lump sum mortgage overpayment

sanova76

Hi,


Would like some opinions please.

Every year you're allowed to make a lump sum overpayment. When is the best time to make overpayment? The beginning of the mortgage term year or almost the end?

I'm on fixed rate interest and I'm thinking if I make payment at the beginning I may be able to get lower monthly payment. If I make payment later I may have save more money and pay more towards the lump sum. For example if I decided to pay in the beginning I may only have £2000 but it I pay a bit later I may be able to pay £3000.

What if you already have the money to pay the max amount allowed. Does it make any difference when you pay it?

TIA.

San

Peelerfart

You need to check the T&C,s on your mortgage, on when mortgage interest is recalculated. If at end of year, keep your cash, wait until the end of year,then pay it.

Lucky_Duck_2

I thought the days when mortgage interest was calculated based on the balance at the end of the year were long gone, certainly every mortgage I have had in the last 20 years has calculated interest on a daily basis

sanova76

I'm on fixed rate so I assumed the interest will be recalculated when the agreement ends? i.e fixed rate for 5 years so the new rate will be calculated in year 5?

Peelerfart

Lucky_Duck wrote: »

I thought the days when mortgage interest was calculated based on the balance at the end of the year were long gone, certainly every mortgage I have had in the last 20 years has calculated interest on a daily basis

Mine too, but worth checking.

Thrugelmir

The beginning of the term, or as early as possible. Interest will be calculated daily and charged monthly.

Ensure you do not breach any early repayment conditions.

If you make a large overpayment check with your lender as to how they will treat it.

If the monthly repayment isn't changed after making an overpayment. Then it will be recalculated at the end of the fixed term. You'll have paid less interest and reduced the debt owed.