Ftb

20SmthngSver

I've been approved for my mortgage (capital repayment) and I've seen the breakdown. I went for a 5 year fix, and in the first 12 months I pay £3,600 but only £1,500 or so comes off the top line.

Is there any point in making overpayments in the first 12 months, or is it best to let it settle considering it's basically only covering interest in that period?

ACG

The sooner you make over payments the sooner you stop paying interest on it. So yes, it is better to make over payments on day 1 than it is to pay them in the last month.

JayCeeEssex

It is always better to overpay if you can from day 1! Every overpayment you make will immediately come off the capital meaning your next repayment will automatically be calculated around a lower amount of capital which in turn means less interest. A simple principle that does work!

20SmthngSver

Ah okay, thank you two.

I just wondered if any overpayments in the first 12 months would actually make a difference, because after 12 months I'd have paid £3,600 but my mortgage will only be able £1,500 lower than it was according to my repayment table they put together.

Gary123456790

Yes this due to your payment partly paying interest and partly coming off the balance.

Sounds like your payment is £300 a month. From the figures you gave, £175 goes to interest and £125 is actually coming off the balance (this is an average over the first year, it'll be more interest at the start and less at the end).

Lets say you overpay an extra £50 a month. This £50 ALL comes off the balance, as the interest is already paid for the month so £175 would come off the balance. This also stops the mortgage company charging interest on that £50 in future months because you've paid it back already.

Overpaying, even by a small amount, is a very effective way to pay off your mortgage quicker. Please double check though, if there is an overpayment limit and if so how much as you'd be charged a fee if you go over it.

Kind Regards.

20SmthngSver

Ah okay, so it is worth it then. Yeah as it's repayment mortgage I can pay off up to 10% of the original loan amount per calendar year. It's a 5 year fix mortgage to overpayments are capped annually, a variable mortgage means I could overpay as much as I'd have liked.