Overpay on 5% fixed or wait until I move to 2.4% deal?

jiffajaffa

Morning all!

I'm due to come out of my 5% fixed in March and have my eye on a 2.4% variable to switch to.

My current payments are £450 a month and I overpay by £550 a month. I'm nowhere near the 10% limit on overpaying.

With the new deal unlimited overpayments are allowed. My monthly payments would be £350 a month so I could afford to overpay around 700 each month. Should I wait until I switch to the new deal to overpay or continue overpaying as normal? I thought I could save that 500 I've been paying in extra and use it to overpay on the lower interest rate?

I've tried working this out using overpayment calculators and got muddled!

shortcrust

You may well have thought of this already, but if your mortgage rate is going to be 2.4% there are more sensible things to do with your money than overpaying. That is unless you're already using every high interest paying current account and regular saver that's out there.

Thrugelmir

March 2017 is a long time away yet. Will the mortgage product still be available?

jiffajaffa

Thanks for your replies.

Shortcrust, that's a very good point. I had thought of saving the overpayment money in various different savings/current accounts but am worried that applying for several different current accounts may affect my credit score when I come to apply for the new mortgage in January (annoyingly I do not already bank with any of the providers who offer higher interest rates). I will do some more research around this I think.

I don't know for sure that the exact same product will still be available, but I think that I will be able to find a mortgage with a lower than 5% interest rate.

itsdagal

As interest is calculated daily, it would be best to carry on overpaying, otherwise you will just be accumulating interest at your current rate.


By then paying it later you will have accumulated interest you didn't need to.