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    • Lizbuff89
    • By Lizbuff89 7th Jan 18, 10:20 PM
    • 3Posts
    • 1Thanks
    Mortgage overpayments
    • #1
    • 7th Jan 18, 10:20 PM
    Mortgage overpayments 7th Jan 18 at 10:20 PM
    I have a repayment mortgage fixed for 10yrs @ 3.89%. Each January whatever the balance is Iím allowed to pay 5% overpayment per year. Iím down now to 6 years & 1 month & £18719.34 left. Iíve been overpaying but Iím not allowed to reduce the length of the term. They reduce my monthly payment. Each month I put £100 + whatever they reduce it by into an account the each January I pay my 5%. This leaves me with some money in the account & was planning on being able to build that up so that by the time Iím say 2 years off completing my term I could take it out and pay it off early. What I want to know it am I wasting my time overpaying or should I do it anyway? Iím very confused. It wasnít explained clearly to me as I thought I could reduce my term by paying 5% over each January cos if not then whatís the point? Please help
Page 1
    • wishingthemortgaheaway
    • By wishingthemortgaheaway 8th Jan 18, 7:31 AM
    • 1,472 Posts
    • 7,031 Thanks
    • #2
    • 8th Jan 18, 7:31 AM
    • #2
    • 8th Jan 18, 7:31 AM
    There are people more knowledgeable than I, but I'll have a go.

    Was the mortgage calculated to be paid off at the end of the 10 year fix? Or will there still be a balance remaining?

    They don't want to reduce the term, because it would cost them money.

    It is worth overpaying the 5% per year because you are saving interest. Use the mse overpayment calculator to work out how much.

    Once you've overpaid by the maximum amount, put your money in an account with the highest interest rate possible, or start looking at your pension.
    The 100 payment countdown (each payment = £400) 2018 Starts at 13/100 o/s £34,750.
    Jan 18 14/100 Feb 15/100 March 18/100 April 19/100 May 20/100 June 21/100
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    MFW 2018 Challenge Member #162 £1600ish/£2,500
    • enjoyyourshoes
    • By enjoyyourshoes 8th Jan 18, 8:53 AM
    • 1,061 Posts
    • 1,302 Thanks
    • #3
    • 8th Jan 18, 8:53 AM
    • #3
    • 8th Jan 18, 8:53 AM
    Ask them for a cost to pay off the whole mortgage amount (only £18.7 K left?)

    The work out how much you will save if you were to keep mortgage going till term end.

    At 3.89 I would reckon cheaper to pay off plus early repayment fee, but dot he calls
    Debt is a symptom, solve the problem.
    • Lizbuff89
    • By Lizbuff89 8th Jan 18, 4:09 PM
    • 3 Posts
    • 1 Thanks
    • #4
    • 8th Jan 18, 4:09 PM
    • #4
    • 8th Jan 18, 4:09 PM
    Hi wishingthemortgageaway & enjoytheshoes
    Thank you for reply.
    My mortgage will be finished after the fixed term. I understand why they donít want me to reduce the term length but it wasnít really explained clearly as I understood that by overpaying 5%each year then I would automatically reduce the term. As Iím not reducing the term what I thought I would do is continue putting £120/£130 per month into an account then each January that will pay my 5% & leave extra in my account as each year that passes of course my balance goes down & therefore my 5% amount goes down but if I leave the extra in the account to build when Iím a couple of years off the end of the full term I may have enough to pay early & redemption charge wonít be as much. This is what Iím hoping. I may have things muddled in my mind as itís all quite confusing & from what I read from Martin Lewis It put doubt in my mind as to whether I should be paying over or not. If I were to pay it all off now (not that I can afford to do that) I would have early redemption charge of £1123.39 plus balance of mortgage.
    Thanks again guys for helping me. Any advice truly appreciated
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