Small monthly overpayments

Dan-1987

I'm looking for a bit of advice,maybe from those who do similar-In the not too distant future we'd like to start making small mortgage overpayments on a monthly basis,by small I mean maybe £100 extra each month.

we are able to overpay a certain amount each year on our mortgage so no probs there,I just know when I've overpayed certain things in the past I've sometimes been advised to pay 1 larger amount less often,ie save up for 6 months then pay a chunk off as opposed to smaller more regular amounts,could this be the case here? Definitely for us the most suitable would be to pay the regular small amounts on a monthly basis.

Does anyone do this/similar to this and have any advice? Maybe an overview of just how much difference these extra payments make?

Thanks in advance

Savingdad

To find out the difference your monthly overpayments will make plug your figures into the overpayments calculator on this site.
The best way to pay your overpaymrnts depends on your morgage rules, if they are taken off the capital immediately and your interest calculated daily then pay off as soon as possible, if your interest is added yearly it may be better saving in a high interest current account and paying off a lump sum
http://www.moneysavingexpert.com/mortgages/mortgage-overpayment-calculator
Link to overpayment calculator added

Thrugelmir

Majority of lenders calculate interest daily and charge it monthly. Therefore make overpayments as soon as you are able to. Savings initially will be small but over time they'll compound and grow.

Savingdad

Just plugged my figures in and overpaying by the £350 a month I do will save me £5367 and shave 8years 5 months off the morgage.
Without the overpayments in 6 years I will owe £32000
With them I will owe £4999

dimbo61

Overpay whatever you can afford each month when you get paid.

getmore4less

savingdad wrote: »

Just plugged my figures in and overpaying by the £350 a month I do will save me £5367 and shave 8years 5 months off the morgage.
Without the overpayments in 6 years I will owe £32000
With them I will owe £4999

Double payments have quite a significant effect.

CathA

I've just started overpaying £15 per month, just by looking at my direct debits and cancelling a few things here and there. It will knock about 6 months off my mortgage, admittedly it's only a small mortgage. At the end of each month, I'll see how much is left in the 'bills' account, divide it in half and add that to it. Small amounts really add up so do it!

anna42hmr

Dan-1987 wrote: »

I'm looking for a bit of advice,maybe from those who do similar-In the not too distant future we'd like to start making small mortgage overpayments on a monthly basis,by small I mean maybe £100 extra each month.

we are able to overpay a certain amount each year on our mortgage so no probs there,I just know when I've overpayed certain things in the past I've sometimes been advised to pay 1 larger amount less often,ie save up for 6 months then pay a chunk off as opposed to smaller more regular amounts,could this be the case here? Definitely for us the most suitable would be to pay the regular small amounts on a monthly basis.

Does anyone do this/similar to this and have any advice? Maybe an overview of just how much difference these extra payments make?

Thanks in advance

Don't let only small amounts put you off, as every little helps and will reduce the interest you pay overall, even a small amount can make a difference if you think about the length of a mortgage overall.

If you have a set idea of how much you want to pay, an easier way to pay may be to see if your mortgage co has the facility to increase your direct debit by that amount.

I have asked TSB to increase mine by £250 per month for the overpayments and if down the line i want to increase, decrease or stop it altogether they will change it for me (just need to phone them up or send a new overpayment form to them via fax/post (which is available on their website).

I find this is a good way if you might otherwise spend the money or be tempted to use it for other things if it sits in an account.

There is nothing stopping you asking them to increase it by a smaller amount than you think you can afford and then putting the rest aside to do manual overpayments down the line as well (i.e if you think you can afford £100 per month but are worried that increasing the direct debit could be inflexible for you, you could always do the direct debit by £50 and then put the other £50 aside and pay that off as and when).

jodles16

As everyone has said even tiny overpayments make a difference and £100 will make a big difference especially over time, if your interested in like minded folk come on over the the Mortgage Free Wannabe boards, you will see all sorts of mortgages and overpayments and it can be inspirational! With my mortgage I can set up set overpayments every month and sometimes I will then ring up to make another if I have some extra to pay. Our mortgage calculates daily interest, so the sooner I make an overpayment the better.

Best of luck,

Jodles

dano17439

Many years ago I started off overpaying by £100 per month. What with payrises, freeing up other money by paying of debts, i'm now up to overpaying £863 a month. It can be done, just requires commitment to use the spare money against your mortgage instead of frittering away when it becomes available