Overpayment limits 30 June 2018 at 10:47AM edited 30 November -1 at 1:00AM in Mortgage-Free Wannabe 4 replies 443 views

stoopy

Had a quick look through a few pages of threads to see if this question has been answered but couldn't see anything.


How is everyone overpaying so much with limits on overpayments?


We have just bought a house but can only overpay 10%, so about £75 per month. This will be just manageable now, and not much more than that at the moment, but when husband works in 2 years after being a student we would be able to overpay much more.


I did a calculator and if I overpaid at 10% forever the term would only reduce by under 4 years.


If you can't overpay more due to limits, do you save the extra money until the end of your deal, then remortgage? Or how do you work out if paying a fee is beneficial for a larger repayment.

stoopy

To be fair this house sale will wipe our savings out so I might be better for the next 2 years concentrating on building an emergency fund, but just thinking ahead to when husband gets a job!

kuratowski

My overpayment limit is 10% of the initial mortgage balance. For a London property, that is a large amount, far more than I could afford to overpay on a regular basis. So really the overpayment limit is only an issue if I want to move house or switch to another mortgage provider.

You need to look carefully at the Ts&Cs when you choose your mortgage provider, they don't all offer the same terms.

Edit: A few months ago I was talking to my sister - she lives in Manchester - and she said the same, that the overpayment limit was so high on her mortgage it effectively didn't matter. The overpayment limit for both of us is almost twice the regular mortgage payment!!

stoopy

Oh, maybe I'm misreading the details then, I thought it was 10% of the annual payments. 10% of the original balance is much more. Will check and thanks for your answer!

stoopy

Oh I feel silly now it is 10% of outstanding balance thanks for clarifying kuratowski