Mortgage overpayments

rodders

rodders

rodders

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Evening all,

I was going to up my overpayments to the max to speed up the last £95k we owe. I used to be able to pay £500pm extra with no charge, but my new mortgage is 10% per annum.

So I'm my mind that's £9,500 this year, then I have to adjust each year as the loan value decreases...so far I think I'm right.

But in my offer it says:- Your overpayment allowance: During a 12 month period, you can make one or more overpayments totalling up to 10% of the original loan amount granted (£14,448.80), without incurring early repayment charges.

Where do they get the £14k from?!

If I do £500pm, its not near the £9,500, let alone £14k. But I'm just curious?
 
rodders said:
Evening all,

I was going to up my overpayments to the max to speed up the last £95k we owe. I used to be able to pay £500pm extra with no charge, but my new mortgage is 10% per annum.

So I'm my mind that's £9,500 this year, then I have to adjust each year as the loan value decreases...so far I think I'm right.

But in my offer it says:- Your overpayment allowance: During a 12 month period, you can make one or more overpayments totalling up to 10% of the original loan amount granted (£14,448.80), without incurring early repayment charges.

Where do they get the £14k from?!

If I do £500pm, its not near the £9,500, let alone £14k. But I'm just curious?
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Was the original loan amount 148k?
 
Could be the total repayable under the loan. 95k at 19yr 4.7% is 140k ish.

calc would be time on fixed rate and then assume SVR for remaining term which pushes up the average rate.
 
Just for knowledge you can overpay beyond that 10% but it would incur a percentage charge however it could be worth looking at as the charge could be £100 for an extra £2k for example.
 
decto said:
Could be the total repayable under the loan. 95k at 19yr 4.7% is 140k ish.

calc would be time on fixed rate and then assume SVR for remaining term which pushes up the average rate.
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my deal is 10 years @ 3.24%
 
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sja360 said:
Just for knowledge you can overpay beyond that 10% but it would incur a percentage charge however it could be worth looking at as the charge could be £100 for an extra £2k for example.
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I just want to do £500pm, that will clear it in 8 years ish, according to online mortgage overpayment calculator
 
Derek W said:
Are you still with the original mortgage supplier? If so then when you renew it's still based on the original amount of borrowing rather than the renewel.
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Semple said:
Was the original loan amount 148k?
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I expect this, 10% of the original loan amount.
I've just switched to a new deal (£40,000 Mortgage) but my overpayment allowance is 10% of £74,000, which was the original loan amount.

Give them a call, and they will tell you for sure or look online if you have online banking/an App with them.
 
Just remembered, we did port our mortgage, maybe that was around £140k at that time.

Either way, I'm safe paying £500pm
 
Wouldn't it work out better if you save in a high interest account then pay off a lump sum each year as you'll earn more interest on your savings.
 
Mine is 10% of the total left to pay at the beginning of the financial year. I can pay it all in one lump sum right from the 1st of April, or in many smaller payments throughout the year.

So far, I have managed to pay the maximum overpayments.
 
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rodders said:
Yeah, it's good they've added that now.

@Fluke? Some instances were better, but you're assuming a high return of 8% or something. As you don't know, it's a bit of a gamble.
Paying off mortgage is absolute and a weight off the shoulders.
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Only if your mortgage interest rate is 7.something% though right, which I presume cannot be the case? And you would have better access to the cash in case of emergency.

:edit: hmmm it seems there's issue with my logic/maths/something, will investigate. Good chat :p
 
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I just ran some scenarios on the overpayment calculator and it seemed reasonable to do it.

Yes, more could be made if a good investment is made, but that could be lost if it goes wrong.

I can use my overpayment buffer to pay the mortgage in an emergency, but I can't draw it back.
But I do have over cash available for other emergencies.

I do also put other money in a couple of other high risk ISAs, to make me the big money (hopefully)

So overall I'm not putting all my eggs in one basket.
 
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