mortgage overpayments question

lucylema

Just a quick question..


I have been making mortgage overpayments for a year now. I pay the same payment as the mortgage itself and I have noticed the mortgage going down. however, I wondered with regards to interest etc, is it better to overpay on a monthly basis or a weekly basis?

getmore4less

Pay as soon as you have the money.

There may be a more optimum time here you keep the money in savings but the difference will be tiny due to savings rates being so low, eg for £500 net saving rate 2.5% the max you can lose £1 if your mortgage interest is calculated monthly.

jamesd

Most modern mortgages have daily interest calculation so the sooner you pay the sooner you start to save interest.

This doesn't change the general fact that unless you have an unusually high interest rate you're making yourself poorer than you could be buy overpaying on your mortgage instead of investing the money.

JCL

jamesd wrote: »

This doesn't change the general fact that unless you have an unusually high interest rate you're making yourself poorer than you could be buy overpaying on your mortgage instead of investing the money.

You ignore the risk part of that equation though. Getting rid of all your debt as soon as you can will remove the risks that life throws up like job loss or poor health. Can't say its a fact that you're making yourself poorer by overpaying. What you should do is overpay as much as you can and invest in your retirement savings. Do both and you're well set.