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Mortgage Overpayments
Comments
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HOWEVER IF I KEEP MY PAYMENTS AT £500 PER MONTH, £30 WILL COME OFF CAPITAL AS WELL.
You cannot keep your payments at £500. This is an INTEREST ONLY mortgage. Your payments will cover your INTEREST ONLY. That is the whole point of INTEREST ONLY. However, you can (if your mortgage will allow it) make an additional overpayment of the extra £30 which will indeed come off your capital too. This will make the next months payment lower again. (I'm just using your figures here.)My point is will this all happen automatically, can it go any other way if not monitored?
My point is that no, your suggestion won't automatically happen. And what's more, even if you ask your mortgage provider to keep the payments at £500 they won't do it as then it ceases to become an INTEREST ONLY product.I just want the amount I need to move to a capital repayment in 12-24 months time to be the least amount possible
Naturally. And the way to achieve this is to keep overpaying. But with an interest only mortgage you will have to do this manually. the effect will, however, be the same.an overpayment can reduce the capital/term or monthly payments you have to specify which you want.
I think you are confused. On a repayment, you chose between term or payments. But we are talking interest only so term is not effected, only payments. Either way, the capital is ALWAYS reduced.0 -
InMyDreams wrote: »You cannot keep your payments at £500. This is an INTEREST ONLY mortgage. Your payments will cover your INTEREST ONLY. That is the whole point of INTEREST ONLY. However, you can (if your mortgage will allow it) make an additional overpayment of the extra £30 which will indeed come off your capital too. This will make the next months payment lower again. (I'm just using your figures here.)
My point is that no, your suggestion won't automatically happen. And what's more, even if you ask your mortgage provider to keep the payments at £500 they won't do it as then it ceases to become an INTEREST ONLY product.
Naturally. And the way to achieve this is to keep overpaying. But with an interest only mortgage you will have to do this manually. the effect will, however, be the same.
Thank you.
This is exactly what I thought, but I needed you to spell it out to me. To do what I want to do require me to manually do it. So each and every month I'll look at how much interest is being made (100% of monthly payment) and see how much it is less than £500. I will then make that as an overpayment together with other payment I want to make.0
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