Best Approach to Take

Sortmyselfout

I am wanting to start making overpayments on my mortgage. I am on a repayment mortgage at the moment and would probably be able to make overpayments of around £250 per month.

What I was wondering was if I go to interest only my monthly payment would be about £300 less and I would use this also as an overpayment taking the total overpayment to £550 but not sure if this is the right way to proceed.

Would be grateful for any advice

Mortgage_Reduction_Novice

Hi,

There's a few things to think about and work out:

1. Does your mortgage provider set a limit to OPs?
2. Any fees to pay for switching to interest only?
3. You can work out the difference between repayment + small OP and interest only + big OP using the calculator - most people find it's much of a muchness.
4. Will you need felxibility? i.e. on the whole you can't claw back any OPs you make so don't forget a sizable savings pot for emergencies.

megela

But wouldn't that £300 just be the normal capital repayment part of your standard payment, and therefore reducing the capital anyway in the same way as an overpayment?

I would keep it as repayment as it 'forces' you to make this payment, if it is an 'optional overpayment', you may decide you can't afford it and run the risk of not clearing your mortgage at the end of the term.

You can then make additional overpayments as and when it suits you.