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When do you overpay?

edited 30 November -1 at 1:00AM in Mortgage-Free Wannabe
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chelseabluechelseablue Forumite
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Part of the Furniture 1,000 Posts
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edited 30 November -1 at 1:00AM in Mortgage-Free Wannabe
I have a target of overpaying our mortgage this year by £500 every month.

I'm thinking it will be better to send the overpayment as soon as I get paid, then the money is gone and not sat in the bank saying "spend me, spend me!"

When do you all do your overpaying?

Replies

  • I over pay same day as mortgage come out as they take it as part of the mortgage payment. I applied to add on what hat I wanted to overpay and it comes out as one amount.
  • It all depends on how your interested is calculated, daily or yearly.

    Call your bank to check, if its daily, pay it in asap, if its yearly, maybe put it into a high interest account of some sort (if the % is higher) and pay it just before the interest is calculated.


    When ever the calulation takes place it's based on what you currently owe (obviously), so the quicker its in the sooner the calcualtions are based on a smaller amount (as I said previously for many mortgages this is daily).
  • edited 16 January 2017 at 9:17PM
    Rachel_PiersonRachel_Pierson Forumite
    75 Posts
    edited 16 January 2017 at 9:17PM
    I have a target of overpaying our mortgage this year by £500 every month.

    I'm thinking it will be better to send the overpayment as soon as I get paid, then the money is gone and not sat in the bank saying "spend me, spend me!"

    When do you all do your overpaying?

    In answer to your original question, I allocate money (including overpayments) right after payday. But I work a slightly different way to you...

    It may not be your thing if you don't have the self-discipline. But if your mortgage is less than 5%, you'd be crazy not to just put the 'overpayment' into a Regular Saver account instead, then use the savings + interest at the end of 12 months to pay off more than just putting the money into the mortgage every month would alone.

    Nationwide is doing one just now that allows you to save a maximum of £500 every month, to miss months, and to (bad point for you) withdraw money without closing the account completely. So the temptation is there to misuse it if you choose. But at the same time, it can act as an "emergency fund" for true emergencies; unlike if you put the cash into the mortgage, where you couldn't access it if heaven forbid something unexpected like sudden unemployment happened.

    I just opened a Flexclusive Regular Saver myself, for the same reason as you. I had to open a FlexDirect account first, which as it turns out pays 5% as well on up to £2500 for the first year. So that was a bonus. Lastly, unlike other current accounts, the FlexDirect doesn't have a minimum number of Direct Debits you need to set up to get the benefits mentioned. (You do need to pay in £1000 per month, but you can take it out again immediately.)

    Returning to your original question, if savings accounts or high interest current accounts aren't for you and you're determined to put the money directly into the mortgage, I'd probably wait until the end of the month if I were you. That way, you know that you really do have the money to spare that particular month. And will be right on the cusp of the next payday should the unexpected happen right after you've put that money somewhere you can't access it again!
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