overpay mortgage

adamcarvell

I've got the paperwork through from Santander five year fix at 2.19 % to be returned by 27th December
am i doing the right thing now or should i wait ?.
Nationwide are doing a five year fix at 2.09% although i couldn't change to that until April the 4th 2019 .
so I'm unsure wether to sign up to Santander now or wait. se if santanders rates fall early next year or switch lender .

getmore4less

Read your other thread

adamcarvell

Right we have now fixed our mortgage for five years at 2.19% balance owing is £44687 .
We are going to make overpayments of £100 a month is this a better option than say opening a new savings account and saving £100 then using that to pay off small lump sums every year?.

pinknsparkly

Hi Adam!

Only consider putting your mortgage overpayments into savings accounts if you're absolutely sure you won't spend them on other things! If you are sure you're committed enough to not touch those savings for anything other than mortgage overpayments, then it is worth putting money into savings accounts if you earn more interest on the savings than you'll pay on your mortgage. So your mortgage rate is 2.19%, which means you need to be saving into an account that pays more than 2.19% interest for it to be worth while. Your only choice is probably going to be a regular saver account or a high interest current account.

If there's a risk that you'll end up taking some of the money out of your savings then just make overpayments from the start. The interest you'll be earning on £100 a month is pretty minimal (about £20 over an entire year if you manage to open a 5% interest account).

adamcarvell

Overpayments then financial matters never been my strong point. Though in 2007 we had 30 years mortgage term now down to 7 years and 7 months left today.

adamcarvell

Your Results
See how your £100 overpayment will affect your mortgage:
Pay off sooner by:
1 year 3 months
Monthly payment:
£533
New term:
6 years 4 months
Potential interest saving:
£660

Got that result from Santander overpayments calculator.