10% overpayment on mortgage allowed each year

user15

Hi


If you are allowed to overpay the mortgage by 10% of the opening balance at 1st Jan of each year, is there any advantage of paying up to the full 10% each year ?
or can you say wait for 5 years, and then make the 10% overpayment with the obvious higher balance?

Cotta

user15 wrote: »

Hi


If you are allowed to overpay the mortgage by 10% of the opening balance at 1st Jan of each year, is there any advantage of paying up to the full 10% each year ?
or can you say wait for 5 years, and then make the 10% overpayment with the obvious higher balance?

The sooner the overpayment is made the less interest you pay.

[Deleted User]

No. That would be mad.

You will pay off much more, and pay much less interest, by paying 10% each year.

spadoosh

user15 wrote: »

Hi


If you are allowed to overpay the mortgage by 10% of the opening balance at 1st Jan of each year, is there any advantage of paying up to the full 10% each year ?
or can you say wait for 5 years, and then make the 10% overpayment with the obvious higher balance?

It reduces the balance of the mortgage quicker meaning (normally substantially) less cost in interest.

I dont get your last question.
Are you meaning dont put the money into the mortgage and then put in what you have saved in year 5? If youre going to put 10% in each year it will mean you have more than 10% in year 5. Ie you will be capped on the amount you can overpay in year 5 as it would be substantially more than the 10% over payment if it is made up of saving 10% in over payments every year.

Either way dont save it up and put it in a lump some. Pay off as much as you can as quick as you can without being charged.