Advice on overpayments & timing? Bank of Ireland

willberine

I intend to start overpaying my mortgage and would like some advice on how best to time it so that I maximise the savings.

Regular overpayments are made by standing order and the amount owed and interest I need to pay is calculated monthly on the 1st of the month after the month in which the overpayment is made, my current normal payments come out on 20th of each month.

Lump sum payments are calculated daily on the day after the lump sum is received, lump sums can only be paid by cheque.

So am I right in thinking it's best to set up a standing order for the overpayment on say the 25th of each month so that it reaches the account in time for calculation on the 1st of the following month?

Or do I stick the amount I can overpay into a savings account and then pay off a lump sum each year or every 3 months for example? Would it make any difference to the balance owed?

Also, the Bank of Ireland site states this regarding monthly overpayments:

'A regular overpayment will appear on your mortgage account as a credit until the amount overpaid is equal to, or more than, two of your normal monthly mortgage payments. At this stage we will recalculate your outstanding mortgage balance and adjust your normal monthly payment – both of which will be reduced.'

I am assuming that this only happens once and from then on the calculation is made from the 1st of the month after the overpayment as mentioned above......

I am on a 3 years fixed term which has just started after remortgaging from Natwest in order to gain a better rate. My aim is to reach 60% LTV at the end of the 3 year term to enable me to get an even better rate.

Thanks for any help!

Thanks

Thrugelmir

Make the overpayments as soon as you are able. Interest is calculated on a daily basis and charged monthly. So every day does count.

If you use online banking set up a faster payment. Then every month on payday make a transfer directly to your mortgage account for the amount you wish to overpay.

martinsurrey

I have a BOI mortgage (through the post office) and I make my lump sum overpayments on the phone by debit card (Lucky enough to have the 10% for the year in advance), simples.

willberine

Thanks for your responses guys.

There is also a stipulation that each payment must be a minimum of £500. So it looks like i'm best off saving the overpayments into a savings account and paying off ASAP once i've got more than £500 so I will be paying £800 overpayment every 2 months.....

Rollinghills

I am not 100% sure from what you said that the overpayments will reduce your balance on the day they are received or from the 1st of the month after they are received. Perhaps call the lender to confirm, otherwise I'd make payments on the 25th as you said not to loose interest you could be getting otherwise.

willberine

Rollinghills wrote: »

I am not 100% sure from what you said that the overpayments will reduce your balance on the day they are received or from the 1st of the month after they are received. Perhaps call the lender to confirm, otherwise I'd make payments on the 25th as you said not to loose interest you could be getting otherwise.

If I pay it monthly then it is from the 1st of the month after the month in which the payment was made.

If I pay lump sum it is done the day after it is received.

As I cannot afford £500 a month I will have to lump sum £800 every 2 months which will make the interest and amount owed reduce on the day after the payment is received.....

stroosioo

Hello Everyone,

Bit of advise needed, please.

Just phoned BOI, wanted to overpay my mortgage by 2k but wanted them to reduce the term rather than the outstanding balance and the the representative of BOI told me that it would cost me £60 to do it.

Is it right?

Thanks a lot.