Overpaying Mortgage

jue66

I currently have a part repayment and part interest only mortgage. I want to overpay by approximately £300 per month and the bank asked me do I want to pay it against the repayment part or the interest only part of my mortgage. Does anyone have any idea what I should do?
Thanks

Thrugelmir

What plans do you have to repay the interest only part?

Seanymph

are the rates different or the same?

dimbo61

If the Interest rate on both parts is the same I would pay it off the IO part and ask for the mortgage payment to remain static!
That way every time you overpay you are paying that little bit more!
The repayment WILL be paid in X number of years while the IO balance will remain the same until the end of the term :-(

cbrpaul

Jue66 I was in a similar position, a few years ago,

This may not suit everyone , and is my personal way of doing it , that I thought I would share.

What I decided to do was to go for a slightly longer period of mortgage term to keep repayments affordable, and chose a fixed for 5 years deal, yet I chose a repayment mortgage of the full loan, hence the slightly higher monthly repayments, that having part , repayment/interst and part interest/ endowment

This mortgage deal also allows over payments of any amount at any time

Don’t be misled by the longer mortgage term, as you will pay it off sooner no doubt.

So when my endowment matures in a few years time, I will use this as a payment off the loan total, bringing it down massively , but not paying it all off as yet.

However I will keep the monthly repayments the same, so will be massively over paying, along with continued payments to the mortgage that equalled my endowment monthly payments!!

However this option does mean initial slightly larger mortgage repayments as you’re paying off the total amount not the non endowment amount alone, along with your endowments payments also!!

I think of my endowment as a savings account that will be used to pay a lump sum off my mortgage.
I have calculated I can pay my mortgage off 7 years earlier with this method !!

jue66

I have a three endowments - all finishing at different times.

jue66

All same rate I think!

getmore4less

Overpay the repayment it reduces your contractual payment the most.