Mortgage overpayment
Discussion
I've just upped my payments so I can breach this perimeter wall a few years earlier. Who knows rates might increase in the next deal I have so I'll be ahead of the game.
I must say Santander were exceptionally easy to apply the overpayment and I can take it off just as easily.
Does anyone else do this?
I must say Santander were exceptionally easy to apply the overpayment and I can take it off just as easily.
Does anyone else do this?
V1nce Fox said:
Yes, i’ve gone beast mode on doing mine. Once first lockdown started last march i’ve stockpiled the overpayments in an account instead for security against job loss but pretty much every penny goes towards it.
Smart move is drop into premium bonds and then draw out to overpayment. Yeah, bought a new house last Jan, rush job as me and the good lady started a business and wanted to get the sizeable mortgage sorted based on our decent "employed" salaries.
Took a 3 month mortgage holiday as our business started trading on March 1st then we went into lockdown on the 22nd. Now paying 50% on top of our monthlies to bring the loan down a bit so that come the end of the fixed term we're in a decent place to re-mortgage.
Took a 3 month mortgage holiday as our business started trading on March 1st then we went into lockdown on the 22nd. Now paying 50% on top of our monthlies to bring the loan down a bit so that come the end of the fixed term we're in a decent place to re-mortgage.
As previously mentioned it's much better to overpay into a vehicle that pays more interest than your mortgage is charging. Then once a year or when you renew your mortgage use the cash saved to reduce the amount borrowed.
Also, if you have any other debts it's usually better to pay them off first. I'd guess it could also make sense to pay the overpayment into your pension, especially if you are in the higher tax rate.
Also, if you have any other debts it's usually better to pay them off first. I'd guess it could also make sense to pay the overpayment into your pension, especially if you are in the higher tax rate.
Edited by rustyuk on Thursday 25th March 09:01
Sy1441 said:
Yeah, bought a new house last Jan, rush job as me and the good lady started a business and wanted to get the sizeable mortgage sorted based on our decent "employed" salaries.
Took a 3 month mortgage holiday as our business started trading on March 1st then we went into lockdown on the 22nd. Now paying 50% on top of our monthlies to bring the loan down a bit so that come the end of the fixed term we're in a decent place to re-mortgage.
I've heard rumblings that taking a mortgage holiday has impacted peoples ability to renew or increase their mortgage. Nothing concrete maybe Sarnie can comment. The same with taking a BBL, I've seen reports that people are being turned down for additional business finance.Took a 3 month mortgage holiday as our business started trading on March 1st then we went into lockdown on the 22nd. Now paying 50% on top of our monthlies to bring the loan down a bit so that come the end of the fixed term we're in a decent place to re-mortgage.
Again, just rumours and internet posts.
rustyuk said:
I've heard rumblings that taking a mortgage holiday has impacted peoples ability to renew or increase their mortgage. Nothing concrete maybe Sarnie can comment. The same with taking a BBL, I've seen reports that people are being turned down for additional business finance.
Again, just rumours and internet posts.
Yeah, heard that the mortgage holiday can have a negative impact on your credit rating, not that worried as it will be over 4 years from the mortgage holiday by the time I re-mortgage, I'm also self employed so that's the least of my worries to be fair.Again, just rumours and internet posts.
Business wise we have taken a BBL, haven't used any of it however we've secured substantial additional lending from the same bank no problem at all for purchasing an additional site later in the year,
rustyuk said:
As previously mentioned it's much better to overpay into a vehicle that pays more interest than your mortgage is charging. Then once a year or when you renew your mortgage use the cash saved to reduce the amount borrowed.
Also, if you have any other debts it's usually better to pay them off first. I'd guess it could also make sense to pay the overpayment into your pension, especially if you are in the higher tax rate.
Got a car loan finishing in October so that'll be even more I can overpay.Also, if you have any other debts it's usually better to pay them off first. I'd guess it could also make sense to pay the overpayment into your pension, especially if you are in the higher tax rate.
Edited by rustyuk on Thursday 25th March 09:01
I have a company pension so can't really add in adhoc funds? Be nice to have this mortgage down to 15 years left running us to im mid fifties.
Sounds morbid but we are going to inherit some funds over this 15 year period as well.
Fed up my job to be honest and want to at least get a job I enjoy for less money.
Have always tried to, although it was much clearer as to whether it was the right thing financially when the interest rates were slightly higher. Now that rates are sub 2% in some cases it probably makes more sense to max out the a stocks/shares ISA beforehand or some other higher returning account or pension top ups.
That being said I'm still planning on overpaying mine a fair bit, there's something satisfying about it, even if it might not yield the best return for the money. It is very tangible knowing it's building your equity and reducing the timeframe, as well as reducing what is ultimately paid to the lender.
That being said I'm still planning on overpaying mine a fair bit, there's something satisfying about it, even if it might not yield the best return for the money. It is very tangible knowing it's building your equity and reducing the timeframe, as well as reducing what is ultimately paid to the lender.
Overpaying the mortgage has made a big difference to me and my family. We have moved twice, and both times it allowed us to get onto higher rungs of the housing ladder than would otherwise have been possible. It also allowed us to build a big extension on our last house. The alternative to overpaying is saving, but you have to get one hell of a (taxable) risk-free return before it beats mortgage repayments. It is, effectively, tax-free saving.
Throttle Body said:
Overpaying the mortgage has made a big difference to me and my family. We have moved twice, and both times it allowed us to get onto higher rungs of the housing ladder than would otherwise have been possible. It also allowed us to build a big extension on our last house. The alternative to overpaying is saving, but you have to get one hell of a (taxable) risk-free return before it beats mortgage repayments. It is, effectively, tax-free saving.
A repayment mortgage is effectively an enforced savings programme - topping it up with monthly regular additional payment is more of the same. No doubt some can make more money from investments elsewhere it’s probably fair to say the mental health benefits of seeing mortgage balance being decimated is extremely worth while/let alone the actual upside of doing it.
anonymous said:
[redacted]
Exactly.We only took a small mortgage as we had a very favourable LTV.
We took a 5 year fixed rate, over a 3 year term, with an allowable, un-penalised 10% over payments of initial loan each year.
So upping the monthly payments to £2650 pm, will soon get this payed off.
I'm overpaying the maximum £7k aswel. Doing this for the fixed 5 year term and that leaves around 30k left where instead of remortgaging ill just pay it all off with no penalties. Thats the plan anyway. Possibly not pay the 30 off, use the savings to buy a student flat. Plans to end up with a good few of them and retire on the funds early. Will fully decide later but the max overpayment don't affect anything in my life since the mortgage was so small.
Yes, I’m currently 100% overpaying (and my monthly isn’t small).
I just don’t understand how people can PCP expensive cars etc etc when they have huge amounts left on their mortgage. I can’t do it. I’m so paranoid that I’ll get out of work sometime in the next years and not be able to make mortgage payments that I’m unable to spend money. My car is worth less than a day’s wages.
I just don’t understand how people can PCP expensive cars etc etc when they have huge amounts left on their mortgage. I can’t do it. I’m so paranoid that I’ll get out of work sometime in the next years and not be able to make mortgage payments that I’m unable to spend money. My car is worth less than a day’s wages.
BurtonLazars said:
Yes, I’m currently 100% overpaying (and my monthly isn’t small).
I just don’t understand how people can PCP expensive cars etc etc when they have huge amounts left on their mortgage. I can’t do it. I’m so paranoid that I’ll get out of work sometime in the next years and not be able to make mortgage payments that I’m unable to spend money. My car is worth less than a day’s wages.
I can fully understand it. I took your approach, and my mortgage was fully paid off last year during the first lockdown. Now I find myself with spare cash and can spend it on whatever, but I think the better approach would have been to enjoy things a bit! I just don’t understand how people can PCP expensive cars etc etc when they have huge amounts left on their mortgage. I can’t do it. I’m so paranoid that I’ll get out of work sometime in the next years and not be able to make mortgage payments that I’m unable to spend money. My car is worth less than a day’s wages.
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