Overpaying mortgage

Ojb

Just a quick question. I'm in a fixed mortgage @2.69% and I'm allowed to pay 10% a year off penalty free.
After that its 4% penalty.
Say I paid an extra £10k off on top of the penalty free 10% how much would it really cost me?
4% of £10k would be £400 but wouldn't I also be saving paying £269 in interest?
Thanks for any help

Zero_Sum

So you'd be £131 out of pocket

Ojb

Ok thanks that's not too bad then really. If you think of it as 4% then it sounds a lot but minus the 2.69 and it's only 1.31%

dani_B

This year, but you'll be saving interest on that £10k for every year left on your mortgage

Ojb

Thanks so would it be better to over pay even at 4% or put the money elsewhere until there's no penalty?

Zero_Sum

Ojb wrote: »

Thanks so would it be better to over pay even at 4% or put the money elsewhere until there's no penalty?

Id stick in a fixed rate until end of deal, then overpay

Ojb

Thanks where would you put the money in the meantime?

getmore4less

When does the ERC change to a lower level?

Ojb

It's 4% for just under 5 years

getmore4less

Many lenders have a reducing ERC as the years go by.

You also have to factor in if you will hit the 10% the next time it renews.
And you have to factor in the best savings rate.