how do you overpay on your mortgage?

MrsGSR

Sorry for a stupid question but once we are debt free we are planning to start overpaying on our mortgage. What is the best way of doing this? Do you just pay an amount off each month or do you save it up and pay a chunk off?

I've heard people talk about it but I'm really not sure how to go about it!

tanith

You need to look at your mortgage terms and conditions first, not all companies allow you to overpay, mine allows £500 per month overpayment .

welsh_mummy

We are allowed up to 10% in overpayments each year. Currently, I pay little bits here and there where I have made savings around the house and any extra monies earned via facebook sales, ebay or any overtime. Luckily I can do it all online and payments shows on mortgage account within 2 days.

Habibiboo

:wave:
You can always phone your lender and double check the terms for overpayments. Tanith's right, you need to know this info and plan accordingly.

I just throw what I can when I can at it but this is all part of a carefully planned strategy complete with spreadsheet, of course! I like to set myself yearly goals (as ours is a reducing mortgage and has an annual loan reduction anyway) but I also like to have smaller goals throughout the year so I can check on how far I am staying ahead of that drop-down figure (see signature for current goal in April).

Ditto to Welsh Mummy with the online banking - it's great and so motivating, so if your mortgage account isn't set up for it but could be, that's another little to-do which is definitely worthwhile (and strangely addictive)!

No such thing as a stupid question BTW, if it's something you need to know, then it's a totally valid question!

Good luck!

SmlSave

When we actually have some OP money I call the mortgage line and make a payment


Check what your lender will let you do first though

apple_muncher

Our mortgage is offset and so long as we pay the interest, we can pay as much/ little as we want! Were near to paying it off, then bought my mum a house so it zoomed to the top of our limit. Because we managed to stay within the limit we'd agreed many many moons ago, we didn't have to re-mortgage or even tell them why we wanted to draw down to the limit. Our focus this year is to reduce mortgage AND increase savings, which reduces the interest.

And we can do it all online, tilly tidying to our heart's delight. I love seeing the numbers drop!

MrsGSR

Thanks for your replies everyone! Yes we can access our mortgage account online, I'll just need to check the terms then I can start planning for later in the year.

elsien

I decided to overpay by the same amount each month, so I've got a standing order set up and can now just forget about it. It's set up for a few days after the mortgage payment goes out so the BS doesn't get confused.

MrsGSR

Oooh that was easy, we can pay up to £500 without getting an early repayment charge and it's already set up to do it online.
I'm excited to have a goal for once we are debt free!