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  • FIRST POST
    • MollyFTR
    • By MollyFTR 15th May 19, 10:51 PM
    • 3Posts
    • 1Thanks
    MollyFTR
    Overpaying mortgage?
    • #1
    • 15th May 19, 10:51 PM
    Overpaying mortgage? 15th May 19 at 10:51 PM
    We took a mortgage out in February 2019 for 160,999, it is a 35 year length with 2.49% fixed for 5 years, we currently pay 574.70 a month.

    My son is due to get his free 30 hours in nursery so I am thinking about overpaying on the mortgage as will have a lot less money being spent on childcare. I am also going to be earning more money as will finish uni that time too.

    On the mortgage documents I can see it says a capital reduction of 10% per annum can be made without incurring an early repayment charge. So does this mean I can only pay an extra 57.47 a month and is this worthwhile doing?

    Just looking for some advice so we are spending the money wisely.
    Thanks in advance
Page 1
    • Nebulous2
    • By Nebulous2 16th May 19, 4:34 AM
    • 2,304 Posts
    • 1,510 Thanks
    Nebulous2
    • #2
    • 16th May 19, 4:34 AM
    • #2
    • 16th May 19, 4:34 AM
    The capital is the 160,000. This means you can repay 16,000 in a year without penalty. If you're going to get anywhere close to that you need to check with your lender how it's calculated. Years vary from lender to lender, some being from mortgage date and some being Jan to Dec, as does the calculation on the capital sum.
    • MollyFTR
    • By MollyFTR 16th May 19, 2:55 PM
    • 3 Posts
    • 1 Thanks
    MollyFTR
    • #3
    • 16th May 19, 2:55 PM
    • #3
    • 16th May 19, 2:55 PM
    Thank you that’s very helpful and makes sense now
    • dimbo61
    • By dimbo61 16th May 19, 5:47 PM
    • 10,252 Posts
    • 5,561 Thanks
    dimbo61
    • #4
    • 16th May 19, 5:47 PM
    • #4
    • 16th May 19, 5:47 PM
    Have you got a Good emergency pot ?
    Money for a new car, boiler, washing machine ?
    Once you have say 6/9 months of income in savings then overpay every month
    • getmore4less
    • By getmore4less 16th May 19, 6:55 PM
    • 35,815 Posts
    • 21,923 Thanks
    getmore4less
    • #5
    • 16th May 19, 6:55 PM
    • #5
    • 16th May 19, 6:55 PM
    Emergency pots should be based on spending not income.
    • MollyFTR
    • By MollyFTR 16th May 19, 9:11 PM
    • 3 Posts
    • 1 Thanks
    MollyFTR
    • #6
    • 16th May 19, 9:11 PM
    • #6
    • 16th May 19, 9:11 PM
    We both have separate saving accounts for rainy days, and have already started the uni fund for our little one. Also have no debts which is why we are thinking of overpaying on the mortgage.
    • getmore4less
    • By getmore4less 17th May 19, 4:50 AM
    • 35,815 Posts
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    getmore4less
    • #7
    • 17th May 19, 4:50 AM
    • #7
    • 17th May 19, 4:50 AM
    With a rate of 2.5% there will be some places you can put it and get a bit more than that.

    Pensions are another option.

    The mortgage is an easy option and flexible, look what a larger payment can do.
    current
    Borrow rate payment term interest
    161k 2.49% 575.70 35y 0m 80,376

    overpayments
    Borrow rate payment term interest
    161k 2.49% 575 35y 0m 80,303
    161k 2.49% 580 34y 6m 79,076
    161k 2.49% 590 33y 7m 76,736
    161k 2.49% 600 32y 9m 74,536
    161k 2.49% 650 29y 1m 65,237
    ...
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