How much real difference can overpaying a mortgage make?

[VinceFox]

The initial message was deleted from this topic on 27 April 2014 at 21:36

[survivalist]

Try this

http://www.moneysavingexpert.com/mortgages/mortgag...

[VinceFox]

That's exactly what i was looking for thanks

[vescaegg]

It can make an unbelievable difference! Without looking at a calculator like the one above, its quite hard to imagine but it really is astounding how much you can save.

[scottri]

vescaegg said:

It can make an unbelievable difference! Without looking at a calculator like the one above, its quite hard to imagine but it really is astounding how much you can save.

Its quite amazing. I have just set up an overpayment as a result of reading this and using the calc. Even relatively small increases can save 10's of thousands and years off the term.

[bogie]

a good rule of thumb used to be if you double your payment on a 25 yr repayment mortgage, you will pay it off in 7 years

...just goes to show, even with low interest rates, just how much of the 25 years payments is interest.....

[truck71]

I'm about to start over paying, I assume it's best to reduce the term and keep the standard payments the same?

[scottri]

truck71 said:

I'm about to start over paying, I assume it's best to reduce the term and keep the standard payments the same?

Thats what i'm doing. Oherwise your total payment would keep dropping and you'd be paying off less each month.

[vescaegg]

truck71 said:

I'm about to start over paying, I assume it's best to reduce the term and keep the standard payments the same?

make sure you tell them you want to do capital overpayments, keeping the standard rate the same. I enquiried once and until I got someone who knew what they were taking about, they said they would reduce my 'normal' monthly payment and it would still take the full term which makes it pointless!

[VinceFox]

mini update, i'm all over this. only problem is that there's a cap as to how much i can overpay per month. might be time to look elsewhere.

[scottri]

VinceFox said:

mini update, i'm all over this. only problem is that there's a cap as to how much i can overpay per month. might be time to look elsewhere.

Have you considered asking for the term on your mortgage to be reduced to increase the payments instead? My bank only wanted £20 fee to make that change, although clearly you need to be able to commit to the higher monthly outgoing on a more permanent basis.

[VinceFox]

scottri said:

VinceFox said:

mini update, i'm all over this. only problem is that there's a cap as to how much i can overpay per month. might be time to look elsewhere.

Have you considered asking for the term on your mortgage to be reduced to increase the payments instead? My bank only wanted £20 fee to make that change, although clearly you need to be able to commit to the higher monthly outgoing on a more permanent basis.

never thought of that, i'll look at it.

[Rick101]

vescaegg said:

make sure you tell them you want to do capital overpayments, keeping the standard rate the same. I enquiried once and until I got someone who knew what they were taking about, they said they would reduce my 'normal' monthly payment and it would still take the full term which makes it pointless!

Does it make a difference?

I stretch my term as long as possible. Currently 33 yrs remaining. As long as your balance is reducing quicker than planned, does it matter?

[Pulse]

It's well worth doing, that's for sure. We started overpaying, and it quickly just starts rolling!

We had our mortgage for just over 6 years, and it's all gone now. Started overpaying at about 2 years in, realising we could save some money, and then it just rolled on and on.

Our mortgage was originally 25 years, so what was said above is pretty accurate!

[CaptainSlow]

One thing to consider, and you'll have to do a comparison on the relevant rates, is paying the over payments into an ISA instead. In years to come you may want to use the money for something else and getting money out of an ISA is much easier than an equity release.

[VinceFox]

CaptainSlow said:

One thing to consider, and you'll have to do a comparison on the relevant rates, is paying the over payments into an ISA instead. In years to come you may want to use the money for something else and getting money out of an ISA is much easier than an equity release.

Very true. Got a chunk stashed in isas but interest is criminally low. Overpaying mortgage would come out of salary, not savings. Those are for sweets.

[MajorProblem]

Get an offset mortgage,

Pay off as much as you like and take it all back if you need it.

[bob1179]

I've just stumbled across this thread and overpaying is something I'd like to do. I am looking at just paying 10% more per month. According to the calculator, it would result in me paying off my mortgage off five years earlier.

[VinceFox]

bob1179 said:

I've just stumbled across this thread and overpaying is something I'd like to do. I am looking at just paying 10% more per month. According to the calculator, it would result in me paying off my mortgage off five years earlier.

Looks like this is an eye opener for a few of us. Good result!

[Sir Bagalot]

Also look beyond the mortgage.

Lady B and I have max regular savers with First Direct paying 6%, when they mature after 12 months we simply use the entire payment straight into our mortgage.