Mortgage overpayments and when to reduce my payments

greencode

I've currently got £18k to repay over 5 years at a fixed rate of 2.5%. I pay £470 a month but overpay £130. Doing the MSE calculator I'll repay in full 18 months early. However, if I do that then I'll incur the early repayment charge of £1k.

So, do I do my calculations so I get close to the deadline i.e. wait for the final few months and then just pay the minimum i.e. £50 for the final 30 months or do I call my bank to get them to recalculate my monthly payments nearer the time?

saajan_12

-Are you on a fixed term, and when does it finish? 
-How much of the early repayment allowance have you used up, before attracting an ERC? 
-How much ISA allowance do you have left?
-What tax bracket you in? 

Based on the above, you may be better off putting the overpayment amount into a high interest savings account instead, and pay off a lump when the fixed term ends (or when interest rates drop). That way you possibly get higher interest than you pay on the mortgage, plus also save the ERCs.