Home Home, Law & Money
Come and join our Support Circle, every Tuesday, 8 - 9:30pm! Anyone is welcome to join. Sign up here
Read the community guidelines before posting ✨

does anybody here overpay their mortgage?

MixBotMixBot Posts: 8,656 Automated Account
me and my boyfriend are thinking of doing this whilst we are young, have no kids, no proper financial committments, etc.

we currently have a 35 year mortgage which is a verrrrryy long time.

according to calculators online, if we overpay our mortgage by £500 per month (which is the min you can with our mortgage provider), we'll have it paid off in just over 12 years (so we'd have it paid off over a period of 13 years, not 35!)

i'm just wondering if anybody else does it and whether its actually as good as it sounds? seems a bit too good to be good to me, lol! i mean, overpaying by £500 a month knocks 22 years off our mortgage and a whopping £110,000 off in interest!!!!! it seems much more sensible to overpay our mortgage than it does to put money in a savings account.

my boyfriend wants to do it because at the mo, we have a fixed interest rate for 5 years and he is stressing that if in 4 years, the interest rates are sky high, we'll get screwed over and we might possibly not be able to afford the repayments (depends on what jobs we have, etc!) so he wants to reduce the amount we owe by quite a bit.

does anyone here do it? has it worked out for you? has it knocked alot of time off your mortgage?
Beep boop. I'm a bot.

Comments

  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    If you can, then do it, they're not lying to you about the figures.
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    I don't overpay my mortage but I did with my car and paid it off a lot sooner and it saved me a lot of interest.

    At the moment me and the bloke are paying off our overdraft caused by not owning the entire deposit and when that's finished we may start overpaying our loan. It's more futile however as the loan is indexed and the total amount we owe just goes up up up every month.

    I'd say it's a good idea to overpay if you've got the means.
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    it just shocks me you know. by overpaying your mortgage, you save SO much money. it makes you realise how much interest they actually pile on top of your actual mortgage.

    just read the terms and conditions properly. the min payment isn't £500 per month. its £500 per year/10% of mortgage balance. even so, the savings are the same.

    its just really shocked me. i didnt realise making overpayments would make such a difference. i've been telling my boyfriend for months now he's silly for suggesting it but after looking at that mortgage calculator :o bahhh, i hate it when he's right about stuff! :grump:
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    Sounds good, if you can afford it deffo go for it :) good luck/well done.
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    Hello,

    Financial commitments have us all worried at times, especially when it's a debt that we owe to someone else. So it's great that you are thinking about how to sort your finances for the future.

    Overpaying your mortgage sounds like a great idea. As you've already found out by the calculations; you could in theory save a lot of money.

    However, a few points to look out for;

    1. Some lenders have restrictions on how much you can actually overpay. It might be a good idea to read your terms and conditions carefully (as you already state that you have done) to check for any such restriction.

    2. If you were going to ever make a lump sum overpayment (for example if you received a bonus from work), also check that there is no restriction on this.

    3. It's worthwhile to check how your interest is calculated.
    If it is yearly then overpaying will not actually benefit you. This is because the lender will calculate the interest based on the total amount of the loan at the beginning of year even if every month the loan amount is decreasing.
    However, you may find this is not a problem for you as your interest may be calculated monthly or even daily.

    You might also want to read the article about 'Mortgages' on theSite.org's website.
    The section called 'Should I repay my mortgage early?' will be of most relevance to you. It also includes a link to an independent financial advisor.


    Hope that this helps. :)
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    We have been overpaying out mortgage by £250 for nearly a year now. This was because our fixed rate period ended and due to house prices falling since we took out our mortgage and us subsequently owing more than 95% of the value of our house, we were unable to go onto a new deal and had to go onto the Base Mortgage Rate. As mortgage rates have dropped so much (we were fixed at 6.34% and the BMR is 2.5%) we decided to continue paying what we had been rather than getting use to paying just 2.5% and then getting so use to a low monthly payment and struggling when rates go back up. We also figured it made sense to overpay while we can so we can pay the 30 year mortgage off quicker and save loads on interest. Another perk is that last month, due to my hubby's company not paying him on time, we couldn't afford to make our payment. As we have alot in an overpayment reserve we were able to use this to pay our mortgage that month, so we were not penalised for missing a payment. So to me this makes sense as if the money were in a savings account I would be tempted to spend it, but at least we have the option of borrowing back the overpayment reserve if we really need it but at the same time we are drastically reducing our mortgage term and are saving loads. I say do it :thumb:
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    v
    L1ttleOne wrote: »
    Hello,

    Financial commitments have us all worried at times, especially when it's a debt that we owe to someone else. So it's great that you are thinking about how to sort your finances for the future.

    Overpaying your mortgage sounds like a great idea. As you've already found out by the calculations; you could in theory save a lot of money.

    However, a few points to look out for;

    1. Some lenders have restrictions on how much you can actually overpay. It might be a good idea to read your terms and conditions carefully (as you already state that you have done) to check for any such restriction.

    2. If you were going to ever make a lump sum overpayment (for example if you received a bonus from work), also check that there is no restriction on this.

    3. It's worthwhile to check how your interest is calculated.
    If it is yearly then overpaying will not actually benefit you. This is because the lender will calculate the interest based on the total amount of the loan at the beginning of year even if every month the loan amount is decreasing.
    However, you may find this is not a problem for you as your interest may be calculated monthly or even daily.

    You might also want to read the article about 'Mortgages' on theSite.org's website.
    The section called 'Should I repay my mortgage early?' will be of most relevance to you. It also includes a link to an independent financial advisor.


    Hope that this helps. :)

    thank you :)

    our interest is calculated monthly which is good.

    we have decided to overpay it by £500 per month whilst we are in the position to do so. it seems silly not to really if you can do it. even though our interest rate is rather low, the amount of interest thats added on each month is actually quite alot :impissed: just wanna get it all paid off as soon as i can. banks rip you off really!
This discussion has been closed.