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Can't figure what option is best Nationwide mortgage dilema
edited 27 February at 8:10PM in Mortgages & Endowments
9 replies 351 views
OK so any help would be appreciated I'm stuck with the maths here.
£61648 is my outstanding mortgage balance.
I have a 10 year fixed rate (I know bad decision with hindsight) 2.89% started in June 2015.
Monthly payment is £500 and every month I have been overpaying by an additional £220.
Max annual overpayment allowed £12,500 (10% of initial amount borrowed) each year runs 1st june to 31st may.
This mortgage year I can pay penalty free another £10,520.
1st June can pay another £12,500.
I have the funds to repay in full however if I do this now there would be a 5% penalty.
If I wait until 1st June the penalty reduces to 4% then June 2022 3% June 2023 2% June 2024 1%. Plus whenever I repay the mortgage an additional £65 fee.
I was planning to max the repayment now and then another £12,500 in june and then clear with a 4% penalty which I reckon to be £1520 approx.
Is this the smartest option? I think from my calculations doing the max £12,500 overpayment each year at the earliest opportunity clears it all by oct 2023 with around the same interest charges as the repayment penalty if I clear it all this June, plus the benefit of me keeping hold of my money longer and earning interest.
So what option is the best from a moneysaving point of view?