Small but significant success

waterbaby

Hello,

I'm quite pleased, can I share my success?

We were allowed to overpay 10% of the mortgage this year (it was the first year), we have been overpaying every month and we have completed our 10% :j

That saves us £42 in interest every month, and two years have been taken off!

There's 5 months left before we can continue overpaying so the plan is, keep 'overpaying' into a savings account. When the new overpayment year comes round, pay the savings in and start monthly overpayments again.

thanks for reading! wb
:beer:

firesidemaid

good for you!

i've come off the phone from my bank, rbos, to find i cannot make easy online overpayments as promised at the mo:mad:

i'm hoping they are now going to do something about it

nethesi

Well done! That's great. have a beer :beer:

We're trying to do something similar - overpaying by £500 a month. Been doing it since last June and have lost something like 3 years so far. Mind you our mortgage is quite small and we're going to be moving to a bigger place soon so will be back up to the long slog soon...

Rachel

racer256

WELL DONE! Thats a fab achievement. x

Racer256

keeperbear

waterbaby wrote: »

That saves us £42 in interest every month, and two years have been taken off!

That is wonderful news! £42 a month is a considerable saving - over £500 a year. Most taxpayers would have to earn over £700 before tax in order to pay this interest. Congratulations, you have just earned yourself a £700 pay rise for the remainder of your mortgage period! This must sound even better than a £42 a month saving.

groatie_queen

What a great start in your first year, and I love keeperbear's translation into hard cash.

Well done!!

waterbaby

keeperbear wrote: »

That is wonderful news! £42 a month is a considerable saving - over £500 a year. Most taxpayers would have to earn over £700 before tax in order to pay this interest. Congratulations, you have just earned yourself a £700 pay rise for the remainder of your mortgage period! This must sound even better than a £42 a month saving.

I hadn't thought of working that out! Excellent! I could also see it in terms of time off - I earn £1400 a month (net) so it translates into two weeks off work!

Stu_H76

well done keep up the good work!

ailuro2

Well done- we were the same,limited to 10%, however we are now xoming out of our penalty term and will be able to overpay loads because we are well used to it!

If you find you can overpay by a lot then it may be worthwhile switching in a couple of years to a mortgage that allows bigger overpayments.

Martinslovechild

If you have an option of reducing the term of your mortgage without incurring fees, then this is equivalent to making regular overpayments.

You've already discovered that making payments of 10% has reduced your term by 2 years, so why not ask your lender how much your mortgage would cost each month if you reduced the term by:-

(a) 2 years
(b) 3 years
(c) 5 years
(d) 7 years
(e) 10 years

This is exactly what I did in 2003 - it's amazing how little extra it costs to reduce the term by a couple of years, but it's worth asking about bigger term reductions to really push yourself to aim to be mortgage-free by a certain age or certain point in the future.

Thinking back to my own figures, I owed £120,000 in 2003 (17 years outstanding). I asked the lender about reducing the term by 2 years and I think they quoted approx £40 per month. A 10-year reduction (i.e. 7 years remaining) cost £435 per month extra.

I've pushed myself really hard and will be mortgage-free in October or November at the latest.

Congratulations on your progress to-date. Now think about how good it would be if you could be mortgage-free soon.

waterbaby

Hi Martinslovechild,

I like the idea of what you say. I've just tried putting our overpayment into the channel 4 mortgage calculator thing, and we could reduce it from 15 years (as of last Sept) to 5.:j

However, we are going to be starting a family soon and I don't want us to get caught out. Do you know if a request to refuse to lengthen the term again can be refused? I expect I need to ask the lender. I'll do that.

There's still at least another 15 months with full income and no childcare to go, so it would be good to make use of it.