Should I overpay my mortgage?

[CobolMan]

We've had two mortgages and overpaid on both - by the age of 32 we cleared our first one. We then moved into a much more expensive house but were able to take out the same size mortgage as our first one. Within 4 years we had cleared that too - although not by overpayments only, I did cash in some shares but the bulk of the reduction came from overpaying.

In my experience it's a great feeling to know that your home is your home and nobody else has any financial interest on it.

[macca]

Here's a calculator I devised to demonstrate how offsetting works. It takes into account the interest you might earn on your savings (less tax paid) compared to combining your savings with an offset mortgage.

http://www.mortgages-online.co.uk/Mortgage_Calcula...

Offsetting or overpaying any mortgage where allowed can be compared to investing without risk. The return comes from a lower mortgage balance. Only a true offset mortgage will give you access to your overpayments should you need them back. Offsets are priced higher than traditional mortgages so you must use the facility to benefit.

[NoelWatson]

macca said:

Here's a calculator I devised to demonstrate how offsetting works. It takes into account the interest you might earn on your savings (less tax paid) compared to combining your savings with an offset mortgage.

http://www.mortgages-online.co.uk/Mortgage_Calcula...

Offsetting or overpaying any mortgage where allowed can be compared to investing without risk. The return comes from a lower mortgage balance. Only a true offset mortgage will give you access to your overpayments should you need them back. Offsets are priced higher than traditional mortgages so you must use the facility to benefit.

Surely you must have a high percentage of savings in relation to your mortgage balance for these to make sense?

[onomatopoeia]

macca said:

Here's a calculator I devised to demonstrate how offsetting works. It takes into account the interest you might earn on your savings (less tax paid) compared to combining your savings with an offset mortgage.

http://www.mortgages-online.co.uk/Mortgage_Calcula...

It seems to use a fixed mortgage rate of 3.75% to do calculations. Why assume that?

[anonymous-user]

macca said:

Here's a calculator I devised to demonstrate how offsetting works. It takes into account the interest you might earn on your savings (less tax paid) compared to combining your savings with an offset mortgage.

http://www.mortgages-online.co.uk/Mortgage_Calcula...

Offsetting or overpaying any mortgage where allowed can be compared to investing without risk. The return comes from a lower mortgage balance. Only a true offset mortgage will give you access to your overpayments should you need them back. Offsets are priced higher than traditional mortgages so you must use the facility to benefit.

First Direct who I'm with do an Offset at 2.39% (base rate + 1.89% tracker) which I think is competitive with traditional mortgages.

Edited by anonymous-user on Monday 5th July 12:13

[macca]

onomatopoeia said:

macca said:

Here's a calculator I devised to demonstrate how offsetting works. It takes into account the interest you might earn on your savings (less tax paid) compared to combining your savings with an offset mortgage.

http://www.mortgages-online.co.uk/Mortgage_Calcula...

It seems to use a fixed mortgage rate of 3.75% to do calculations. Why assume that?

3.75% is a typical rate currently available on this type of product (not all offsets combine savings plans like ISA's with your mortgage, some simply allow you to make overpayments. Allowing the user to enter their own mortgage rate does not acurately reflect the product but I do understand that this option might be useful, try this calculator instead http://www.mortgages-online.co.uk/Mortgage_Calcula...

[NoelWatson]

Bluequay said:

macca said:

Here's a calculator I devised to demonstrate how offsetting works. It takes into account the interest you might earn on your savings (less tax paid) compared to combining your savings with an offset mortgage.

http://www.mortgages-online.co.uk/Mortgage_Calcula...

Offsetting or overpaying any mortgage where allowed can be compared to investing without risk. The return comes from a lower mortgage balance. Only a true offset mortgage will give you access to your overpayments should you need them back. Offsets are priced higher than traditional mortgages so you must use the facility to benefit.

First Direct who I'm with do an Offset at 2.39% (base rate + 1.89% tracker) which I think is competitive with traditional mortgages.

Edited by Bluequay on Monday 5th July 12:13

I think it may be 1.99% + base, unless I'm looking at wrong page.

[anonymous-user]

NoelWatson said:

Bluequay said:

macca said:

Here's a calculator I devised to demonstrate how offsetting works. It takes into account the interest you might earn on your savings (less tax paid) compared to combining your savings with an offset mortgage.

http://www.mortgages-online.co.uk/Mortgage_Calcula...

Offsetting or overpaying any mortgage where allowed can be compared to investing without risk. The return comes from a lower mortgage balance. Only a true offset mortgage will give you access to your overpayments should you need them back. Offsets are priced higher than traditional mortgages so you must use the facility to benefit.

First Direct who I'm with do an Offset at 2.39% (base rate + 1.89% tracker) which I think is competitive with traditional mortgages.

Edited by anonymous-user on Monday 5th July 12:13

I think it may be 1.99% + base, unless I'm looking at wrong page.

It must have gone up since I took mine out, the arrangement fee however has come down, from £699 to £99

[DH2]

Bluequay said:

It must have gone up since I took mine out, the arrangement fee however has come down, from £699 to £99

Tracker mortgage in fluctuating rate shocker...
I've been watching it for a short while, and it has dropped from 2.09% to 1.99% and just last week from £999 to £99. My application is in.

DH2