Mortgage over payment before or after?

Coldred

Hi. Our current mortgage allows a 10% overpayment each year, we started a new mortgage a few months ago but want to pay the 10% lump sum. Is it better to do it now or wait until near the end of the first 12 months. My thinking is that if we pay it now that our interest repayment would be lower? Is that right. Your thoughts on now or before end of 12 months?
Thanks

K_S

@Coldred

It depends on what that money is earning now vs your mortgage interest rate.

If your mortgage interest rate is 2.5% and your lumpsum is sitting in your current account earning nothing, I would consider overpaying now.

If your mortgage interest rate is 1.19% and you lumpsum is sitting in a savings account earning close to or more than that, I would consider leaving it as it is and reassess at the end of the year.

Do remember that once you overpay your mortgage, most products will not come with features that allow you to access those funds so always keep that in mind.