Overpayments during ERC period

Jonny88

Hi,

I wondered if anybody could help me with this, I am wanting to pay off my mortgage and start saving again as quickly as I can. I am on my first mortgage and it is as follows:

5 Year fixed @ 3.1% (expires 2018)
Current ERC is 4% (declines by 1% each year, next decrease is sept 2015)
11y9m remain
£35,000 remaining (approx)

I am allowed to make an overpayment of 10% of the remaining amount with no ERC once a year.

I have roughly 10k saved to overpay and I can afford to make direct debit overpayments of between £50-£100 a month. I currently save seperatly and do not want to change this.

My savings are kept mostly in an isa with a little always in an instant access so I can get to them when I need a few pounds at the end of the month or for a big purchase. The isa is 1.75%

Is it worth making the overpayments regardless of the "4%" charge? My view is that as the interest rate is 3.1% I am only really paying a 0.9% charge over the whole year, and then in subsequent years I will save 3.1% on that lump sum overpayment, meaning I will save long term? Also because I can pay 10% charge free it is only £6,500 I will be paying a charge on, so it works out as only a few hundred pounds I loose as a charge, but then gain that back before the end of the 5year fix in interest saved.

I havent done any sums on monthly direct debit overpayments, but I thought that the theory would be the same - the "charge" would only really be 0.9%

Any advice would be great, cheers