Would we get a mortgage?

velocity_girl

Tigie wrote: »

Can you explain to me how I could do this? If I had a mortgage of £135,000 over 25 years @3% that would be £640pcm so extra 10% is £64, so over 25 years would save me about £8000 and only reduce my mortgage by 3 years.
If I do a 12 year mortgage I would save about £31000 in interest without even overpaying, or am I working this out all wrong?
Thanks

Most mortgages allow overpayment of 10% of mortgage balance each year, not 10% of contractual monthly repayment. I.e in year one, you can overpay by £13,500 in addition to your contractual repayments.

Tigie

velocity_girl wrote: »

Most mortgages allow overpayment of 10% of mortgage balance each year, not 10% of contractual monthly repayment. I.e in year one, you can overpay by £13,500 in addition to your contractual repayments.

Great bit of info, thanks! I didn't realize this only thought it was percentage of monthly payment.
Makes things look a lot more positive now :j

Caz3121

some really good threads over here re overpaying and reducing term
http://forums.moneysavingexpert.com/forumdisplay.php?f=98
gives you more flexibility being able to overpay when you can but paying the normal payment at times you may have other priorities

Tigie

Thanks very much Caz, will have a good read through all of those!

kingstreet

Tigie wrote: »

Great bit of info, thanks! I didn't realize this only thought it was percentage of monthly payment

Look at section 11 of any key facts illustration and it will tell you what that particular product allows.

Tigie

Thanks kingstreet

Soot2006

We originally took our mortgage over 30 yrs on the lowest rate they would give us (we had very little credit history although we had a high deposit). We overpaid 5-10% per year (depending on what we had available!) for the first 5 years. Now the loan has 25 years to run so contracted monthly repayments are low but we still throw overpayments at it most months. So we are chipping away steadily but have some leeway in our disposable income when needed; e.g. new driveway last summer, new guttering/soffits/fascias this season ... We reduce the overpayments to save for other house-maintenance things. OK so will take little longer to pay off but means we are financially comfortable when we could easily have committed ourselves to a higher contracted monthly payments and been less comfortable. If you are young enough to have some time to play with then use it wisely!