Is there any point in overpaying my mortgage?

Brallaqueen

My fix has just come to an end and from 01/02 I will drop onto the svr which is 100 less than what I was paying. I have a two bed flat with a lease of approx 90 yrs and SCharge of 75 a month. It is unlikely that the value of the flat has increased so i still am at the 90% bracket at best.

My mum believes I should use some of this 'extra' money to overpay my long mortgage (32 yrs remaining) as she did the same on the family home and paid it off early. However, my brother argues that there's no point as I will never really own the flat so why pay more than I have to?

It's unlikely at my age/wage/stage in life that I will ever be able to afford a house.

I'm a bit confused and would really appreciate any ideas or opinions from you knowledgeable people.

worried_jim

Your brother is stupid. By paying it off sooner you will pay less. How does he get through the day?

Excited13

I agree with worried Jim the quicker you pay it off the. If you over pay when you come to remortgage you will owe less and may be able to bring down the mortgage term. Once the mortgage is paid off you will be better off by that monthly repayment amount each month which is why people aspire to being mortgage free.

BrownGirl

Yup, if you have spare cash available to pay off extra on your mortgage go for it! You never know what's going to happen in future and if you can reduce the term of the mortgage whilst you have the extra cash available its got to be good for you, plus paying less interest long term.

roswell

See it as a insurance policy if you over pay now you can worry less if you are X years ahead of paying it off and loose your job.

hillcats

Get rid of the debt I agree.

kidmugsy

Have you any more expensive debts to clear first? Have you got an emergency fund saved in a Cash ISA? Do you pay enough into a pension to maximise an employer's contribution?

If "yes" to all three, consider overpaying the mortgage. If they allow you later to reborrow any excess payments, that makes the idea particularly attractive.

Brallaqueen

Thanks for your input everyone. So the fact that the flat is leasehold doesn't have any impact on the decision? That's where he was coming from - with a house it would be differentI guess.

Kidmugsy - I don't have any credit cards or debts aside from the mortgage, about 2.5k savings but I am a temp so I don't have a pension to pay into.

kidmugsy

Brallaqueen wrote: »

I don't have any credit cards or debts aside from the mortgage, about 2.5k savings but I am a temp so I don't have a pension to pay into.

Fair enough - pensions only become a compelling idea if someone else supplies a lot of the money.:)

So you want some balance between building up your savings and overpaying. That will be partly a matter of convenience and above all a question of what lets you feel least worried about money.

Yorkie1

I agree with kidsmugsy re. the need to have sufficient rainy day funds set aside, particularly as you are not on a permanent contract.

Brallaqueen

Thank you all very much for your input. YOu are all very kind and helpful people, bless you.