Overpaying

vernall

Hi guys, First Time Buyer here,
 I’m almost 2 years into a 5 year fix @1.89% of a 20 year mortgage.
I have overpaid  £1000 every month since the start, as I want to clear it as soon as I can. As interest rates in an easy access savings account are now well over 2% I’m guessing that’s where the £1000 per month should be going, and not to TSB to overpay the mortgage.

My question is, in 3 years time when this 5 year fix is coming to an end, and am looking to remortgage/take on another fix  with TSB/whatever is best at the time and I have this pot of money, which if I can save at the same rate should be £36000 plus interest. How is this chunk of money paid off the mortgage so I am borrowing less? And are there some kind of fees for paying this lump sum off? As this is well over the 10% I’m allowed to overpay each year. 

gih

You could wait until your current deal comes to an end, move onto the SVR for a month before taking another fix, and overpay the lot then (when on the SVR).  There's usually no penalty for overpaying when on the SVR.

Alternatively, you could just make a lump payment at the start of each year, at the maximum limit (10%) you're allowed to overpay.

dimbo61

Well done on taking a 5 year fix at 1.89%
 Lots of savings accounts now paying more than 2% so you could divert the spare money into savings accounts rather than overpay 

Orchid96

If you are remortgaging after the current fix, you can apply for a remortgage product considering the reduced amount after lumpsum payment. You can pay this to the solicitor at the time of remortgage completion. I am not sure how this is done with a product switch with same lender. Most likely you should be able to secure a new product 3/6months in advance based on your then LTV, then request for a transfer to the new product at the end of current product along with lumpsum payment.

PK_London

The Barclays Every Day Rainy Saver is paying 5.12% interest at the moment for up to £5000. That's the best place to add your savings. Im thinking I might just save £5000 over 5 months, then take that payment and interest earned and overpay the mortgage and start again so still overpaying the mortgage but making the most of the 5.12% interest Barclays is giving away