Mortgage overpayment strategy 17 July 2020 at 6:13PM in Mortgage-free wannabe 3 replies 171 views

geocatwest

Hi there, I'm currently on a 1.74% fixed mortgage, paying £408 a month.
I'd like to set up a standing order for overpayments of £200 a month. Does it make a difference to reduce interest whether you overpay weekly, fortnightly rather than monthly? 
for e.g. either £50 weekly, £100 fortnightly or £200 a month. 

longway2go

It depends when your interest is calculated which will depend on your lender. I would call them and check. 

julicorn

@longway2go are there many UK lenders that don't calculate the interest daily? I just know that some add the interest to the account daily too, and some just add it once a month (but still calculate daily) - there might be ones that don't calculate daily, but I've not heard of any on this forum yet. 

@geocatwest Generally speaking, the earlier you pay, the better (unless you can get higher interest in savings accounts, in which case saving in there makes more sense financially). So overpaying as soon as you have the money is generally better. £200 at the start of August > £50 every week in August > £200 at the end of August. Although the difference will be relatively small with the example given here. 

longway2go

@julicorn tbh I'm not sure, I know there used to be do worth checking with the lender.