Questions re Overpayments????

Coffee_Cup

I am a newbie so forgive me for asking what will seems like obvious questions to all you seasoned overpayers.

1. My mortgage interest is calculated on the 1st day of the month so my question then is it okay for me to stick my overpayments for the month into my bank account (have set one up specifically for overpayments) and then once a month make an online payment or post a cheque? I would imagine if it were calculated daily then I would be better to pay as and when I have spare cash?

2. My mortage allows me to pay 10% overpayments per year and anything over that is charged at 3% so if I pay an extra, say £10000, the charge would be £300. Is that right? And if that is right then is it still worth doing. I am thinking yes??

3. I am doing a rate switch as of 1st Sept so am I correct in saying if I make overpayments before then they wont count in my 10% for this year.

4. I have noticed some people in their siggies say how much the daily interest or monthly interest on their mortgage is. How do you work that out?

As I say, sorry, humour me, I am a newbie :beer:

Loving reading all these diaries too btw.

TBagpuss

check your mortgage. Even though the interest is only shown on your statement each month, it would be quite unusual to have it calculated monthly, it may well be calculated on a daily rate.

If you make payments of more than 10% in the year then yes, the ERP on a £10,000 overpayment would be £300. whether it is still worth doing depends on what your mortgage interest rate is and what other options you have - you *might* find it is better to wait and to pay the extra into an ISA.

In relation to your rate change you would need to check the T&Cs. I think in most cases it would effectively be a re-mortgage so you would start over, and then any rules which applied to the new mortgage would take effect.Double check that the year runs from the date you take out the produce not from Jan-Jan or April to April, too.

getmore4less

Are you sure it is actually calculated on the 1st.

Many are daily interest added monthly.

Coffee_Cup

TBagpuss wrote: »

check your mortgage. Even though the interest is only shown on your statement each month, it would be quite unusual to have it calculated monthly, it may well be calculated on a daily rate.

If you make payments of more than 10% in the year then yes, the ERP on a £10,000 overpayment would be £300. whether it is still worth doing depends on what your mortgage interest rate is and what other options you have - you *might* find it is better to wait and to pay the extra into an ISA.

In relation to your rate change you would need to check the T&Cs. I think in most cases it would effectively be a re-mortgage so you would start over, and then any rules which applied to the new mortgage would take effect.Double check that the year runs from the date you take out the produce not from Jan-Jan or April to April, too.

They have just phoned me so I double checked and it is calculated on the 1st of the month. Seems odd to me. My ISA has terrible rates but should I get a better one I will reassess then and lets face it I am unlikely to get over 10% a year. Possible but not all that likely. Overpayment year will run Sept - Sept and they have just confirmed any overpayment I make before 1st Sept will not count in my 10% as it is as you say a start over so thats good. I dont have a whole lot of money to throw at it just now but I will scrape some from somewhere. Thank you:)

Coffee_Cup

getmore4less wrote: »

Are you sure it is actually calculated on the 1st.

Many are daily interest added monthly.

Yes, I just got off the phone with them and it is on the 1st of the month. Seems odd doesnt it :mad:

London18

Hi CoffeeCup,








Do check the mortgage small print about the OP year as I was initially told the year went from date of new rate fix (1 Sept in my case). But the paperwork clearly says its 10% of the balance "at start of calendar year".






Not sure what that means for Sept -Dec 2014 then, but presumably I could overpay 10% of the entire balance in those 4 months and then 10% again next year based on the 1 Jan 2015 balance.














(Not really an issue of course, it's hardly like I can afford to do either!)

Coffee_Cup

London18 wrote: »

Hi CoffeeCup,








Do check the mortgage small print about the OP year as I was initially told the year went from date of new rate fix (1 Sept in my case). But the paperwork clearly says its 10% of the balance "at start of calendar year".






Not sure what that means for Sept -Dec 2014 then, but presumably I could overpay 10% of the entire balance in those 4 months and then 10% again next year based on the 1 Jan 2015 balance.














(Not really an issue of course, it's hardly like I can afford to do either!)

Thanks London. I will check the paperwork when it arrives tomorrow. Just checking my calculations and I would have to overpay by £18k until it kicks in so in the average year that wont matter but the way Mr Cup is paid we sometimes get larger fees in (sometimes smaller too ).