Can we? Should we?? Think we might just bloody well try!

martin2345uk

Okay, so we got a mortgage last August, for £174,000 at a fixed rate for 2 years of 4,1%.

Regular payments (from our join a/c) are £891.

Now, according to the terms of our HSBC mortgage we can overpay during the fixed period by 20% of the monthly amount which comes to £178, and according to the MSE calculator, this alone would bring the term down to 20 years from now, rather than 29, which psychologically is a big difference.

I believe we can afford £178 without putting ourselves on the breadline, but a couple of practical questions if I may..?

-Do people usually set up a standing order, or make manual payments?

-Do the lenders actually reduce the term when you overpay, or just reduce the amount you pay per month, or can you choose?


Sorry if they are silly questions... :-/

It's an exciting thought either way, just need to get OH on board...

flashg67

Every lender may be different. With Nationwide, I set up a standing order to make sure I wasn't tempted no miss a month (though of course you can if you need to)


My normal payments stayed the same, te balnce showed as reduced but the overpayments also showed in a separate 'pot'. Nationwide say I can 'withdraw' these overpayments in the future if I want.

midnight_child

I am on a similar mortgage to you, with the H$BC.

I initially thought the same thing and set up a standing order and got charged ERC. Unfortunately (if you branch is anything like mine) you need to go in and speak to someone, as you will need them to increase your standard monthly direct debit.

Not sure exactly what your terms are but in my case the ERC is a sliding scale of 1% per year left on fixed term. I am fortunatle that I can now afford to overpay beyond my 20% monthly payment, and I set up a standing order to do this. I have calculated that the extra saving on interest is more than the ERC.

MC

martin2345uk

midnight_child wrote: »

I am on a similar mortgage to you, with the H$BC.

I initially thought the same thing and set up a standing order and got charged ERC. Unfortunately (if you branch is anything like mine) you need to go in and speak to someone, as you will need them to increase your standard monthly direct debit.

Not sure exactly what your terms are but in my case the ERC is a sliding scale of 1% per year left on fixed term. I am fortunatle that I can now afford to overpay beyond my 20% monthly payment, and I set up a standing order to do this. I have calculated that the extra saving on interest is more than the ERC.

MC

You got charged the ERC even though your initial repayments were below the ERC threshold? How can they do that!? Hmmm, I might have known it wouldn't be a straightforward as I hoped! :eek: