Best time to make overpayments?

jamesd

Take the outstanding balance at the start of the year when you probably get a statement. Divide by ten. That's how much you can overpay without penalty in that year. Divide by 120 instead of 10 if you want a monthly overpayment amount.

That assumes that it is 10% of the remaining mortgage balance. It might be 10% of the initial loan amount. You'd have to ask them to clarify that. If you're lucky it'll be on the mortgage statement.

wasted

Jessie
my understanding is this;
It means you can overpay upto 10 % of the outstanding balance of the mortgage in a 12 month period.

eg.
For simplicity lets assume your mortgage is interest only.
Year 1 your mortgage balance is 100,000. you can overpay 10% (10,000)
Lets assume you overpay the full 10,000
Year 2 because of your previous overpayment. Your mortgage balance is 90,000 you can overpay 10% (9,000)

and so on

Hope this helps

wasted

If you are lucky as Jamesd suggest, you may be able to pay upto 10% of the orginal loan value in each 12 month period.

Based on the previous example, that would mean a maximum overpayment of 10,000 every year.

neetugopal

Sorry for being off the topic. I took repayment mortgage from A&L last year in July. Anybody knows if I can change it to interest only?

jamesd

Ask them. They will want to know why. They are likely to charge you something for it but might not force you to do a full remortgage.

Better to start out with an interest only mortgage and routinely overpay by the difference between interest only and repayment, then you never need to wonder.

ailuro2

Our mortgage overpayment fund remains accessible to us, we would have the money in a few days if we needed it, so now we just keep ISA's for shorter term saving ,for money we know will be spent within a few months.We never go above the limit of 3K anyway in the ISAs.

We also overpay every month,started at 50 quid, then once we got used to that,up to a hundred. We now overpay 150 a month and our mortgage outstanding has reduced by an incredible percentage in the last five years.:j