Mortgage Overpayments

mb6000

Hi
I have the option to overpay my mortgage by a good amount each month - as I am doing a temporary contract for the next few years that pays well.
So the question is, should I send the overpayments each month, or at the end of each year as a larger lump sum?
I have the option to overpay 10% of the balance each year without a penalty.
Thanks
Matt

getmore4less

Sooner you pay the sooner you start saving interest(in most cases)

Check your lender applies payments immediately and calculates interest daily.

there are other option

If a good mortgage rate savings may be better.

Pensions often(approaching always) provide a better long term return against mortgage overpayments.

sparkey1

Based on what you said initially, you are better off paying as you go, why save up when you could have already made the payment.

However, it depends upon your mortgage company. For example, Santander used to want a £500 minimum overpayment.

Some apply any payments straight away, therefore saving you interest on the overpayment amount.

Some have minimum payment amounts.

Some apply the payments quarterley, some mortgages out there still use the annual method. Ie Pay on 1st Jan, it might not reduce your interest until 31 Dec.

Would suggest you post mortgage company name, and how long ago you took the mortgage out for a more accurate response.