Which is best for overpaying?

pushbiker

Does anyone have an opinion on which is the most efficient for overpaying your mortgage?

a) Remortgaging every couple of years to a low rate and overpaying up to the 10% limit.

b) Going onto the Standard Variable Rate at the end of my current discount and overpaying as much as I want (around £500pm overpayment on top of standard mortgage payment).

Thanks :-)

Pushbiker

homer_j_3

how large is your mortgage? Does the £500 a month exceed 10% of your balance then I presume (under 60k mortgage).

I would look to either do a fixed rate with no tie ins or limitations on overpayments. That way your money will go further as you are paying less interest in comparison to SVR.

If fixed doesn't float your boat, a tracker may be better for you. Once again one with the flexibility required.

If you are confident that you can overpay by a certain amount each month without fail, it may be worth reducing your term and paying the most you can each month or a combination of reducing your term by a few years and increasing your monthly payment by a little so you can use the 10% facility as and when you can.

JoeK_3

Subject to the size of the mortgage, I would go for the remortgage.

Just spotted it, If it's £83,000, I would go for the remortgage.

JoeK

camstop

I was enquiring about a 5 year fixed rate for £19k with Britannica today which the girl said i could overpay up to £500pm.


HTH :beer:

JoeK_3

Based on a small mortgage like £19,000, I would shorten the term and make the repayments higher.

JoeK

Jonbvn

I am soon to be in a similar position. I have decided to opt for a fixed rate shorter term (and hence bigger payments).

camstop

JoeK wrote: »

Based on a small mortgage like £19,000, I would shorten the term and make the repayments higher.

JoeK

My example was just in answer to the original question that Britannica allow £499 (it is) over payments pm even on a small amount like what i'm looking at.

I'm happy enough with my situation ta seeing i've cut 3+ years of the term of my mortgage by cashing in my endowment and upping my payments slightly and now not having to worry about a potential large shortfall.

And i can always make over payments if i want

pushbiker

Homer_J: "how large is your mortgage? Does the £500 a month exceed 10% of your balance then I presume (under 60k mortgage). "

So can I take it that the 10% overpayment limit on my 83000 Mortgage doesn't actually include the normal payment? I was thinking of adding £500 to my £540 normal payment to make £1040pm. I was thinking that this would come to more than the 10% of £8300 for the year (£1040 x 12) HOWEVER, if the 10% starts after my normal payment then I am well within the banks limits.

Please can you confirm that the 10% applies to the "overpayment" and not the normal monthly amount + the overpayment.

This clarification will make my day ! :rotfl:

Thanks for your replies everyone.

Pushbiker

homer_j_3

the 10% facility would be in addition to your normal monthly payment