Mortgage overpayments advice please

SonnyJim

I have just come in to a bit of money, 50k to be precise :j and would like to pay 30k into my mortgage. I was wondering the best way to go about this as I'm with santander and they allow (i think) 10% a year. I have £157,643.77 left to pay and 21 years and 4 months @ 2.99%. The deal i'm on finishes in Feb 2019.

My question is this really, is it better for me to pay 15k now then 15k in January or am i better off making monthly overpayments for the rest of the time.

I tried using the calculator but wasn't sure how to input it really. I'm no good with figures but would like to know how to pay the least for less time!

Thanks in advance !

SonnyJim

jayII

Check if the 10% rule is 10% of the opening balance (mortgage at the start of the current deal) or 10% of the current balance.

Generally, assuming daily interest, it's better to pay the additional money as soon as possible (within your overpayment rules). So if your interest is calculated daily (most is these days), then lump sum £15,000-ish overpayments are better than small monthly overpayments.

N.b. Also check if your 'new mortgage year' starts in January--or if it starts on the anniversary of your current mortgage deal!!!!

SonnyJim

Ah now i never thought of that. I would have thought it's 10% of the balance surely? I'll check with Santander. If that is the case how much would/could i overpay each month (after i've made my 2 lump sum payments) in the years ahead?
Sept 2017 - 15k
Jan 2018 (assuming mortgage year is Jan to Dec) - 15k
Then Jan 2019 - ???
Feb ?? and so on.
If it's 10% of the balance then surely it will be slightly less each month.

Am i over complicating this?

ViolaLass

You'll be quicker asking your bank these questions. If you make the maximum overpayment in a lump sum, you won't be able to overpay any more that year.

You /could/ ask to shorten the term, which would increase your monthly payments.

jayII

SonnyJim wrote: »

Ah now i never thought of that. I would have thought it's 10% of the balance surely? I'll check with Santander. If that is the case how much would/could i overpay each month (after i've made my 2 lump sum payments) in the years ahead?
Sept 2017 - 15k
Jan 2018 (assuming mortgage year is Jan to Dec) - 15k
Then Jan 2019 - ???
Feb ?? and so on.
If it's 10% of the balance then surely it will be slightly less each month.

Am i over complicating this?

Not necessarily--some are 10% of balance at start of current deal.

Jan-Dec 2019 will be 10% of the relevant balance, but as Violalass says, your bank is best placed to answer your questions in detail. Your mortgage documents should also have detailed info, but unless you understand them really well, I'd call Santander or pop into a branch.

Brighty

jayII wrote: »

Not necessarily--some are 10% of balance at start of current deal.

Jan-Dec 2019 will be 10% of the relevant balance, but as Violalass says, your bank is best placed to answer your questions in detail. Your mortgage documents should also have detailed info, but unless you understand them really well, I'd call Santander or pop into a branch.

I recently took a new deal with Nationwide and was surprised to find out that their 10% is 10% of the balance when the mortgage was first opened with them, so even though i just took a new deal, the 10% is on our opening balance from 4 years ago.

Boredatwrork

If your current deal ends in Feb 19, then the previous year ends (obviously) in Feb 18.

So pay the max now before incurring any charges, then the next max in Feb 18 as soon as it falls on the final year. that should deal with most of it and stick the next in Feb 19.

What I would also mention is when you get your next deal, ensure the next deal incorporates the rest of the money you are putting in, in feb 19, it may put you on a better LTV, that beaing the case it may be better to go onto the SVR for a few days allowing the ladt OP to be made before moving onto the new deal. You can discuss this with your bank at the time.