Paying small lump sums, disheartening!

SG27SG27 Forumite
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We are paying off small lump sums of around £60 per month when our bills come in under what we budgeted. So we budget £100 per month for gas/electric and this month was £28 :) so a nice OP.

But these payments reduce our future payments thereby making our regular OP more. So far we have paid £201 this way. Which according to my calculations will reduce next years payments by 70p (meaning our ops next year are 70p more) this hardly seems worth it! I know it saves long term but just doesn't seem like those are £100s we are op are doing anything!

I know lots of people make small payments like this.


Does any one else feel like this.

(Our balance is £103,300 with 24 years 7 months left)

Replies

  • TheFactoryTheFactory Forumite
    110 Posts
    Its tough I know but you have to think of it as delaying wealth. Every OP you make now reduces your immediate interest payments AND reduces the length of your mortgage. So everything you put in you will get back at a later date and more - think of it as parking your money in your house for a few years!

    OP now whilst we have a (relatively) easy ride with BOE rates, you will be glad when the rates do eventually rise.
  • Waffle_OnWaffle_On Forumite
    408 Posts
    I've been Money Tipped!
    Most lenders will allow you to use your overpayments to reduce your term - why not ask them if you can do this? I find it very motivating to know I've knocked a month off my term.

    If you can't or don't want to then think about it another way - 24 year of interest saved on whatever you overpay!
    Shrinking my mortgage!
    Nov 13 £166,000


    Jan 17 £142,900
  • Wentthedaywell?Wentthedaywell? Forumite
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    That's £210 you will not be paying interest on for the next 24 years. Next year you'll have £400 you will not be paying interest of for 23 years etc. When IR go up, you'll be so glad you did this, and you'll be thrilled at the end of the term at the savings.

    It's like pension savings, a little early on and regularly is better than a big sum late. I really wish I'd done what you are doing. Don't be disheartened SG27, you are going the right thing!
    Save £12k in 2021 thread #14:

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  • SG27SG27 Forumite
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    Waffle_On wrote: »
    Most lenders will allow you to use your overpayments to reduce your term - why not ask them if you can do this? I find it very motivating to know I've knocked a month off my term.

    If you can't or don't want to then think about it another way - 24 year of interest saved on whatever you overpay!

    I have spoke to them twice about it. Basically if you make a fixed monthly op then it reduces the term. If you make random one off payments it reduces future payments. But it is effectively the same thing if you keep your monthly amount fixed. For example we op £100 per month as a fixed amount plus odd bits here in there. Next year our repayments reduce by £2 for example then our overpayment becomes £102.

    I'm going to keep at it but just feels so slow. I suppose because its such small sums compared to the total and the interest pushes us back a step for every two forward.

    Already reduce the term from 25 to 19 with £100 ops not including the extra bits so that's great :)
  • SG27SG27 Forumite
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    That's £210 you will not be paying interest on for the next 24 years. Next year you'll have £400 you will not be paying interest of for 23 years etc. When IR go up, you'll be so glad you did this, and you'll be thrilled at the end of the term at the savings.

    It's like pension savings, a little early on and regularly is better than a big sum late. I really wish I'd done what you are doing. Don't be disheartened SG27, you are going the right thing!

    Thanks very much for the encouragement!

    It's just so slow at the start but I know it saves so much long term!
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