Overpay mortgage or save to regular saver?

Mind_Overload

My mortgage rate is 1.99% fixed until June next year.

KnowledgeIsLife

Try googling mortgage overpayment calculator and that should help.

trevman

KnowledgeIsLife wrote: »

Try googling mortgage overpayment calculator and that should help.

I've found another calculator https://www.themoneycalculator.com/mortgages/calculators/mortgage-overpayment-calculator/#!/dealfinder/mortgages/ which agrees with my calculations

trevman wrote: »

based on a £60,000 mortgage at 1.99% for 10 years;

overpaying £250 a month means;
Overpaying would save you £2,104 in interest alone,
and mean you pay the debt off in full 3 years & 4 months earlier.
Normally you repay £552 per month. If you regularly overpay £250, you'd be mortgage free 3 years and 4 months earlier. Your total payment over this period would be £64,119.

saving £250 a month to a regular saver (nationwide 5%), would provide an annual overpayment of £3,081.25, which means;
Overpaying would save you £1,942 in interest alone,
and mean you pay the debt off in full 3 years & 1 month earlier.
Normally you repay £552 per month. If you regularly overpay £3,081, you'd be mortgage free 3 years and 1 month earlier. Your total payment over this period would be £64,281.

both calculators say its better to overpay on a 1.99% mortgage rather than save at 5% and then overpay annually

TrickyDicky101

trevman wrote: »

I've found another calculator https://www.themoneycalculator.com/mortgages/calculators/mortgage-overpayment-calculator/#!/dealfinder/mortgages/ which agrees with my calculations



both calculators say its better to overpay on a 1.99% mortgage rather than save at 5% and then overpay annually

Either you're inputting the data incorrectly or the calculators are wrong.

Logic should tell you which one is best.

Thrugelmir

trevman wrote: »

I've found another calculator https://www.themoneycalculator.com/mortgages/calculators/mortgage-overpayment-calculator/#!/dealfinder/mortgages/ which agrees with my calculations



both calculators say its better to overpay on a 1.99% mortgage rather than save at 5% and then overpay annually

Are you allowing for the fact that you would still have the balance in the regular saver at the end of year 10. As cash in hand.

KnowledgeIsLife

Best people to ask about how much interest you would save is your lender speak to customer service see if they can calculate over the phone if not request it in writing. You already know what you would get from the saver all depends on your balance, term, and rate also check if there is any limits to what you can pay per year some lenders allow 10% per calendar year some don't allow any normally this is the balance at the start of the year not as it stands now and check how there overpayment process works as this varies from lender to lender just be clear about what you want to actually have you checked if your lender actually has an overpayment calculator on there website that would help as well

trevman

KnowledgeIsLife wrote: »

Best people to ask about how much interest you would save is your lender speak to customer service see if they can calculate over the phone if not request it in writing.

I got a full mortgage payment breakdown from nationwide, im £50 a year better off, by paying into regular saver and using the lump sum at the end of the year

honestsammy

Here's an illustration using all the online calculators:

If I had a £100k mortgage over 25 years, with capital repayments at 2%, after year 1 I will owe:
£96,886

If I could overpay each month by £100, after year 1 I will owe:
£95,675

A difference of £1211

If I put £100 in a regular saver every month at 2% I will end up with: £1212

Probably has some rounding errors due to the different calcs I used, but hopefully it illustrates that it is only the interest rate that makes any difference here.

Also note if I were to put £100 into a 3% regular saver I would get £1219, so that's the sorts of margins we're talking about on the sums involved in this illustration.