When's it best to start over paying new mortgage?

MRSB

Hi everyone,

Just wondering if anyone knows the answer to this please as I am going to be taking out a mortgage soon and I'm looking to reduce the term by overpaying by my 10% annual payments allowance each year. Looking at the overpayments calculator on MSE I see that for the first couple of years not a lot is deducted from the amount owing compared to the actual over payment amount paid, so I wonder whether it is better to start over paying a few years into the mortgage instead, and whether this will reduce my mortgage term more effectively?
Sorry if I'm being a bit thick about this! If anyone knows of any calculators or sums I could do to help figure out when it is best to start overpaying that would be great too if that is a good idea?
I just want to make my over payments as effective as possible at shifting the capital, but don't know if this is the way to go about it?
Any advice really appreciated. Just incase it's useful to anyone I'm going to be taking out a 100000 mortgage on a 25 year term, fixed for 5 years at pretty much 5% (credit issues...)
Thanks everyone, hopefully I'll have my own proper MFW thread here soon!

shireknight

I started a 20 year mortgage in 2007 and before the end of the first year I was lucky to find myself in a better paid job so looked into making overpayments.

I found that the quicker you start making overpayments the more drastic effect on the end date they have because the earlier in the mortgage you are the more money you are paying towards the interest which is what you want to get away from as quickly as you can.

I quickly paid all of 2007's overpayment allowance (5%) and have paid every years allowance in a lump sum at the start of ever year since then and I'm currently on target to pay off my mortgage in 2015, that's 12 YEARS before the official mortgage end term.

My advice is to start making overpayments the moment you can.

What convinced me to do it was that I was using Microsoft Money to record my mortgage and it has an Amortisation calculator built into it which predicts what date your mortgage would be paid off if you were to make such and such an overpayment.

Get yourself an Amortisation calculator and start putting in some imaginary payments and you will be shocked at the results.

Here use this one http://www.bankrate.com/calculators/mortgages/amortization-calculator.aspx

Just imagine the $ are £ -the results will still work out exactly the same.