start the overpayments a lot sooner than I did, no matter how small they were.

gallygirl

I agree, every penny OP'd is around 2p interest saved so well worth doing.

If things are so tight why not set yourself a challenge to raise some extra cash & chuck all that at it also?

RenovationMan

short_cake wrote: »

just a quick question is it worth paying small over payments to a mortgage
ie 10 quid here 20 quid there , those sort of payments as and when ?

ive seen loads of threads on large £500 over payments unfortunately i couldnt do that, but every now and then i think i could at least give £10/£20/ maybe 25 quid extra to the mortgage a month

so what are peoples thoughts good idea or not?

Some mortgage providers have a minimum overpayment amount (I believe that mine, Santander, is £1000) and if you overpay less than this amount, the bank simply puts the cash into a non-interest paying account until the end of the year and applies it to your mortgage then.

You need to find out if your mortgage provider has a minimum OP level, and if so you should put your OPs into a savings account until it accumulates above the minimum level.

EDIT: Just checked and my minimum OP amount is £500 with Santander/Abbey.

pinkteapot

Subject to what RenovationMan said... Yes - every little helps as they say.

Firstly, any overpayment will reduce the interest you pay over the life of the mortgage, so it saves you money. As long as it doesn't leave you short of cash and force you to spend on credit cards etc.

Secondly, it will reduce your balance owed and hence your LTV. If you then want to re-mortgage onto a different deal you might be able to get a better deal if you go down an LTV bracket (70%, 60% etc). Which would also save you money.

madeupname1

Just to echo what the others have said. I think all OPs which you can afford are worthwhile and eventually mount up. Try one of the OP calculators, there is one on this site, and you will be able to tell how much an overpayment of £10 per month will save you both in interest and time. Agree with what others have said about it becoming addictive though! As RM said, some lenders have a minimum level - mine is £500. Have a look over at the Mortgage Free Wannabee board. You will see people making OPs of lots of different amounts and finding the venture worthwhile.

torbrex

RenovationMan wrote: »

Some mortgage providers have a minimum overpayment amount (I believe that mine, Santander, is £1000) and if you overpay less than this amount, the bank simply puts the cash into a non-interest paying account until the end of the year and applies it to your mortgage then.

You need to find out if your mortgage provider has a minimum OP level, and if so you should put your OPs into a savings account until it accumulates above the minimum level.

I was lucky with mine in that there was no minimum amount or charges for making overpayments and the interest was calculated daily and applied monthly so it did not really matter when I made my OP.
I did it by adjusting my monthly payments and all they asked was that I give at least 3 weeks notice for the change to take effect.
I was also able to make single payments to the account by bank transfer or cheque with no penalty.

RenovationMan

torbrex wrote: »

I was lucky with mine in that there was no minimum amount or charges for making overpayments and the interest was calculated daily and applied monthly so it did not really matter when I made my OP.
I did it by adjusting my monthly payments and all they asked was that I give at least 3 weeks notice for the change to take effect.
I was also able to make single payments to the account by bank transfer or cheque with no penalty.

I remember someone posting on the MFW board that she used to pop into her bank whenever she was passing in town and used to overpay with the contents of her purse, a fiver, tenner, whatever. She had the same terms and conditions as yourself and so the only downside were the tutting and eye rolling from the bank staff, but she found that amusing anyway.