Overpayments - think I'm nearly sold on the idea

FreddieFrugal

We're just in process of buying first house now. We'll have a £77,000 mortgage - 53% LTV. 25 year term

2.59% Nationwide 4 year fix, £349 per month

Now we should, although won't neccessarily always be, in a position to overpay. I'd quite like to overpay by boosting the payment by £151 to match our current rent of £500. (under 10% overpayment limit)

Now if I have this right. If we are able to overpay then we will save on interest and reduce the term of our mortgage. If interest rates rise during our fix which it sounds like they may well do, then by overpaying during the fix we will have removed some of the sting when/if we have to go onto a higher rate.

I'm also assuming -based on nationwide's terms - that we can always 'get back' what we have overpaid in the form of reduced payments later on if we need to.

If this is true than it would seem like a very sensible thing to do as long as we can afford to and I'd rather not be cutting in to our savings (Keeping 10K minimum as a, no touch til rapture, emergency fund) it would only be if there was additional money left over at the end of the month. (Currently in position of uncertainty with my job which may well not be there from Easter and I have no idea when I'll be earning again thereafter.)

We should still be able to afford that extra £151 though and to me it makes more sense to plough that into the mortgage then have it sitting in a lower interest account, as long as we're keeping in the black above that emergency fund minimum.

Am I correct in my thoughts in your opinion?

littlegreenpeas

Yes sounds like a good plan, just need to work out how long your emergency fund will last you in case of job problems.
LGP

quicklee99

Tbh unless savings are paying a better rate and you have an emergency fund then I can't see why over payments would be a bad thing, but you will get some biased views on that in this section ; ) Best of luck with it.

LisaLou1982

I think that sounds like a great idea

I overpay £50 as a minimum each month and then do an account tidy and pay extra off as and when!

FreddieFrugal

Managed to sell the concept to OH too - so that's a greenlight to overpaying. Just hoping the house buying goes through now. :j