overpaying on a fixed rate mortgage?

Hi, we've just recently taken out a 10 year fixed with west brom @ 5.39% on £115,000. Payments are £706 a month.

DH went into branch the other day to set up an SO to make overpayments, and was told to phone head office. They have said as it is a fixed rate mortgage, any overpayments will not affect the capital amount. The overpayments will be collated and applied after 10 years, so the man suggested putting any overpayments into a high interest savings account for the next 10 years, and pay then.

Does this sound right? I thought by overpaying each month, the capital amount would come down a bit each year so we'd be paying less interest ...? have i got this all wrong?

He also changed the date we pay mortgage (after some good advice on here - thanks!) to the 1st, so at least feel we have done something in our quest to be MF!!
thanks for any replies


  • jessicambjessicamb Forumite
    10.4K Posts
    Part of the Furniture Combo Breaker

    you could put your overpayments into one of the top paying cash isas - I got an egg one at 6.05% and I think that there are better ones now. Like you I am currently on a fixed rate (and about to run out :O ) and am limited as to what can be overpayed.

    I'm not an expert on all this overpaying though so somebody else might have better advice for you.
    The early bird gets the worm but the second mouse gets the cheese :cool:
  • dimbo61dimbo61 Forumite
    12.4K Posts
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    check the terms and conditions of your mortgage and also contact the mortgage department to check if you are allowed to overpay !
    most lenders allow overpayment but its in the small print of your T & C ,s
    you can earn 6.5% tax free in ISA,s with barclays and lloydstsb ( £9k+)
    AT THE MOMENT but that is not to say that saving into ISA,s is going to give
    you a better return than your mortgage over the next 10 years.
    your mortgage rate is fixed but the ISA,s may go down so you need to
    check your interest rate each year.
    better to overpay as well if ALLOWED GOOD LUCK
  • thanks for the replies. overpayments are allowed at under £1k a month, so thought it would be ok. will get onto the ho next week
  • Kaz2904Kaz2904 Forumite
    5.8K Posts
    Mortgage-free Glee!
    I have a fixed rate mortgage and my overpayments are going onto the capital every month. I would check out your T&C's again!
    Debt: 16/04/2007:TOTAL DEBT [strike]£92727.75[/strike] £49395.47:eek: :eek: :eek: £43332.28 repaid 100.77% of £43000 target.
    MFiT T2: Debt [STRIKE]£52856.59[/STRIKE] £6316.14 £46540.45 repaid 101.17% of £46000 target.
    2013 Target: completely clear my [STRIKE]£6316.14[/STRIKE] £0 mortgage debt. £6316.14 100% repaid.
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