Overpayments -worthwhile?

angel31572

Hope this question makes sense...

If I were to pay almost double my mortgage for at least six months, would this be enough to reduce the repayment amount?

I have no arrears and have not missed a payment but would like to gradually reduce repayment amount.

homer_j_3

if you were to increase your monthly repayments it can have 1 of 2 consequences.

1 - It will reduce the term

2 - you keep the term the same and reduce your monthly repayments as the balance is lower.

angel31572

Thanks. Really appreciate your reply.

Would six months extra payments make a difference with re-payments?

angel31572

Any other comments would be appreciated....

Jonbvn

MSE has an article on this exact issue. Paying off a mortgage versus saving.

The crux is, you may be able to get a better return on savings than paying your mortgage. It basically depends on your current mortgage rate. There is a calculator on the link which will help you decide. Don't forget such issues as any early redemption charges etc.

HTH.

angel31572

Thanks

I am not trying to pay off the mortgage early (That is something I can think about in years to come) but I would like to reduce the repayment amount each month by about £300.

Jonbvn

angel31572 wrote: »

Thanks

I am not trying to pay off the mortgage early (That is something I can think about in years to come) but I would like to reduce the repayment amount each month by about £300.

The MSE article still applies. As an example instead of paying off your mortgage, you could consider opening a regular saver with Yorkshire Bldg Soc. with 7% interest (max 20k). They allow you to save up to GBP500 pcm.

Therefore it depends on your current mortgage interest rate, and whether you will need access to your money at short notice. Remember when you pay-off money from your mortgage, you may not be able to recover it, without selling or remortgaging