Mortgage overpayments, when to make them?

Troy_af

Hello.


If making overpayments on my mortgage, when would be the best time to make them? My mortgage advisor awhile back told me that it is better to make monthly overpayments rather than say save up for the year then pay off however much you've saved, something to do with interest building up or something, but I cant remember.


Thanks.

oxfordowl1

Hi there, interest on your mortgage acrues daily, so my general principle is to make a monthly overpayment just after payday. This assumes that your overpayment is under(say) a couple of hundred pounds a month so you would not be subje to an Early Repayment Charge by your mortgage company.

Hope this helps

PS: even if it is only a small amount a month, I really liked the feeling if overpayment. It feels good to be 'ahead of the game'

oxfordowl1

I've just remembered that there are some regular savers that pay 5% interest. If you have access to one of these, the 5% interest may be more that the interest you are paying on your mortgage. If so it might be sensible to use the regular saver for a year and pay a single overpayment after the year. Either way, the principle of overpaying your mortgage is a sound one.

AnotherJoe

Unless your mortgage is massive, very long (past your retirement) or with a very high interest rate, never.

Bump up your pension instead, especially if you are a high rate tax payer.