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    • prufrock
    • By prufrock 14th Jul 17, 5:19 PM
    • 47Posts
    • 21Thanks
    overpaying fixed mortgage
    • #1
    • 14th Jul 17, 5:19 PM
    overpaying fixed mortgage 14th Jul 17 at 5:19 PM
    Hi there,

    Please can anyone advise if I have made any mistakes or not understood things properly.

    I currently pay 859 on a two year fixed mortgage with the Halifax. I have 31 years still to pay. I have requested to make monthly overpayments of 241 per month, which Halifax will set up as a DD. I have about 600 disposable income each month. (the rest goes into my savings account for emergencies) but I asked that my monthly amount stay the same so that I am always paying 1100.

    My fixed finishes in April 2018. At which point I was thinking I will most likely transfer to the retention offer of another fixed.

    When this happens, as I understand it, they will recalculate my outstanding mortgage so that it remains the same term- in effect lowering the monthly amount.

    I presume is not a problem as I can just increase my monthly overpayment as it will still be well under the 10% annual overpayment allowance (This year I can overpay over 20,000).

    I also presume when I get to a point where if, by accepting another fixed term, I would likely hit the 10% allowance, I can re-apply for a shorter term mortgage through Halifax or a different lender when the current fixed finishes.

    Am I correct in these presumptions or am I about to do something stupid that I should put the brakes on asap?

    Thanks in advance if you are able to offer any help!
Page 1
    • debtisnotme
    • By debtisnotme 14th Jul 17, 6:34 PM
    • 103 Posts
    • 78 Thanks
    • #2
    • 14th Jul 17, 6:34 PM
    • #2
    • 14th Jul 17, 6:34 PM
    Sounds good to me, can't see any issues as long as you're clear on how much you can overpay.
    Debt on 25/5/17
    Mortgage 61,999 59,335
    Secured loan approximately 20,000 19,353
    Unsecured debt in DMP with Stepchange 38,887 37,763
    • AlexTheLion
    • By AlexTheLion 15th Jul 17, 12:18 PM
    • 17 Posts
    • 15 Thanks
    • #3
    • 15th Jul 17, 12:18 PM
    • #3
    • 15th Jul 17, 12:18 PM
    Depends on several factors for me,

    If I can beat the interest rate on my mortgage with interest rate return on the cash then I would personally look toward putting the overpayment cash into those bank accounts, and continue to pay the required amount on the mortgage. Then at the end of the fixed term remortgage for a shorter mortgage, if you have say 31 years remaining as of your fix-term end, remortgage for 29 or 30 years investing what you can from the cash lump saved to reduce the LTV. Obviously only go as far as you can afford with the time period reduction due to increase monthly payment.

    Having worked out the figures for my own mortgage this tactic knocks not only a large amount of time off the mortgage, but a huge amount of interest also for myself and OH. Just an idea to think about. Goodluck.
    • prufrock
    • By prufrock 17th Jul 17, 12:41 PM
    • 47 Posts
    • 21 Thanks
    • #4
    • 17th Jul 17, 12:41 PM
    • #4
    • 17th Jul 17, 12:41 PM
    thanks for getting back to me!

    i know there are some circumstances where overpaying doesn't actually help too much and the bank just makes extra profit, i didn't want to fall into that trap.

    i have been able to get one better savings rate than the mortgage but it is capped at a maximum 200 a month deposit. i am though putting in the maximum amount each month and my other savings into a different savings account. so potentially then i can overpay now and also get a reduced term when my current fixed rate finishes?!
    • getmore4less
    • By getmore4less 17th Jul 17, 12:44 PM
    • 32,042 Posts
    • 19,225 Thanks
    • #5
    • 17th Jul 17, 12:44 PM
    • #5
    • 17th Jul 17, 12:44 PM
    If you think you will go over the 10% during the year you can just pay down a bit from savings at the switch and restore savings using the excess monthly

    save a bit more that way
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