£1+ a day Mortgage OP challenge for April

Lois_E

elantan wrote: »

Thanks dave that has been a great explanation I think I will continue to put my overpayments into a saving account and just transfer once a week/ fortnight that way the money will work that wee bit harder for me


Quick q ... Would I be better making my overpayments on the same day as my regular payment comes out? In the sense that I try and overpay mortgage 1 by £500 a month I tend to do this on the first but my regular payment comes out on the 20th ... Would I be better paying the £500 on the 20th?

With my second mortgage I am just chucking Tilly tidies and any spare at so was going to pay that once a week/ fortnight as it isn't going to be much

Which is the best way to get the most from my payments ?

Thanks

If yours is calculated the way TheWebDev's is, then yes, you'll be better off paying it on the 20th or as soon after the 20th as you've got the money. If it's calculated the way some other people's are, then you'll be better off paying it as soon as you can, regardless of the day of the month.

elantan

thanks Lois ... i'm with the n@tionwide (notice what i did there he he) so i am sure i will be calculated the same way as daves... will keep the £500 into an account till the 20th then ... was lloking forward to paying it tomorrow as well lol ... the other one i will just fill up the savings account i was starting to put it into and then pay it off on the 20th as well

this way on the 20th of every month i will have a big payment to come off the mortgage and our money will be working that little bit harder for us

TheWebDev

elantan wrote: »

thanks Lois ... i'm with the n@tionwide (notice what i did there he he) so i am sure i will be calculated the same way as daves... will keep the £500 into an account till the 20th then ... was lloking forward to paying it tomorrow as well lol ... the other one i will just fill up the savings account i was starting to put it into and then pay it off on the 20th as well

this way on the 20th of every month i will have a big payment to come off the mortgage and our money will be working that little bit harder for us

When I said it's best to pay it on the same day as the regular payment, I was referring to much smaller overpayments. In the fairyclicks example above, the payments were approximately the same as the interest charged during the month.

If you are overpaying £500 and only being charged about £100 in interest, it's probably better to overpay ASAP. However if you're being charged £400 or more interest you're probably better waiting until the 20th (or soon after it). But as nationwide only allows you to overpay £500 per calendar month without penalty, never wait past the end of the month, as it's better to take the opportunity to overpay than it is to miss out.

It is impossible to tell which is the best option without knowing more information. You need to calculate how much interest accrues between the regular payment and your overpayment. You can do this by looking at the balance online or by using the formula above. From this you can workout how much you reduce the balance by and multiple this by your mortgage interest rate. If you multiply your £500 by your savings interest rate, you can compare them easily.

Doing this will give you interest gains based on a whole year, but we're only interested in a few days of this. As we are interested in the same number of days in both cases, comparing the whole year values is just as good as scaling them to the respective number of days. If the 2 values are fairly close, it's probably not worth the hassle of moving the money multiple times.

fairyclicks

I think all the info on here is brilliant as a newbie to this mfw stuff its great to be given the information so early in the process even if it does make my head hurt a bit lol! i'm looking forward to talking to the mortgage peeps and getting the info needed to maximise my OP

re the interest rates with my mortgage at 1.5% i know i would be best to put money in savings but i'm rather exited about the prospect of paying off my mortgage so i am doing a bit of both its only little payments i can make into either but it does feel good i have to say (and its even making me think twice about buying chocolate hahahaha)

elantan

Thanks dave ... Will try and get my head around all that info lol ... I think I can see a phone call with the bank coming up ... I can imagine I may be trying to change my pay date lol

elantan

It is great fair clicks and its brilliant that so many are helpful

Good luck with your journey

Katzen

Wow this is all mind boggling! We are just in the process of getting our mortgage but I'm lurking around here to get tips in advance. Thank you all for this discussion.

fairyclicks

Good Morning all and welcome to the first official day of the challenge With 30 days in April the target for this month is £30+ into the mortgage OP pot - we can all do that can't we???

I am feeling very confident this morning and with the help of some great ebay sales over the weekend i am putting £5 into the pot (not paying it off yet till i speak to the mortgage peeps for more info on the best time to make payments)

so i'm on £5/£30 so far

fairyclicks

No extra sales or anything for me today so £1 added to the OP pot

£6/£30 so far put aside!

Am going to ring the mortgage company today as well to ask re interest etc - seems like a good day as its my repayment day anyway

kittiej

Hi everybody

Just popping in to give an update, my saves so far have come from shopping and packed lunches.

Shopping vouchers = £5.48

Money saved from buying multi-buys = £2.98

Money saved on lunches = £2

So my total = £10.46 :T

I also ended up with another £5 off voucher from Tesco as I only did half my shop for the month so I can add that next week.

Only another £30.04 to go