Mortgage Overpayment

andywilliams1187

Afternoon all, 
Just after some advice on mortgage overpayments. I am currently with Nationwide who allow a 10% overpayment of the original loan amount each year. 
I usually put money aside each month and at the end of the year pay off a piece of the mortgage (around 5-8k) which is slowly reducing the whole term of my mortgage. 
I have recently been offered a decent cash advance from my credit card company (2% fee, zero% interest until December 2022). I am wondering if it would be beneficial to take 5 or 6k on the card (which will cost around £130ish in fees, but no interest) and pay this straight off the mortgage. The money i would usually put to one side to make one payment a year would be used to pay the CC back (I also have a decent emergency fund which I could use if needed to clear the CC if anything happened). 

Just trying to work out if paying the £5/6k now would be more benecifical long term. It would be equivelant to one years mortgage payment (which would cost me £130ish in fees) but long term i would save more than that in interest if i wait another 12 saving to make an additional payment. 

Thrugelmir

What rate of interest are you being charged on the mortgage? 
You may well be better off over paying your mortgage as the funds become available. Interest being calculated daily and charged monthly. 

getmore4less

Why are you saving up the spare cash till the end of the year?

Better to pay it off as soon as you have it and only carry over the excess once you hit the 10%.

What rate is  the mortgage?

andywilliams1187

getmore4less said:

Why are you saving up the spare cash till the end of the year?

Better to pay it off as soon as you have it and only carry over the excess once you hit the 10%.

What rate is  the mortgage?

Current mortgage rate is 2.34% (fixed) until 2024. Mortgage payments are currently set at £488 a month. I am thinking i might just increase the payment to £750 a month for now. 

getmore4less

£5-£8k py  is £417pm-£667pm
2.34%

CC  say  £6k with 2% fee  for 18months
interest saved is £5,880 *2.34% * 1.5 = £206  for the fee of £120  net saving ~£86

look  at what's left in 18month interest only on £10k.

do nothing to get the interest payment

amount	rate	payment	owing	interest
£10,000	2.34%	£19.50	£10,000	£351

borrow £6k less the £120 fee and pay it off the debt, same payment (saving £333.33 * 18)

amount	rate	payment	owing	interest
£4,120	2.34%	£19.50	£3,910	£141

Looks about right £90 saved
You could use a monthly saver and pay the CC mins and probably optimise that a bit more with interest on the monthly .

or just pay £333.33 extra pm

£10,000.00

2.34%

£352.83

£3,900

£251