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Mortgage Overpayment question

(9 Posts)
Shitton Mon 01-Feb-16 23:10:11

Hi,

Wondered if anyone could advise me. I have been over paying on our mortgage recently, we have a portion of it on interest only and a small amount of repayment. I the idea was to overpay to reduce the interest only borrowing. I have received a letter today which advises that the over payments are allocated to the repayment section first and to call if we would like that changing. The interest rates and length are the same but I wonder if it is advisable to get it swapped against the IO amount or does it not matter?

Any advice gratefully received - thanks

annielostit Tue 02-Feb-16 07:34:07

In real terms your not paying anything off the IO part of your mortgage.
When the term runs out you'll still owe what you borrowed.
It would be wise to pay off that balance with your overpayment. Your repayment is looking after its self

annielostit Tue 02-Feb-16 07:35:44

Unless you have ££££££ under the bed to cover itgrin

TalkinPeace Tue 02-Feb-16 21:21:53

I agree with Annie,
request that all overpayments are thrown at the IO part

Shitton Wed 03-Feb-16 19:59:55

Thank you I will the mortgage company them a call

caroldecker Wed 03-Feb-16 20:51:43

it doesn't matter - as is you will pay the repayment off faster and then turn interest only to repayment and pay off, or you pay them both off together over a longer period.

annielostit Thu 04-Feb-16 08:48:48

The problem with not paying any IO off now carol is when the term runs out she might not be in the position age wise etc to remortgage the debt - that's the problem with IO mortgages, you never get the balance down.

lljkk Thu 04-Feb-16 09:52:13

I think other posters are saying convert it all to repayment, which is what I think OP should do, too.

Shitton Thu 04-Feb-16 17:12:03

Having called Nationwide there is only 1500 left on repayment then it will transfer to reducing the IO. At the moment I am not planning on coming off IO as the rate is only 2.5 and has great flexibility regarding overpaying, we are lucky that we can throw a fair bit at the mortgage and overpay much more than we would if it was a repayment. Obviously if that changes we will need to readdress the situation.

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