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Overpayments one off or monthly ?
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blue4ever76
Posts: 3 Newbie

I'm looking at overpaying on my mortgage, but cant work out if overpaying £200 a month or a £2400 one off payment a year every year is better ?.
Calculators dont help with this 😩 so any help would be much appreciated.🤞
Calculators dont help with this 😩 so any help would be much appreciated.🤞
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Comments
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The earlier you make your repayments, the more interest you will save.
So it depends on when you're making the one off payment.
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I'm guessing you mean pay off £200 each month or save it and pay £2400 at the end of the year? I'm interested to figure out how to work this out too.
But with the present climate i was thinking i would be better of paying monthly then if i need a break it should be no problem as i've overpaied?0 -
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soupy600 said:I'm guessing you mean pay off £200 each month or save it and pay £2400 at the end of the year? I'm interested to figure out how to work this out too.
But with the present climate i was thinking i would be better of paying monthly then if i need a break it should be no problem as i've overpaied?0 -
Deleted_User said:The earlier you make your repayments, the more interest you will save.
So it depends on when you're making the one off payment.
I cant find anything to say this would continue to happen year on year.
I too believed monthly payments would lower the interest quicker but it doesnt seem so ????0 -
It does if you make them sufficiently in advance of the one off option.
It's all based on the balance at any given point. Basically, if you have spare money and won't be charged an ERC (and can't make more interest on savings than you're paying on the mortgage), pay if off your mortgage as soon as you can.
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Overpayment is just borrowing less,
Smaller loan less interest.
The difference between monthly and up front is roughly
Rate * lump amount/2
Eg for 2% rate on £2400
0.02 * 2400/2 = £24.
Upfront saves £48 monthly saves £24
Year 2 that £2,400 saves £48. Does not matter when you paid it.
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blue4ever76 said:Deleted_User said:The earlier you make your repayments, the more interest you will save.
So it depends on when you're making the one off payment.
I cant find anything to say this would continue to happen year on year.
I too believed monthly payments would lower the interest quicker but it doesnt seem so ????
If you had £2400 debt and paid it off you would pay no interests.
If you paid £200pm you would still have a debt at the end.0 -
If you pay it upfront at the beginning of the mortgage year it would save you money as that's 12 months of interest you're not paying on that full amount of money. If you save it up and pay it at the end of the mortgage year then it will cost you more as you've paid 12 months of interest on the full amount.
MFW - OP 10% each year to clear mortgage in 10 years!
2019: £16,125/£16,125
2020: £14,172.64/£14,172.64
2021: £12,333.62/£12,333.62
2022: £10,626.55/£10,626.55
2023: switched tactics to saving in a higher interest rate account than mortgage interest rate
2024: mortgage neutral!0
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