early repayment of mortgage

Jimisi

Hi all. I'm new to this so hope it doesn't all get garbled. I'd like some advice if poss. I have a part repayment and part interest mortgage currently on a fixed rate. I am trying to pay off 500 (max allowed) every now and then, but don't understand how it works really. I know my payments went down £6 per month last time i did this..but what is really happening? and is this the right way to go?
There is so much more I need to work out, but this is the start.
Thanks in advance for any help
Jimi

edinburgher

Jimi,

It sounds like your overpayments are reducing your monthly payment. This means that the term of your mortgage (25 years etc.) will remain the same, you'll just pay less interest each month.

Most people on here want to pay their mortgage for a shorter period. If you fall into this camp, you want to specify that your overpayments are used to reduce the term.

SillySod

For a complete picture of what options are best for you, you would need to find out what the forms and limits of overpayments are both for the interest-only and the repayment portions (e.g. a certain amount per month, per year, a proportion of the balance per year etc etc), and whether maintaining the current monthly payment after an overpayment counts as further overpayments (only an issue if you are overpaying by close to the limit).

Jimisi

Thank you both for the reply. I did try to find out what benefits I would have either using the overpayments for the final sum, or taking off my interest only. However, it was a little complicated so I have just paid it and hoped for the best. I would like it to reduce my term though so I need to work on this and probably have it explained again to find out how my over payments are being used. I find it all very confusing but am hoping to try and crack this.