Can you top up your deposit after taking out a mortgage

tchester

Hi all,

First of all apologies if this has been asked elsewhere; I couldn't see anything via search.

My question is this: can you pay off a lump sum on your mortgage within the first year or two of taking one out, and will it help lower your repayments (presuming interest rates stay the same)?

Basically I have enough savings to put down 10% deposit, but would like to increase that to 15% within 12-18 months. I just don't have enough right now. Is it possible, and is it the best course of action?

I'm looking in London, so don't want to wait to buy until I have the full 15%. Aware of the 'bubble' / why are you in a rush arguments...

Thanks
:beer:

ComputeAngel

It depends upon the product. Normally you can overpay 10%

Paully232000

I guess it depends on the specifics of your mortgage, as with my mortgage I am able to pay off up to 10% of the outstanding balance every year above and beyond the monthly payments I am contractually bound to pay.

tchester

Sounds like it's pretty common but depends on the provider. Thanks for the info!

Mrs_Rachel_Trelfa

tchester wrote: »

Hi all,

First of all apologies if this has been asked elsewhere; I couldn't see anything via search.

My question is this: can you pay off a lump sum on your mortgage within the first year or two of taking one out, and will it help lower your repayments (presuming interest rates stay the same)?

Remember that overpaying the lump sum (assuming 10% and that its won't effect ERC's and compiles with the mortgage terms and conditions) and keeping the repayments the same and reducing the term will increase your equity AND save you money in interest.

Overpaying and reducing the monthly repayment and keeping the term the same will mean you only increase your equity.

moneyshoe

Yes - just make sure you take out a mortgage which allows overpayments. We are with Nationwide who allow up to 10% per year whilst we are still within our 5 year fix. We moved 5 months ago and have just paid an extra £2000 into our mortgage as I received some back pay and savings rates are so miserable at the moment. Sadly this comes nowhere nera the 10% overpayment we are allowed!