Mortgage overpayment advice needed

jakehill307

Hi,


We are currently at the start of a 2 year fix at 2.09% with Leeds Building Society and are allowed to overpay 10% of the total value each year.


I have worked out we can save enough each month to overpay 10% in a lump sum towards the end of the first year. With Leeds terms & conditions suggesting a lump sum is better as it adjust your interest instantly where smaller additional monthly payments do not.


My question is as its a fixed deal once we have made the overpayment will the monthly mortgage payment stay the same or drop? And if it was to stay the same would that then count towards the overpayments for the 2nd year or could we again overpay a 10% lump sum.


Thanks in advance, Jake.

kingstreet

It's usually 10% of the outstanding balance each year that can be repaid without penalty.

Reduced payment or reduced term you usually have to tell the lender how you want your overpayments treated.

xyz123

kingstreet wrote: »

Reduced payment or reduced term you usually have to tell the lender how you want your overpayments treated.

Op- Check with ur lander. Some (like post office/bank of Ireland one that we have) automatically reduce monthly payments. Reduction in terms requires £60 fee...

ViolaLass

On only 2% I wouldn't overpay, I'd fill up accounts with higher interest rates first.

jayII

Mine automatically reduces the payments, but it's free to reduce the term if I prefer this.

I'd also fill up high interest accounts first, rather than overpay.

getmore4less

jakehill307 wrote: »

Hi,


We are currently at the start of a 2 year fix at 2.09% with Leeds Building Society and are allowed to overpay 10% of the total value each year.


I have worked out we can save enough each month to overpay 10% in a lump sum towards the end of the first year. With Leeds terms & conditions suggesting a lump sum is better as it adjust your interest instantly where smaller additional monthly payments do not.


My question is as its a fixed deal once we have made the overpayment will the monthly mortgage payment stay the same or drop? And if it was to stay the same would that then count towards the overpayments for the 2nd year or could we again overpay a 10% lump sum.


Thanks in advance, Jake.

Are Leeds NOT daily interest?


If they are a genuine daily interest they should credit any payments immediately don't confuse reduce payment with reduce interest they do not mean the same thing.

getmore4less

web site says a mortgage could be annual interest with monthly payment

OR

daily interest with daily compounding.


if the later pay as soon as you have the cash

jakehill307

Thanks for all the help/advice guys!