Is it worth it????

nichart20

HiI have a fixed rate mortgage of £150k at 4.99% fixed for 5 years expires 31/10/11 I just wondered if making a extra £30-£50 per month would make a difference at all it would be a stretch but could budget to it if it will be worth it, any advice apprechiated Nicola

angelavdavis

Hi nicola.

Enter your figures on the overpayments calculator here to see for yourself what a difference it is likely to make, as you haven't provided the overall length of mortgage loan period. Ensure you check with your lender that you won't be penalised for overpaying.

mojo_jojo

According to the egg mortgage calculator, a £50 overpayment (assuming your mortgage is over a 25 year period) will save you £12,964.71 and knock 2 yrs 6 months off your mortgage.

livalicious

:T Good question nichart cos we were thinking of doing the same thing. We just received our offer of advance on a £154 800 mortgage, 5.7% interest, 2 yrs fixed on a 25 year term. We would like to make a £100 overpayment every month (and more nights in of course... ). Our offer states that we can make overpayments up to 5% of the loan amount a year, so i think we would be alright not to incur an ERC.

Thanks for the calculator link angeladavis, according to that we could be making a saving of £28 160 and knock 4 and half years off our term!

firesidemaid

welcome to some more MF wanabees.

once you discover these calculators, and the idea of overpaying, you will never look back.

as well as overpaying, when you come to arrange your mortgage again, you can paermanently increase the payment and decrease the term (we have gone from 28 to 17 years by overpaying £150 a month).

can you see your mortgage balance on online banking. also check with your lenders how your interest is calculated eg. daily, monthly or yearly. this depends how you save your money and when you overpay.

have a look through the previous threads on here for loads more hints and tips.

keeperbear

Any overpayment, no matter how small, will make a difference. £10, £20 or £30, £300, it doesn't matter what amount.

tsharp

I'm seriously looking at over paying.

Where do i get the account details for the mortgage, it must be similar to other bank and saving account numbers? Is it likely to be on my paperwork, or is it best to contact the lender?

What happens when you move and acquire a new mortgage, do you just start the process over again?

nichart20

wow it really does make a difference, im impressed the maximum we can over pay is £50 per month but im definitley putting the £50 per month in from now on. We had to get the mortgage over 30 years at the time but if we put £50 in every month from now it will take 3.7 years off. When we change mortagage over after 5 years we were wanting to change mortagage to 20 years and hopefully we can get a higher amount to overpay too knock more years off. yeh

Dithering_Dad

With such a low mortgage rate (4.99%) and fixed for over 5 years I would take maximum advantage of your low rate and pay the money into a cash ISA. NS&I (national savings) have an interest free cash ISA at 6.3% and you are not capped at £50 per month like your mortgage - handy for when you may have extra cash you'd like to put away.

The cash ISA is returning 1.4% more than your mortgage overpayments and would roughly be the equivalent of 1 month's overpayment (£50) for free.

Once your interest free period ends you can then withdraw the money from the ISA and pay it directly onto your mortgage, with the additional money included.

taka

Check out the "Should I pay off my mortgage?" article as it may help in your decision!

I have 2 loans so will overpay on the higher APR one but when this is paid off (less than 3 yrs hopefully) I'll look at putting money into an ISA instead of overpaying as at the moment its rate is above that on my main mortgage and I would not max out my ISA anyway then. Thats the plan anyway!!

I've put my loan details into www.whatsthecost.co.uk and saved them as a snowball as my overpayments will prob vary month to month and can keep an easy eye on my MF date using this!

Good luck!!

Bargain_Rzl

If you are a standard rate taxpayer you may also find that there are regular saver accounts (non-ISAs) which beat your mortgage rate, though I'm not sure what rates are out there at the moment. I'm currently saving in an ISA (Barclays at 6.5%) and a regular saver (Lloyds TSB, 8% which is 6.4% after tax).

My mortgage is at 4.89% Not fixed for as long as yours though!