Lump sum or little and often over payments

jules4485

Hi

Could anyone please advise if I am better off making a lump sum overpayment of £1200 or making on over payment of £100 every month. Does it matter in the long run or does it all calculate out to be the same? Thanks Jules

[Deleted User]

You're charged interest on a daily basis. The smaller the balance, the lower the interest.

Just consider any overpayment limits.

jules4485

so monthly is the best option, thanks

ViolaLass

£1200 is better if you have access to it right now.

MerryGoRoundAvoider

Lump sum now is better as you'll pay less interest, but make sure you have money set aside for unforeseen events such as boiler breaking etc as these things could cost you big if you don't have money sitting around to pay for them.

Personally I try to get into the habit of little and often as that's the main way of sustainably paying down such a large loan. That is unless you won the lottery or something!

VDOT47

In short, if you have the £1200 now, you are marginally better to pay it in a lump sum rather than spread over 12 months, but you may prefer the security of keeping the lump sum (in an interest earning account) and then drip-feeding it to the mortgage at £100 pcm.


If you don't have the funds now and the question is whether to pay the £100 pcm off the mortgage or not, personally I would pay that into a regular saver account to earn decent interest on it and then pay it off as a lump sum in a year. Unless your mortgage interest rate is very high (say, over 5%) in which case you would probably be better to get the money off the mortgage sooner rather than later.

System

Lump sum for me! Paid £5000 off mine and phew it felt great