Overpayments - Annually vs Monthly 29 May 2013 at 10:32AM in Mortgage-free wannabe 3 replies 731 views

ibz75

If I am on fixed rate and can overpay by 10%, are there any advantages/savings by making the overpayments annually (Jan) rather than monthly?

Thanks.

StuC75

Its better to pay little and often.maybe not by much.. but still better to pay off monthly..

http://www.moneysavingexpert.com/mortgages/mortgage-overpayment-calculator

hildosaver

Think it depends on when your bank calculates it's interest, if they do it daily then monthly overpayments are best, if yearly.. well you get the idea.

originalmiscellany

My parents warned me of the "good old days" where you they updated your mortgage amount once a year, so if you wanted to you could put in 10K overpayment the day after the mortgage amounts were altered and you then didn't see it reflected in what you paid for another 364 days if you were a bit silly! Of course they did it the other way round and dropped off money at the bank the day before the mortgage was recalculated. Either way, the more modern responsive solutions seem to be so much better.

I think (depending on your bank) overpaying monthly will make a very small difference in how much pay but little steps end up helping you go a long way.