Apologies another overpayment question

PhilRMow

Im terribly sorry but I have been searching and I haven't come across the answer to my dilemma.

I have £8k to over pay on my mortgage and I have been on the calculator and it gives me these options:

Current £58k 20.5 years to run fixed at 3.07%
So paying £324/month

With the £8k off it bring my monthly repayments to £279 and the term would remain the same. Total repaid £66952

or

Reduce the term, the calculator shows by 3yr 7m. Total repaid £71719

Have I missed something as what I have read always advocates shortening the term to save the most amount of interest/money ?

Thank you in advance

getmore4less

Which calculator?

looks like the £8k may not have been accounted for the same way


£58k  3.07%   20y6 months is £317  to be paying £324 should be 19y 11m

after 5 years  

amount	rate	payment	owing	interest
£58,000.00	3.04%	£317.11	£46,987.57	£8,014.17

pay  £324pm

amount	rate	payment	owing	interest
£58,000.00	3.04%	£324.00	£46,541.70	£7,981.70

overpay 8k

amount	rate	payment	owing	interest
£50,000.00	3.04%	£273.37	£40,506.53	£6,908.76

amount	rate	payment	owing	interest
£50,000.00	3.04%	£324.00	£37,230.21	£6,670.21

run full term

amount	rate	payment	owing(20y6)	interest
£58,000.00	3.04%	£317.11	£0.00	£20,009.03

amount	rate	payment	owing(19y11)	interest
£58,000.00	3.04%	£324.00	-£62	£19,374.11

overpay 8k

amount	rate	payment	owing(20y 6)	interest
£50,000.00	3.04%	£273.37	£0.00	£17,249.16

amount	rate	payment	owing(16y 4m)	interest
£50,000.00	3.04%	£324.00	-£7.20	£13,496.80

4y 2 months off the term   and ~ 4k saved


The payments  and term saving don't look right on your numbers



Shortening the term is only needed if you are going to hit overpayment limits and hit ERC payemnts as you can just overpay and make the same savings.


Your numbers raise some questions

Why are you paying 3.04% .

What is your LTV   at £58k and £50k 

Is there any ERC on an £8k overpayment as it is over 10% (there may be better options)

What are the ERC terms as with 5 years to go and potential rates much lower a ditch the fix might be worth looking at

PhilRMow

Sorry yes payment is currently £317.06 on a rate of 3.07 with a term of 20y 8m.
Paying that rate as I locked in with Lloyds for 10 years pre the last general election as I was concerned to what a change in government would mean.
LTV 21.09% on 58k
LTV 18.18% on 50k

Very small amount of ERC as we can catch up from taking a covid 3 month payment holiday and then 10% of outstanding charge free.

Self employed with a new business so books arent great at the moment but have this small inheritance that I'd like to go against the mortgage.

Thank you for your help

Philip  

getmore4less

What is the ERC and when does it drop?   


Current Lloyds 10y its 6% for the first 5 years then drops 1% a year


Even a small ERC it might be better off waiting till the ERC free reset and paying it then.



Also interested why pick Lloyds as for a few years Coventry had the better 10y fix as they only had ERC for the first 5 years