Effect of overpayments

engineer_amy

So I got a good bonus/commission at Christmas, so decided to pay most of it towards the mortgage. Previously I had never made large overpayments, just a couple of hundred here and there, and this never had any effect on my direct debit, the amount paid always stayed the same. I could see my capital reducing and I was happy, and the proportion of capital to interest in my monthly payment was improving.

But I received a letter yesterday to say my direct debit was reducing from this month by £56 as a result of the large overpayment (only £3k). I was surprised! £56? I was expecting it only to go down a couple of quid. It's very encouraging, I'm going to set up a standing order to pay this £56 as a regular overpayment, in addition to whatever other bits and pieces of cash that I can spare.

I'm quite close to 75% ltv which is the next band down on interest rates my lender is offering on 5 year fixes so as soon as I get down to that and fix, my DD will be lower again and I can increase my overpayments! Amazing how it all adds up!

kitjos

Well done on the large OP!


Fantastic that it has reduced your payments by that amount. It's a real incentive to keep pushing when you see the result of an OP.


We are battling to reach 60% LTV - 75% is our next milestone but im trying to bypass it. There are awesome rate's for low LTV's.

Keep going for it .

jodles16

Thats fantastic well done on your OP! Its a good idea to just add the difference as a standard OP as it will add up!

It does get addictive this OPing!

Good luck,

Jodles

Cariad71

Yes it's a great motivator when you see how much you're saving! I use the 'my mortgage' app on my iphone. Really inspires me!

shangaijimmy

Can someone help me to work out exactly how much interest we are saving. We started at £163k and are currently on 4% interest. I'd like to know how to work out how much interest we'd save for each year we knock off the 30 year term.

jamesd

engineer_amy wrote: »

I'm quite close to 75% ltv which is the next band down on interest rates my lender is offering on 5 year fixes

How close? One useful trick to get there faster is to use a 0% for purchases credit card for normal spending and save or overpay the money you would have spent to reduce the LTV faster.

engineer_amy

jamesd wrote: »

How close? One useful trick to get there faster is to use a 0% for purchases credit card for normal spending and save or overpay the money you would have spent to reduce the LTV faster.

I'm at 77% (exactly 76.86%), its another £2325 to get me down to exactly 75%. I don't have any 0% cards at the moment, and wasn't keen on applying for a new one in case I was changing the mortgage over sooner - didn't want credit searches appearing on the file too close to applications.


however, think about it now I probably should get a 0% balance transfer card as im paying interest to Barclay card. the saved interest could go to my overpayments. It might be six months anyway before I swap the mortgage