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Overpayments to reduce payments and not term.

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Hi- was just wondering if there's any flaw in my tactic.

We are about to sign for a house.

We are paying 1220 mortgage a month(fixed for 5) and the mortgage is 27 years

If we over pay a lot in the first few months and we keep the term the same would I get the following benefits.

- less interest over term.
- reduced monthly payments so when I get income protection to cover mortgage I will need to cover less. So it de risks me going forward?

Comments

  • glentoran99
    glentoran99 Posts: 5,825 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker Debt-free and Proud!
    mrbg07546 wrote: »
    Hi- was just wondering if there's any flaw in my tactic.

    We are about to sign for a house.

    We are paying 1220 mortgage a month(fixed for 5) and the mortgage is 27 years

    If we over pay a lot in the first few months and we keep the term the same would I get the following benefits.

    - less interest over term.
    - reduced monthly payments so when I get income protection to cover mortgage I will need to cover less. So it de risks me going forward?



    Are you able to overpay enough to make a difference? most fixed deals have a maximum overpayment
  • mrbg07546
    mrbg07546 Posts: 290 Forumite
    Part of the Furniture 100 Posts Combo Breaker
    Nationwide overpayment? 10%
  • mrbg07546
    mrbg07546 Posts: 290 Forumite
    Part of the Furniture 100 Posts Combo Breaker
    mrbg07546 wrote: »
    Nationwide overpayment? 10%

    Is it 10% a year?


    So if mortgage is 100k you can pay 10k over lament per year??
  • KFW
    KFW Posts: 29 Forumite
    Part of the Furniture 10 Posts
    Hi,

    I believe its 10% of the initial borrowed amount per mortgage year. Called them on the helpline a few days ago

    KFW
  • mrbg07546
    mrbg07546 Posts: 290 Forumite
    Part of the Furniture 100 Posts Combo Breaker
    So that is pretty generous and could make a big difference I guess??
  • A_Frayed_Knot
    A_Frayed_Knot Posts: 3,308 Forumite
    Ninth Anniversary 1,000 Posts Name Dropper Photogenic
    KFW wrote: »
    Hi,

    I believe its 10% of the initial borrowed amount per mortgage year. Called them on the helpline a few days ago

    KFW


    H@lif@x is 10% of balance at beginning of each year.
    Always have 00.00 at the end of your mortgage and one day it will all be 0's :dance:
    MF[STRIKE] March 2030[/STRIKE] Yes that does say 2030 :eek: Mortgage Free 21.12.18 _party_
    Now a Part Timer from 27.10.19
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