Worth paying extra to mortgage?

imported_Ducklet

Was wondering if it is worth paying extra to a halifax fixed rate mortgage? The halifax said i can pay up to 10% extra without any early repayment charge. Is this a good idea?

Joe_Bloggs

If you have excess savings in reserve and are getting a poor rate of return on the other things that you could do with your money then it should be considered. Paying of capital would be wise if these payments affected how much interest you paid for the next month.
J_B.

david78

Its definitely worth it. But first try to get the best mortgage deal you can, and review it every couple of years.

Walletwatch

Would this not depend upon what stage of the mortgage the OP is in? If it is the fag end of the mortgage term, then he/she'd have already paid the bulk of the interest, and a large proportion of the repayments in future will go towards the principal payment anyway.

imported_Ducklet

I'm just at the begiining of the 25 year mortgage -almost a year in :-s

mrcow

If you want an idea much money you'll save with either lump sum or regular overpayments, then try inputting the info in this calulator (you can set your own interest rate).

http://new.egg.com/visitor/0,2388,3_54988--View_1028,00.html

Even a small regular overpayment can make a dramatic difference.

Hobo_2

Ta mrcow, nice find noticed after having a play with it all things being = with a 50% offset the higher the interest rate the sooner mtg is paid off, must be something to do with gearing?

imported_Ducklet

Thanks for that everyone, in particular mrcow - that is a really helpful calculator!

posty_3

remember banks etc have a limit of how much you can pay off,
with the abbey its 10% a year.

Hobo_2

mrcow, i put same numbers in 2 other offset calculators, Charcol Online & One Account all results came out the same apart from yrs to pay/saved

on a 22yr mtg = Years to pay

6.7 Charcol

6.6 One account

10.3 Egg ???

http://mortgages.charcolonline.co.uk/mortgages/calculator/flexcalculatortext.aspx?linkfrom=moneysavingexpert

http://www.oneaccount.com/onev3/calculator/calculator-how-much-save.shtml


http://new.egg.com/visitor/0,2388,3_54988--View_1028,00.html

mrcow

I've only used these calculators for overpayments (as unfortunately I've never enough spare cash for an offset ), and they are coming out the same for Egg and Charcoal.

I'm looking at the Charcoal site, and can't see an offset option, so I'm not sure how they've come to that figure.

The One Account calulator looks more sophisticated than Egg for offsetting, as it's asking for your monthly income etc, so it's going to offset that against the mortgage too, hence the discrepancy with Egg (which is purely looking at a lump sum savings figure to offset against).

Does this help at all?