Annual overpayments

TroubleOverBridgewater

I want to start making overpayments on my mortgage. They calculate the interest annually, so I want to make a one-off overpayment every year just before they make the calculation. But they said they'd only accept overpayments made monthly. Can they do that? I'm worried my overpayments won't be as efficient as they could be.

They say they can change it to be calculated daily, but it will cost £70 - is it worth it?

MortgagesInc

It depends really on how big your mortgage is, and how much you want to overpay as to whether the £70 is good value or not - what are the figures you're looking at?

TroubleOverBridgewater

Mortgage is £101k, current payments are about £660, and I was thinking of upping them to £700.

Dan_Collins_2

TroubleOverBridgewater wrote: »

Mortgage is £101k, current payments are about £660, and I was thinking of upping them to £700.

Are you with C&G? Double check your mortgage offer. Most lenders allow 10% per annum. As long as you dont pay more than this you will not be hit with a penalty. Also an overpayment is different to a capital repayment, call back using the different terminoligy!

MortgagesInc

One way round it would be to amend the term of the mortgage to make your repayments £700. It still doesn't really help though, as like you say the lender charges annual interest - I would take quite some time to recoup the £70 you would have to pay to amend this. Do you know what rate you're paying - it may even be worth remortgaging to a daily interest lender

TroubleOverBridgewater

Dan_Collins wrote: »

Are you with C&G? Double check your mortgage offer. Most lenders allow 10% per annum. As long as you dont pay more than this you will not be hit with a penalty. Also an overpayment is different to a capital repayment, call back using the different terminoligy!

I'm with the Chelsea - they'll let me make overpayments of up to 20% of my monthly payment (I can't stretch to that much) so they're not penalising me but I will have to pay if I want to change the way they calculate the interest.

I'm about four months in to a two-year fixed interest of 5.02%.

TroubleOverBridgewater

Dan_Collins wrote: »

. Also an overpayment is different to a capital repayment, call back using the different terminoligy!

By the way, what is the difference between an overpayment and a capital repayment? Is it just the fact that a capital repayment is a one-off?

Dan_Collins_2

TroubleOverBridgewater wrote: »

By the way, what is the difference between an overpayment and a capital repayment? Is it just the fact that a capital repayment is a one-off?

Its different with different lenders, but normal an over payment is a monthly over payment a capital repayment is a one off and normally over £500 or £1000.

See nationwide allow £500 per month over payments with no capital repayments allowed (Unless under £500 overpaid that month), other lenders take C&G for example will allow 10% per annum.

Your rate is very good so I would not be that worried, stick you money in a saving account or ISA and then pay the lump off when you remortgage in two years.