Regular monthly overpayment or annual lump sum

Boomdocker

Hi all,

We are in the process of buying a flat and I am planning to over pay when I can. We had originally planned to make an annual one off payment but looking at some of the diaries it may be easier to make a small over payment each month. If I set my direct debit up to do this how can I make sure that this overpayment comes off my capital? Is it generally better to make a monthly overpayment rather than a annual one? We will be on a five year fixed term initially. Thanks.

lilyp

Hi Boomdocker,

I am not the best at the maths side but I believe if your interest is calculated daily then it is better to make monthly payments rather than annual one on the financial side of things.

However you also need to look at your personal circumstances and if you might need that money in the year as you cant get it back once its gone.

I op £150 monthly on mine but I am also trying to put as much money as possible in a savings account which will be used to pay an annual lump sum if we can afford it.

Good luck on your MF journey

marlasinger

I agree with Lily. I've always heard that as interest is calculated daily it's best to make frequent small overpayments rather than one large one.

With some lenders I think you may need to specify that it is a capital repayment; probably best to give them a call and ask what is required.

Good luck. :beer: