overpaying mortgage

adjusy

Hi,

I'm a bit confused with how much I would be saving if I overpaid on my mortgage. If I use the MSE overpayment calculator with the following details:

£55,000 mortgage, 33 years, 2.44% interest, overpay £200 per month.

After 2 years I would have a balance of £47,863, instead of £52,777 - a saving of £4,914. However, it would have cost me £4,800 (£200 x 24) to make about £100 of savings? Is this right or am I missing something obvious?

Thanks for any help!

glentoran99

adjusy wrote: »

Hi,

I'm a bit confused with how much I would be saving if I overpaid on my mortgage. If I use the MSE overpayment calculator with the following details:

£55,000 mortgage, 33 years, 2.44% interest, overpay £200 per month.

After 2 years I would have a balance of £47,863, instead of £52,777 - a saving of £4,914. However, it would have cost me £4,800 (£200 x 24) to make about £100 of savings? Is this right or am I missing something obvious?

Thanks for any help!

What about the savings you are making on interest over the rest of the term?

Thrugelmir

adjusy wrote: »

After 2 years I would have a balance of £47,863, instead of £52,777 - a saving of £4,914. However, it would have cost me £4,800 (£200 x 24) to make about £100 of savings? Is this right or am I missing something obvious?

What do you save over the following 31 years ?

adjusy

"If you regularly overpay £200, you'd be mortgage free 19 years and 7 months earlier. Your total payment over this period would be £64,516."

Which makes sense, I would be mortgage free after 14 years instead of 33, but I plan on moving after 2 years so those figures are not that relevant to me. I was curious of the savings after 2 years specifically, should I not be using this calculator?

glentoran99

adjusy wrote: »

"If you regularly overpay £200, you'd be mortgage free 19 years and 7 months earlier. Your total payment over this period would be £64,516."

Which makes sense, I would be mortgage free after 14 years instead of 33, but I plan on moving after 2 years so those figures are not that relevant to me. I was curious of the savings after 2 years specifically, should I not be using this calculator?

Whether you are moving or not you are still going to owe less than you would have had you not overpayed, so your interest payments would be less on the new mortgage

adjusy

Very good point. Thank you for your help! I wasn't sure whether to overpay or not but after you clarifying I definitely will now, thanks!

getmore4less

£200pm over 2 years average £2400 @ 2.44% 2y == £117