Mortgage Overpayments

FreddieFrugal

Also just for anyone looking, the way I posted those figures is slightly misleading.

You see, while you may be overpaying, once your overpayment limit was reached (assuming you pay in full) you're back to saving again and gaining interest on your savings. So you would in fact have some extra money from that interest not accounted for in my figures.

Also I stopped it at 48 months. But at 49 months there would be another overpayment due that would already have been saved up for.

So when the SAVER not overpayer, uses their savings to pay off big chunk of mortgage and end up with £30,839.76 left over.

The next month the ANNUAL OVERPAYER would also spend another £10,000 on the mortgage bringing it down to £31,259.79

If you do in fact take into account the additional interest that the overpayer will have gained every month from saving up his £10,000 each year, which would be £1,372 over the 4 years:

£29,887.79

(take the next months savings for the SAVER into account to make it fair)

So at 49 months (after end of fix) the balances are:

£29,887.79 OVERPAYER VS SAVER £30,006.43

Both could finish paying off their mortgage at a similar time from that point onwards.

So in fact the difference is small. So it very much depends on the individuals savings and mortgage interest rate as to which is going to work out better for them.