Advice gratefully received

MFWannabe

Newbie_John said:

DBPHJ said:

gazfocus said:

I definitely wouldn't pay 20% each year as you'll be hit with a penalty from your mortgage lender for anything overpaying more than 10% of your remaining balance.

The best thing to do (or what I'd do at least) would be to not overpay at all until your fixed term is up and instead put the money in a high interest savings account, then pay the mortgage off in one lump sum at the end of your fixed term.

Hi there, thanks so much for your reply.

It’s a NatWest mortgage and I am allowed to overpay by 20% a year but my real question is is there any point at all doing this? I don’t see how this will reduce my payments when they are fixed for five years and then I am going to completely pay off the outstanding balance after Five years once the fixed rate has finished

Surely it will just mean that NatWest will have my extra money for five years and it won’t help me at all. I agree with you, surely putting any spare money I have for the next five years in a high rate interest account or premium bonds will be the best idea then after five years I can use it to completely pay off my mortgage. Still very confused

You need to put more numbers:
-what is your 5 years fixed interest rate?
-what tax do you pay - 20/40/45% ?

If it's worth overpaying now really depends on the above answers.

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