Going from Interest only to repayment?

sugartree

I will give my FA an email at some point regarding my mortgage small print, but I am currently on Variable and not charged for oevrpayments however not sure if there is a limit. Is it worth putting money into an ISa to gain interest as well before paying off the lump sum or just paying an overpayment via DD monthly?

holly_hobby

As I say, if you can obtain a NET (of tax) return that exceeds your mortgage payrate, yes you could leave it all to build up and each yr use the whole amount & interest to reduce your os balance. If not, then throw as much as you can, when you can at the mge, to reduce the overall cost (ie incurred) mortgage interest over the term.

Be sure to advise your lender what you want to do, ie redue the balance as oppossed to reducing the term - as this will give you the greatest degree of flexibility for when some months may be a bit tight.

Of course be mindful of ISA allowances, and that the savings vehicles used are consistent with your risk profile, access requirements and any other personal preferences.

Hope this helps

Holly