Overpayment question on an Interest only Mortgage.

WeeBee

Hi.  I have (had) a mortgage which was part Repayment and part Interest only.
I am planning to retire over the next 2 years, and wanted to get my mortgage paid off early. (there is 6 years left in repayments). I came into some money and lodged it with the building society as a  lump sum overpayment and they applied it to the repayment part leaving me the interest only part of the mortgage still in place.
My plan is  to overpay monthly on the remaining interest only mortgage and have it cleared within 2 years.  The interest payment is down to £167pm from May 2020 on £56k remaining balance, and I had hoped to overpay a further £2800 pm, bringing the total payment to around £3000 pm.
I started checking a few related things on the internet, and one site said that overpayments on an interest only mortgage will only go to reducing future interest?
I calculated £167pm interest payment x 6 years would be £12000 approx in interest.  Does that mean the first 12000 I overpay will go to interest reduction before the capital amount starts to reduce?  I was hoping to see the actual capital amount reduce monthly for every £1 I overpay each month (thereby reducing the interest owing monthly on a reducing capital amount).  Plenty of other websites suggest this is the case, but I am confused now.  Also, if I use any of the multiple overpayment calculators for interest only mortgages, the capital amount seems to reduce monthly for every monthly overpayment.  I suppose I am just looking reassurance.  Thanks.

Thrugelmir

Interest on your mortgage balance is calculated daily and charged monthly. If you reduce your mortgage balance by £2,800 to £53,200. The following month you'll incur less interest than the £167 you are currently paying. Increasing the amount of capital you overpay your mortgage by. Over time the reduction will snowball. 

WeeBee

thanks.  Will I see my capital amount reduce each month with this large overpayment?

Thrugelmir

You will see the capital balance owed rapidly reduce.  

WeeBee

many thanks

Mycull

Many mortgage companies will re-adjust your monthly payment automatically once they edtect a capital repayment (normally a payment 3x greater than the normal payment). As they previous posted rightly said, just make the overpayments and watch the outstanding amount tumble month on month.
One final thought though, you ARE allowed to make overpayments arent you ? Some fixed term mortgages limit your overpayments whilst in the initial fixed period, normally upto 10% of the balance in overpayments in a year is allowed.

WeeBee

oh yes, I am long out of my offer period on on the building societies standard rate and I am allowed to freely overpay whatever I want now.  I was going to remortgage the small amount left, to avail of a good rate, but then I would likely not be able to overpay substantially over the next 2 years, and I plan on clearing the full amount by then. I also don't want to remortgage to the 2 year period as I would like the option to not overpay in a given month if I need the funds elsewhere.  I don't really mind if they alter the payment or the term.  As long as I see the balance reducing each month as I will be paying over 20 times the actual monthly payment each month.