Extra Mortgage Payments

[Peoplesoft bloke]

There seems to be a received wisdom that overpaying on a repayment mortgage at present is a bad idea - but Shirley if the overpayment reduces the o/s balance it will be a good thing, particularly when rates rise again (I have a tracker mortgage) since the interest component of any payments is currently small (about 1.5% in my case) - or am I missing something (again)?

[SueEllen]

Wisdom is once you have sorted out your debts, other long term savings and investments i.e. pension then over pay on your mortgage.

[Old Greg]

There seems to be a received wisdom that overpaying on a repayment mortgage at present is a bad idea - but Shirley if the overpayment reduces the o/s balance it will be a good thing, particularly when rates rise again (I have a tracker mortgage) since the interest component of any payments is currently small (about 1.5% in my case) - or am I missing something (again)?

If you are going to overpay by 10k, and you can get a better return (after tax) elsewhere, do that. As long as you're able to withdraw it quickly and overpay if interest rates go up (if that worries you).

[northernladuk]

Depends on what product you have and the terms around the overpayments. Some people still have products that allow you to over pay and also draw down on the overpayments at anytime you wish with no financial penalty. Stuff all your spare cash in there to reduce interest (which is neglible now of course) and then take it back when you need it. Happy days.

Any other product than this then as SueEllen says I would put at the back of the queue of other investment/money saving opportunities.

If you believe however that the interest rates are going to rocket then you need to be overpaying now. No good when suddenly your interest payments are 4%+ higher.

[Dearnla]

Mortgage Calculator: Simple calculator for repayment & interest only mortgages...

See Martin Lewis' site to work out why you want to over pay. It's not about the monthly payments, it's about how much you actually end up paying.

So, if you have a £100k mortgage and pay it off 5 years earlier, you save £20k on the deal.

[jmo21]

Mortgage Calculator: Simple calculator for repayment & interest only mortgages...

See Martin Lewis' site to work out why you want to over pay. It's not about the monthly payments, it's about how much you actually end up paying.

So, if you have a £100k mortgage and pay it off 5 years earlier, you save £20k on the deal.

yep, I am overpaying 3 times my minimum mortgage payment amount.

I don't have any other debts that need sorted first though.

T - 5.5 years til mortgage free*

*until missus wants to get a bigger house, more babies arrive etc etc

[MarillionFan]

Reduce your highest interest debts first.

If your mortgage is less than you could get if you invest the money elsewhere, then invest it elsewhere.

[Paddy]

There seems to be a received wisdom that overpaying on a repayment mortgage at present is a bad idea - but Shirley if the overpayment reduces the o/s balance it will be a good thing, particularly when rates rise again (I have a tracker mortgage) since the interest component of any payments is currently small (about 1.5% in my case) - or am I missing something (again)?

I have a similar problems with a mortgage in which overpayments were made and the building society credited them to a holding account not paying interest. What is worst they lost old payment records when the building society merged.

[SueEllen]

*until missus wants to get a bigger house, more babies arrive etc etc

Convince missus that she wants to expand her knowledge and do a higher powered i.e. earn more income job. Once she gets there she won't be so keen on getting a bigger house.

[Peoplesoft bloke]

Thanks all - some good stuff here.