Over payment advice please

I wonder if anyone could give me some advice on making over payments on my mortgage please.  I’ve set myself the challenge of making over payments of the interest for next year but I’ve started over thinking it and second guessing what is best to do!  I’m planning on over paying £2085 next year which is based on the daily interest rate today, I know this will go down  but the more I over pay the better so I’m sticking to this figure.  I have got a £600 lump sum that I was going to send off on 1st Jan, then paying the council tax that isn’t paid Feb and March, I will get 25% single person discount from April about £40 and I already over pay £20 a month.  That leaves £569 to “find” for the rest of the year so just order £48 a month.  Now my question is do I make the bigger payments when I’ve got them and the smaller payments as a when or open up a savings account and put the money I’ve got in there and make equal payments of £174 each month ( at the start of the month, daily or the end of the month).  I really want my over payment to have the best effect on the interest and like I’ve said I have totally been over thinking this so any advice would be gratefully appreciated!!!

TIA 😄💕 xx
slowly working towards being MF one small over payment at a time :T

Comments

  • JGB1955
    JGB1955 Posts: 3,438
    First Anniversary First Post Name Dropper
    Forumite
    Assuming the interest rate on your savings is well below the interest rate on your mortgage, pay it off as soon as possible.
    #2 Saving for Christmas 2024 - £1 a day challenge. £131 of £366
  • I wonder if anyone could give me some advice on making over payments on my mortgage please.  I’ve set myself the challenge of making over payments of the interest for next year but I’ve started over thinking it and second guessing what is best to do!  I’m planning on over paying £2085 next year which is based on the daily interest rate today, I know this will go down  but the more I over pay the better so I’m sticking to this figure.  I have got a £600 lump sum that I was going to send off on 1st Jan, then paying the council tax that isn’t paid Feb and March, I will get 25% single person discount from April about £40 and I already over pay £20 a month.  That leaves £569 to “find” for the rest of the year so just order £48 a month.  Now my question is do I make the bigger payments when I’ve got them and the smaller payments as a when or open up a savings account and put the money I’ve got in there and make equal payments of £174 each month ( at the start of the month, daily or the end of the month).  I really want my over payment to have the best effect on the interest and like I’ve said I have totally been over thinking this so any advice would be gratefully appreciated!!!

    TIA 😄💕 xx

    What is your interest rate on your mortgage and what is the best interest rate you can get by saving it? If the best interest rate is lower than your mortgage rate then pay it off as soon as you can.
    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
  • Yep, and if your interest is calculated daily then pay whatever you've got as soon as you can, to maximise the savings. Good luck 😀!
    Mortgage start: £65,495 (March 2016)
    Cleared 🧚‍♀️🧚‍♀️🧚‍♀️!!! In 5 years, 1 month and 29 days
    Total amount repaid: £72,307.03. £1.10 repaid for every £1.00 borrowed

    Finally earning interest instead of paying it!!!
  • Definitely pay off when you’ve got the money rather than putting it in savings to gain a pittance in interest!
    do you have an emergency fund as well? 
    MFW 2021 #76 £5,145
    MFW 2022 #27 £5,300 
    MFW 2023 #27 £2,000
    MFW 2024 #27 £500/ £3,600


  • Thanks for all of your reply’s.  I haven’t looked in to a new savings account yet so not sure what rate it would be.  My mortgage rate is 2.9% and I doubt I’d get a savings account of that so probably best to just pay off straight to the mortgage.  I’ve got plenty in my savings for yearly bills, holidays, Christmas, emergencies etc and I’ve got no others debts so no problem there.
    thanks
    slowly working towards being MF one small over payment at a time :T
  • As others have mentioned above pay off the mortgage as soon as you can to make the savings on interest. The other thing to double-check with your mortgage provider is how they will apply overpayments, some reduce your monthly amount while others reduce your term make sure you agree how your overpayments will be treated. Good luck
    • Original mortgage end date: March 2041
    • Current mortgage end date: Dec 2032 (aiming for October 2025)
    • MFW 2024 #15 £446.24/ £2500 /// MFW 2023 #15 £8,617.84/ £10,000 /// 2022 #15 £7,315.24/ £7250 /// MFW 2021 #15 £8,530.07/ £8500
    • Daily interest is currently £4.44
  • Thanks moneyminded. I can make 10% over payments a year which reduce the term but don’t effect the monthly payments.  I just really wondered if paying off the same amount as the interest in over payments each month was more beneficial than one bigger over payment at the start of the year and then smaller payments during the year xx
    slowly working towards being MF one small over payment at a time :T
Meet your Ambassadors

Categories

  • All Categories
  • 341.8K Banking & Borrowing
  • 249.7K Reduce Debt & Boost Income
  • 449.2K Spending & Discounts
  • 234K Work, Benefits & Business
  • 606.2K Mortgages, Homes & Bills
  • 172.5K Life & Family
  • 246.8K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.8K Discuss & Feedback
  • 15.1K Coronavirus Support Boards