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Matt.H

posted on 16th Jul 09 at 20:52

Yeah...The mortgage is the only debt I have. Made sure of that before I bought a house.


Ian

posted on 16th Jul 09 at 17:54

By the way, my advice assumes you've no other debts.

You wouldn't, for example, overpay if you had personal loan or overdraft interest accruing while you were moving money elsewhere.

[Edited on 16-07-2009 by Ian]


strick206

posted on 16th Jul 09 at 08:55

Defo overpay each month, it will have far more benefit to you than putting it in a savings account, will shortern the term of your mortgage or lower the repayments if needed.

I will be trying to overpay where i can when my house finally goes through, but it will be unlikely for the first few years


a_j_mair

posted on 15th Jul 09 at 16:00

quote:
Originally posted by a_j_mair
eggs in the one basket


better to have a few options imo


Cosmo

posted on 15th Jul 09 at 15:39

He is only looking to pay £94 extra a month over. He could save up a year and more or less pay that whole lump saved over the next 2 months if he wanted (given his is a similar limit to yours).


RichR

posted on 15th Jul 09 at 15:35

quote:
Originally posted by a_j_mair
id stick it in a savings account, then overpay a lump sum after you have a little saved up

dont want all your eggs in the one basket imo


If I pay a lump sum I get hit with overpayment charges, If I pay upto £499 overpayment per month I get no overpayment charge.


a_j_mair

posted on 15th Jul 09 at 15:02

id stick it in a savings account, then overpay a lump sum after you have a little saved up

dont want all your eggs in the one basket imo


Dan

posted on 15th Jul 09 at 09:22

Have a look on money saving expert, there was a big article about it a lil while back. I would defo overpay.


A2H GO

posted on 15th Jul 09 at 07:09

Also, most mortgage companies, say you overpay all the time and so are in 'credit' with your payments by for example by £4000 and your payments are £500 a month, they will let you stop paying for 8 months and just use the money you have overpaid by, so if you ever get in a situation where you loose your job ect you wouldnt have to pay the mortgage anyway. Im with britannia and they allow this but check it out with your provider first.


Matt.H

posted on 14th Jul 09 at 20:50

Thanks guys...as said above, this was my first choice but cos of what a mate said it seemed a good idea at the time to go with that. Will give my mortgage firm a ring and see what I can do. Cheers


_Allan_

posted on 14th Jul 09 at 19:52

quote:
Originally posted by Ian
Overpay.

You would need a fantastic rate to offset the interest accrued on a debt of that duration.


+1

Although it would be nice to get your hands on the cash if needed, even with notice etc... You would need an excellent interest rate as said. At the moment it's not the best time for savings rates. As the overpayment is optional you could contnue to do so until interest rates pick up.


Ian

posted on 14th Jul 09 at 18:08

Overpay.

You would need a fantastic rate to offset the interest accrued on a debt of that duration.


RichR

posted on 14th Jul 09 at 12:39

even if I'd only managed £100 a month it would still be £1800 extra capital paid off!


RichR

posted on 14th Jul 09 at 12:38

If it was only short term its probably not worth it but if you could continue it for a good duration of 3/4/5 years; it would be worthwhile.

I looked over my mortgage statement the other day and I think I've paid approx. £2750 off the capital for £13,000 of payments. If I'd hit the maximum permissible overpayments over that 18 months I could have paid off an extra £8982 off the capital.


Cosmo

posted on 14th Jul 09 at 12:28

He shouldnt fall behind anyway, as he'll have this money saved should he lose his job etc. and also be able to afford to live off it.

If its all in his house he is going to struggle to free up that cash if he loses his job.


AndyKent

posted on 14th Jul 09 at 12:27

Yep, as above - I would be overpaying as well.

Its going to earn naff all in a savings account at the moment so I'd be paying off as much as possible before the interest rates go up again.


RichR

posted on 14th Jul 09 at 12:26

I can overpay by £499 per month before early repayment charges kick in. I worked out that if I start doing that from January, I'll pay the mortgage of in 12 years or so instead of the 23 we have left and save a ridiculous amount in interest payments.

The other argument for overpaying is thta a bank/building society is likely to be more lenient if you stuff up/fall behind with normal payments as you would be ahead in real term payments. With my mortgage I can take pre-arranged payment breaks but they're easier to set up if you're already ahead with payments


A2H GO

posted on 14th Jul 09 at 12:06

Me personally id pay it off the mortgage each month, remember no interest is charged on overpayments, they come straight off the balance meaning you can either shorten the term or lower the repayments for when rates go back up. Again, it depends on the circumstances, are you likely to need the money in the near future?


BlueCorsa

posted on 14th Jul 09 at 12:05

I overpay by about £250 per month, about 2 years ahead on paying it off already.


Cosmo

posted on 14th Jul 09 at 11:56

quote:
Originally posted by Matt.H
As I now owe more than what the house is worth I wanted to try pay some off to get that down abit so I'm in a better position to jump on a fixed rate if mortage rates were to start going up again.


No reason why you cant then throw what you've saved in to a new mortgage deal as a larger deposit to lower the amount you'd need to borrow.


Matt.H

posted on 14th Jul 09 at 11:52

Cosmo...I agree with you. One good reason for having it in my savings is so I can get to it if need be. Especially with work being sketchy at the minute. Im not too fussed about gaining interest on savings as to get a good rate you need a silly amount of money. Just aslong as I know where my money is I'm happy.

As I now owe more than what the house is worth I wanted to try pay some off to get that down abit so I'm in a better position to jump on a fixed rate if mortage rates were to start going up again.


whitter45

posted on 14th Jul 09 at 09:18

in my opinion 100 a momth extra over a short term is not going t make any difference so I would enjoy it or save as rates are bound to go up in the near future i.e next 2 years


Cosmo

posted on 14th Jul 09 at 09:08

Id personally be putting it away into a savings account or ISA.

Few reasons really (without doing the maths behind it all admittedly) - Id hazard a guess the monetry difference between the two is next to nothing. If you are putting it away then you have access to it for a 'rainy day' just incase something happens and you really need it, if you were putting it in to the mortgage then you would really have access to it.


Matt.H

posted on 14th Jul 09 at 09:02

Recently I have just dropped off a 2yr fixed deal with a interest rate of 6.09%. I'm now on a rate of 4.78% or there abouts. This equates to my mortgage being £94 cheaper a month. No i was goin to continue paying off my mortgage at the amount when it was 6% but a mate said i'd be better at putting the difference into an ISA or savings account. I went with the savings account option with the intention of paying a lump sum off. BUT...after seeing a bloke I work with he said i'm better off overpaying each month as interest is calculated daily. Now i know i dont get penalised for making overpayments but just wondered what people on here thought was the best option.

Thanks.