taking out my overpayments

jagdipa

I am thinking of overpaying on my mortgage, and was wondering whether it is possible to take the overpayment back if I need it.

For example, I have 5000 GBP in the bank. If I leave it in a saving account, after 3 years, I may have made another 200 GBP in interest.

If I overpay my mortgage, I could say 50GBP per month. Meaning a total saving of 1800GBP in 3 years. But I know that I will need that 5000GBP at the end of 3 years. So can I take that back out from my mortgage?

ViolaLass

Your numbers are a bit confusing. If you have £5k, that means you can overpay by more than £50 a month. It won't save you £1800, it will only save you the interest you would otherwise have paid.

Whether you can take it out depends on your mortgage conditions, which we can't guess.

Goldiegirl

A mortgage is not some sort of savings account,

Some lenders may let you draw out over payments, others may not.

Also, if you make large overpayments, your mortgage debt will reduce, resulting in a lower monthly payment. So if you draw the money back out again, don't forget your monthly payment will go up again the next time they calculate it.

Spangled

Goldiegirl wrote: »

Some lenders may let you draw out over payments, others may not.

Quite. I've made a number of capital repayments on my fixed-rate Natwest mortgage. I can't draw those back. Other mortgages will differ, depending on the lender and type of mortgage.

Goldiegirl wrote: »

Also, if you make large overpayments, your mortgage debt will reduce, resulting in a lower monthly payment. So if you draw the money back out again, don't forget your monthly payment will go up again the next time they calculate it.

If you make a one-off capital repayment, you can usually request with your lender that your regular monthly repayments remain at the same level - which means in effect you are making additional (small) monthly overpayments.

Again, I've done that with my fixed-rate Natwest mortgage, which means I'm making a £60 overpayment each month on top of my regular monthly payment. I can stop those overpayments at any time.

dprice

You need to look at flexible offset mortgages. Usually higher interest rates but depending on your saving to offset may work out cheaper. Usually only benefits those with large savings.