Lump Sum vs. Monthly Overpayments

qtlc

I'm probably being REALLY thick here but wonder if someone can help me...

My Grandmother just gave me £1,000 and I was thinking of paying it off our mortgage.
My girlfriend and I bought last August for £156,000 with a mortgage of £130,000 at 5.59 fixed until Sept 09. Our monthly is £745 (or thereabouts).
We've started overpaying £55 a month (since Jan) which should save us almost 5 years eventually.

I was using the Egg calculator to see if paying the £1,000 now would make much difference.
If we were to pay £1,000 off the mortgage today it would save us 7 months and £4,254 in interest - this is with NO overpayments of £55.
However according to the calculator if we overpay £55 a month and also pay £1,000 now it only saves us £3,069 and an extra 5 months more than if we were only paying £55 extra a month.

Am I missing something? I'd assumed that the 1k now would have the same effect at least when combined with monthly overpaying. Can anyone help?

dimbo61

you figures must be wrong but have you filled your ISA allowance this year ?
barclays paying 6.5% TAX free and this will give you a better rate of return and also greater flexibility.
make sure you have built up an emergency fund of six months earnings in
ISA,s giving you a better rate of return than your mortgage rate
GOOD LUCK

CLAPTON

no, the savings in interest when overpaying by 1000 will be greater if you don't also overpay with a regular amount as obviously the saving depends upon how long the mortgage lasts ... so if you also pay 55 per month the mortage ends earlier so less interest saving from your 1000. You aren't losing anything however, as you will then have extra money to save as your mortage will have been paid off.