Should I overpay before or after switching to a cheaper deal?

tubbsy

I was on a fixed rate mortgage for two years, which has just gone onto the standard variable rate. The provider (C&G) offered quite a good deal when we said we were looking to switch. At the same time, we want to overpay a chunk of our mortgage to reduce the overall amount and our payments.

C & G said we should pay off whatever we want to first, and then they will switch us to a better deal. I am faintly suspicious of them, and just wondered if anyone had any advice on whether to overpay now or wait until we're on a cheaper deal?

I'm assuming the penalties on the new deal will be the same as the old, as we're not switching provider. But i also figured there might be issues around interest etc. Also, are they likely to give you a better rate on a larger mortgage? If this is the case then presumably its better to keep the mortgage as it is, and get the new deal then repay?

All advice most gratefullly recieved!

Thanks

MortgagesInc

There may be restrictions on how much you can overpay on your new rate, so it may be best to do it now. On the flipside, some products do have minimum loan sizes, so make sure that it doesn't take it below that and mean you have to pay a higher rate.

Dan_Collins_2

tubbsy wrote: »

I was on a fixed rate mortgage for two years, which has just gone onto the standard variable rate. The provider (C&G) offered quite a good deal when we said we were looking to switch. At the same time, we want to overpay a chunk of our mortgage to reduce the overall amount and our payments.

C & G said we should pay off whatever we want to first, and then they will switch us to a better deal. I am faintly suspicious of them, and just wondered if anyone had any advice on whether to overpay now or wait until we're on a cheaper deal?

I'm assuming the penalties on the new deal will be the same as the old, as we're not switching provider. But i also figured there might be issues around interest etc. Also, are they likely to give you a better rate on a larger mortgage? If this is the case then presumably its better to keep the mortgage as it is, and get the new deal then repay?

All advice most gratefullly recieved!

Thanks

I think you have spent to much time thinking about this one. They will pay the amount off before they switch. When they switch they switch it to the lower amount and pay your chunk off. If its less than 10% in most C&G mortgages no penalty anyway. Where do you live? If you do it through a local branch it may be easier and they may be able to explane the process face to face!

Woby_Tide

also consider whether the amount of overpayment is carried to the new product. It shouldn't matter as it's same company but some may keep products seperate, i.e. if you pay off the lump sum now then move to new product you will owe that new amount and be unable to drawdown on it whereas if you overpay after switching to new deal(if you are allowed lump overpayments) then that money is available to drawdown at the existing rate?

tubbsy

thanks everybody for that, its all really helpful.

Dan Collins - you're right, i probably am overthinking it! that's the problem with learning to manage your money and be on top of things, is you can go too far the other way and start obsessing over fairly irrelevant things!

I live in Oxford and we have a branch of C& G so i'll take your advice and go in, as i have to admit they did confuse me on the phone!