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Starting overpaying mortgage

edited 11 April 2016 at 5:32PM in Mortgage-Free Wannabe
9 replies 1K views
Dragon_LilyDragon_Lily Forumite
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edited 11 April 2016 at 5:32PM in Mortgage-Free Wannabe
I'm wanting to start to over pay (£100 per mth) on my mortgage of £44,233 but am a little confused about which account the payment would be paid. My mortgage is a standard repayment split into 2 sub accounts. One is the interest account at the moment this is £3,322. The other account is the main mortgage amount of £40,911.

My query is if I over pay will the payment be split between the two sub accounts or just taken off the main mortgage? What do other people do when overpaying? I'm with the Halifax if that helps.


Any advice much appreciated :)


DL
:staradmin Star from Sue-UU


3 - 6 Emergency fund #24 £1815 (63%) Target £3,000
SPC14 #57
SPC13 £114.08
SPC12 £215
SPC11 £183
SPC10 £209

Replies

  • LuckyinlifeLuckyinlife Forumite
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    Hi dragon is there interest on the 2 accounts ? whats the interest rates ?

    i have a sub account 2 but one has no interest on it so i just put it all off my mortgage :]
    Mortgage--- [STRIKE]£67700 March 15[/STRIKE] [STRIKE]£65221 April 15[/STRIKE] [STRIKE]£64983 July 15[/STRIKE] [STRIKE]£64780 sept 15[/STRIKE] Remortgage [STRIKE]£67295 oct 15[/STRIKE] [STRIKE]£66599 Nov 15[/STRIKE] [STRIKE]£65878.73 Dec 15[/STRIKE][STRIKE] £64834 1st Jan 16[/STRIKE] [STRIKE]Feb 16 £64,511.89[/STRIKE][STRIKE] March 16 £64,056.40[/STRIKE] [STRIKE]April 16 £62550[/STRIKE] [STRIKE]May 16 £62,396.20[/STRIKE] Feb 17 £60.800
    Emergency fund 23k
  • Dragon_LilyDragon_Lily Forumite
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    Hi Luckyinlife

    Thanks for replying. Both sub accounts have interest paid at the end of each month. My mortgage rate is fixed at 2.69% until Jan 2018. My mortgage payment is split between the two acts - £28 and £392 respectively.
    :staradmin Star from Sue-UU


    3 - 6 Emergency fund #24 £1815 (63%) Target £3,000
    SPC14 #57
    SPC13 £114.08
    SPC12 £215
    SPC11 £183
    SPC10 £209
  • Lotti1982Lotti1982 Forumite
    153 Posts
    As your with Halifax (like me) it will be split in the same percentage as your regular payment unless you contact them and instruct them otherwise. If the interest rates are the same that's fine but it's worth checking as mines split into three sub accounts, two have the same interest but the third is interest free.
    Planning to be debt free by 11/20. MFW Jan 2028 - [STRIKE]86700[/STRIKE] [STRIKE]83057.20[/STRIKE]
    [STRIKE]81629.13[/STRIKE] 78761.29 mortgage should end August 2045 now 04/2041
  • User1489User1489 Forumite
    400 Posts
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    Bad financial advice, but I paid off my 0% sub-account just because I could kill it off in one hit and then I could focus on the mortgage. Not sure why I'm admitting to that but it felt good at the time haha
    Baby Step 1 - £1k Emergency Fund - COMPLETE
    Baby Step 2 - Pay off all debts except the Mortgage - £9,326 to go
    Baby Step 3 - Save 6 months of expenses into full Emergency Fund - £4,300 to go

    Baby Step 4 - Put 15% into Pension
    Baby Step 6 - Pay off the Mortgage early
    Baby Step 7 - Live like no-one else :D
  • Dragon_LilyDragon_Lily Forumite
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    Sixth Anniversary 100 Posts Combo Breaker Photogenic
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    Thanks Lotti


    I've checked and both sub accounts have the same interest rate 2.69%.


    I'll be over paying £100 most months from the end of this month before the interest is charged to the account (at the end of each month). As I have a online account it will be easy to transfer the money.


    It feels good to be starting to reduce the amount left. My mortgage allows overpayment up to 10% of the balance per year but I won't be anywhere near that!

    At the moment I have 10 yrs & 10 mths left on the mortgage. I'm hoping by Jan 2018 when my present fixed rate is up I can reduce the term to around 6/7 years with another fixed rate deal but not too high a monthly payment. :D
    :staradmin Star from Sue-UU


    3 - 6 Emergency fund #24 £1815 (63%) Target £3,000
    SPC14 #57
    SPC13 £114.08
    SPC12 £215
    SPC11 £183
    SPC10 £209
  • Secret_Saving_SquirrelSecret_Saving_Squirrel Forumite
    4.1K Posts
    Mortgage-free Glee!
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    I am sorry that I can't help with the technical questions, but very good luck on your journey!
    Paid off mortgage nine years early in 2013. Now picking and choosing our work to fit in with the rest of our lives!
    Still thrifty though, after all these years:D
  • edited 15 April 2016 at 6:24PM
    User1489User1489 Forumite
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    edited 15 April 2016 at 6:24PM
    Actually, re-reading your thread as you have identical rates it maybe is worthwhile repaying the smaller one first where possible and the reason is this;

    If they are in two separate accounts, do they both have the same term? If not, you may be charged to remortgage them separately, doubling the admin costs of the product fee.

    I would check whether that is the case - if the terms are different, then it may well be - if the terms are the same then check with your bank.

    Killing off the smaller one first would mean you would only ever have to remortgage one account and hence pay one set of remortgage costs.

    If your bank is splitting your regular mortgage payments proportionately then you can ask them to pour more into one sub account - maybe all - and kill it first. And you can make overpayments and ask for them to be allocated to one sub account too.

    Hope that helps,

    Rasputin
    Man v Mortgage
    Baby Step 1 - £1k Emergency Fund - COMPLETE
    Baby Step 2 - Pay off all debts except the Mortgage - £9,326 to go
    Baby Step 3 - Save 6 months of expenses into full Emergency Fund - £4,300 to go

    Baby Step 4 - Put 15% into Pension
    Baby Step 6 - Pay off the Mortgage early
    Baby Step 7 - Live like no-one else :D
  • cat04cat04 Forumite
    644 Posts
    Part of the Furniture
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    Hi, we bank and have our mortgage with Halifax and it's all linked online. I've just started over-paying and found the info about OPing online on the mortgage part. When making OPs, unless you specify which sub account to pay they will pay it off both in the same proportions your monthly mortgage payment is paid. Or you can specify by adding 01 02 etc to the end of the ref or account number and any OPs will go off that sub account only. You'll need to check the details as only less than a month later I can't remember exactly!!

    If you have access to your accounts online it was really straight forward as all the info was there. I did a £1 OP to start with to make sure I'd set it up right in the first place though just to be on the safe side :rotfl:
    Extra savings aim for 2020 £4,000 £0/£4,000
    Original MF date Feb 2025. Currently Feb 2030:eek: Aiming for Jan 2025 :T
    Mortgage at [STRIKE]10/19 - £47,200[/STRIKE] 11/19 - £46,615
    :heart:My girls keep me going:heart:
  • Dragon_LilyDragon_Lily Forumite
    288 Posts
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    Thanks, Rasputin, Cat

    You've given me some extra info to think about. If I remember correctly both accounts are for the same term and interest rate. I'll check to see if I can pay off just one account instead of splitting the over payment between both accounts. £100 isn't much but every little helps! :)
    :staradmin Star from Sue-UU


    3 - 6 Emergency fund #24 £1815 (63%) Target £3,000
    SPC14 #57
    SPC13 £114.08
    SPC12 £215
    SPC11 £183
    SPC10 £209
This discussion has been closed.