Quick paying off question..

Daveinlincoln

Hi All,

I'm back in the mortgage game due to divorce...never thought I'd be here again but life has a habit of throwing us curve balls doesn't it !

My story is I have a £140000 mortgage on a £280k house, it's for 17 years and I have my first mortgage payment of £771 going out next week.

I'm on a 2 year fixed deal of 1.99% for 2years but I'm allowed to pay off 10% early so yesterday I paid £5k off that yesterday and the lady on the phone asked if I want to have my monthly payments adjusted or leave them as they are...I said leave them as they are as my goal is to pay lumps off this mortgage and be done in 7 years...

Did I do the best thing considering my circumstances?

Throwaway1

Yes, in terms of not adjusting the monthly amount if you are wanting to pay off early. Possibly not in paying off the 5k, it depends whether you could have locked it for 2 years into a savings account that would have got you a better interest rate than 1.99% or not.

A_Frayed_Knot

It's all to do with affordability and savings, so long as your comfortable with the monthly payments staying as they are, and you have a back-up fund for "real life" issues as they crop up, then I would say, you have definitely done the right thing.

Just for info, it's what I would have done. A few points to consider;
a) Overpay on the day -b) every £1 overpaid, is a £1 that you will never pay interest on, ever again
c) once your monthly mortgage payment is paid, then try and overpay to reduce that balance at the end to as many 00's as you can afford - that kept me focused, well and truly

Good Luck, great start, with that large o/p, well done:T

ElmoR

Hello
Similar circumstances here for same reasons. You have adopted exactly the same plan that I've now been following for the past 5 years and it is working a treat. The advice from AFK above is spot on. Can you change mortgage to one that allows unlimited o/ps? I switch every two years or so, have a slightly lower interest rate and can make any o/p I wish. Those sort of mortgage deals do still exist.

Good luck with it all, keep chipping away.