Mortgage Overpayment Strategy?

We employ similar tactics to others that have posted:

1. Overpay a set amount monthly which rounds the mortgage payment up. When we first got the house we rounded up to the nearest £100 so OP'd £89.80 most months. As we've taken out a new deal early this year our rate dropped, therefore our payment dropped so we continue to 'top up' the monthly payment to the original we used to pay (so OP £212.45 but added another £100 as feels good for the monthly payment to be £1k!)
2. TT's- I love tilly tidies and round down our bills account whenever it's at an odd number- this has hada great impact on our OPs
3. Selling- we go though periods of car booting/ebaying/gumtreeing anything we don't want anymore and OP that
4. Surveys- onepoll, Yougov, Pinecone, Prolific academy- again I go through periods of religiously doing these and then tail off at times but it does help
5. Cashback sites when we remember! Quidco for online stuffs, Shopmium/ CheckoutSmart & ClickSnap with varying degrees of success- helps keep grocery costs down as well as yellow stickers giving more money in the bank available to OP
6. Bonuses- my company doesn't allow overtime boooo and has massively decreased the value of my annual Bonus (:o ) but whatever I get I try to OP just a small amount even if it's £30 it all will help

Sorry if I've rambled but these techniques have meant we have overpaid £4300 since we bought our first home- a new build- in Oct 2016. I would never have dreamed we could overpay that or we would have 'spare' cash like that when we started our Mortgage (our budget looks pretty tight!) but it is all adding up slowly but surely :T

Mr_Curious wrote: »

I really like the idea of making over payments to bring the total outstanding to a rounder number. Very simple and very effective and mentally very rewarding to see the number dropping at easier to digest intervals

Exactly what I do, (its in my signature) I call them my Knotty o/payments I just keep making sure there is 0.00's at the end of my mortgage, and recently reached my 0,000.00 with a 1 on the front

You said it "Very simple and very effective and mentally very rewarding to see the number dropping at easier to digest intervals"

You'll be there in no time at all :j if you stick to this and all the other suggestions:beer:

We have our mortgage with santander and I phoned them up to change the direct debit. Our monthly payments are 816 but we wanted to overpay 200 so they have set the direct debit to 1016. They asked when I phoned if we wanted to reduce the term or our monthly payments but keep the term the same. We wanted to reduce the term so our payments are kept the same. Also if you overpay this way and you use your 123 account you get cashback on the new amount so we now get £10 cashback as well. I have also set up online so that I can transfer money whenever I want as a faster payment. Santander were really helpful when I phoned them.

A problem with reducing the term may be that you are now locked into that and you may have issues if you wish to stop overpaying. Have you checked they will allow you to stop overpaying and revert to the original timescale?

FWIW if you took the other option, you are still reducing the term as long as you adjust your overpayment upwards gradually to account for the fact that the required monthly payment is getting lower, but you then have the flexibility to adjust or stop your overpayment without needing to get permission

I have 2 approaches to OPing, built in and ad hoc.

Built in OPs are the ones that leave the account automatically. On our first mortgage, we rounded up and added a small amount. We have kept payments at this level ever since, even though we have since remortgaged and our contractual obligation has more than halved in this time.

Every time I had a payrise, we added 90% of this to the OP standing order - you don't miss what you have never had, and it helped stop lifestyle inflation.

When we remortgaged, we got a better rate. When our lender first tried to reduce our monthly payment, we asked for it to be kept at the rate we were initially paying. This is an additional £80+ towards the mortgage that we don't miss, on top of the £410 that is a static SO (meaning that the total leaving the account each month is always at least as high as our first ever mortgage payments).

For ad hoc OPs, I TT and send any spare money towards the mortgage each month. The annual MFW challenges are very motivational to help with this. I know that to hit my target of OPing £6000 this year, I need to find £90 a month on top of my built in OPs.

Another idea that has really helped is the 1% challenge, where you attempt to get together enough extra money to OP 1% of your debt. Focusing a number in the 00s or low 000s is much more achievable than trying to settle your entire mortgage. If you are not already in the habit of TTing this is a great way to establish the habit. It is also really motivating technique when you feel like you want to OP more but your budget won't really stretch to it.