Overpay mortgage or wait?

figgyroo

I have a fixed rate mortgage at 3.99% till April 2014. The balance is around £91,000 and the term remaining is 27 years. Redemption penalty is 3% till the end of the fixed term. I can overpay by £499 a month plus 10% of the outstanding balance each January.

I am shortly due to inherit around £30,000; question is do I use this money to over pay monthly / annually or stick it in a savings account and pay off a lump sum when the fixed rate ends and I re-arrange my mortgage?

Gary123456790

Hi,

Is it an A&L mortgage? Sounds similar to the overypayment limits I had. I would put it in asap as you'd have to find a savings account paying more than 3.99% to make it worth saving it.

What i did when we got some inheritance is I changed the term to 2 years (there was a fee of £25 to do this with A&L) this made the dd around £7,800. I changed it back after a few months. It was worth paying £50 in fees as the interest went down by hundreds each month the big dd went out. I had to be very careful to ensure the term was changed back at the right time (I had to inform them around 6 weeks in advance).

When the term was changed back, we made it shorter so the payment was what it used to be, but it was years less left to pay due to what we had put in.

If you have any other debts like credit cards etc these should be cleared first and ensure you have an emergency fund as any extra you put into the mortgage is not easy to get out.

Gary.

figgyroo

Yes, it's an A&L mortgage. I've never thought about changing the term...thanks for that.

I've got no CC debts and have rainy day savings so this money is all earmarked for the mortgage.