mortgage overpayment timing
Discussion
I phoned them and they said is makes no difference but i do have the following 3 options, which should i go for? All i want to do is overpay by £150 a month on a 68k mortgage, current monthly payment is £503.
Pay off your mortgage earlier by reducing your mortgage term.
Reduce your future monthly repayments.
Keep your existing payment and term 'as is'. At the next natural mortgage payment change, i.e. interest rate change, your repayment will be automatically recalculated
Pay off your mortgage earlier by reducing your mortgage term.
Reduce your future monthly repayments.
Keep your existing payment and term 'as is'. At the next natural mortgage payment change, i.e. interest rate change, your repayment will be automatically recalculated
I was on the SVR (bank_rate+2%) with Nationwide. When the rate started to dropped I said make the payment a fixed ammount - so say £653pcm in your case. At each step down in the bank rate the ammount of over payment effectivly increased, but my monthly payment/budget was still the same. Of course as the rate can only really go up, it would be the opposite case - until the required payment is greater than your fixed ammount.
I effectively took the 3rd option - which I think meant that I had a type of offset mortgage - where I could have taken some money out, or even taken a mortgage holiday (ie move to option 2). In the end it became option 1 - I'd reduced the balanced and hence remaining term to zero.
I effectively took the 3rd option - which I think meant that I had a type of offset mortgage - where I could have taken some money out, or even taken a mortgage holiday (ie move to option 2). In the end it became option 1 - I'd reduced the balanced and hence remaining term to zero.
I read this in the Irish Times last April and thought it was worth bookmarking. I haven't gone through their math but if the numbers stack up then we should ALL be making two monthly mortgage payments
http://www.irishtimes.com/newspaper/pricewatch/201...
http://www.irishtimes.com/newspaper/pricewatch/201...
Just ask them to take the extra £150 with your regular payment and then reduce the term.
Reducing the monthly payment is pointless unless you are making a large one off over payment, in your case and depending on the rate you are being charged you would see a monthly reduction of about 50 pence, however by reducing the term and keeping the payment the same this would be an extra 50 pence that you are then paying off the mortgage the following month.
Lastly, I assume that you will not be charged any redemption penalty on this over payment?
Reducing the monthly payment is pointless unless you are making a large one off over payment, in your case and depending on the rate you are being charged you would see a monthly reduction of about 50 pence, however by reducing the term and keeping the payment the same this would be an extra 50 pence that you are then paying off the mortgage the following month.
Lastly, I assume that you will not be charged any redemption penalty on this over payment?
seaninog said:
I read this in the Irish Times last April and thought it was worth bookmarking. I haven't gone through their math but if the numbers stack up then we should ALL be making two monthly mortgage payments
http://www.irishtimes.com/newspaper/pricewatch/201...
A quick scan through it suggests to me that for a lot of people, switching to fortnightly payments would have the exact opposite effect.http://www.irishtimes.com/newspaper/pricewatch/201...
egor110 said:
I phoned them and they said is makes no difference but i do have the following 3 options, which should i go for? All i want to do is overpay by £150 a month on a 68k mortgage, current monthly payment is £503.
Pay off your mortgage earlier by reducing your mortgage term.
Reduce your future monthly repayments.
Keep your existing payment and term 'as is'. At the next natural mortgage payment change, i.e. interest rate change, your repayment will be automatically recalculated
When we looked at doign this there were costs associated with anything that involved changing the regular payment. The only option that was free was to send a cheque every month.Pay off your mortgage earlier by reducing your mortgage term.
Reduce your future monthly repayments.
Keep your existing payment and term 'as is'. At the next natural mortgage payment change, i.e. interest rate change, your repayment will be automatically recalculated
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