Overpay when interest high?

[Deleted User]

So a mortgage 95% £136,000 borrowed. Interest rate 4.49%.

With the option to overpay £500 per month is this a good idea / investment? Or would It be better to save this money?

Fixed term is 2 years. I would hope by 2 years to have moved down to the 80% LTV ideally to get a better interest rate.

Tom99

[FONT=Verdana, sans-serif]Providing you have enough emergency capital I would overpay, particularly at that rate.[/FONT]

Tropically

I don't know of any safe way to get 4.49 % on savings. If you can get higher than 4.49%, then save. If you can't, overpay and save the interest. You have a pretty high rate, but typical for a high LTV. Overpaying is a guaranteed savings of 4.49%. I would.

MichaelDH

I would concentrate on over paying as much as possible now so that the LTV is reduced when you remortgage.

I'm a newbie, have only just started making over payments myself despite having the mortgage for a year, seeing the balance reduce is really motivating. Set your self a target and aim for it, and remember that any payment you make, however small, is reducing the capital and saving you interest for the rest of the mortgage term.

Good luck!

McTaggus

We are on a similar rate, but for a much larger mortgage. From my perspective, I can't get that kind of return on my savings right now, so overpayments make sense for me. We were on 95% LTV too, but our fixed rate is coming to a close soon and are now projecting to be at 83% LTV, which drops our interest rate down from 4.29% to 1.7% - a huge saving every month.

I would say go for it!

[Deleted User]

Thanks guys, Just wanted to check that was the right thing to do.

Well I have a 10% overpayment maximum so I think we can overpay £13,600 in the first year - Although I am not sure if this amount goes down monthly or yearly as if we paid more the first month the £136,000 would start to go down?

Also I was hoping to overpay by £7000 per year so hoping getting to an 80% LTV is achievable by 2 years. How do I work it all out?

[Deleted User]

McTaggus wrote: »

We are on a similar rate, but for a much larger mortgage. From my perspective, I can't get that kind of return on my savings right now, so overpayments make sense for me. We were on 95% LTV too, but our fixed rate is coming to a close soon and are now projecting to be at 83% LTV, which drops our interest rate down from 4.29% to 1.7% - a huge saving every month.

I would say go for it!

Would it have been a better rate if you had got to 80% LTV?

Madcatgirl

Hiya - ours is nearly 4% and we had 85%ltv went we took it out. We had a five year fix and are in the final year of it. Due to ops and not least, house price rises, we're well over 50%ltv now. Will be very curious to see how that impacts our rate of payment next year. So, I agree, pay down as hard as you can to up your ltv now. Btw, we can op 10% each year, and it is 10% of our opening balance, not the remainder on our mortgage.