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Mortgage repayment

(6 Posts)
NotAMumbutOnMN Wed 10-Feb-16 18:48:14

I have been thinking of how mortgage repayments work and am a bit confused on how this works in a hypothetical scenario. We have a capital and interest repayment.

Imagine that if we overpay £5000 now we would pay our mortgage 6 months earlier.

If we overpay another £5000 in a year's time would we 'save' more or less than 6 months.

KP86 Wed 10-Feb-16 18:52:01

A lump sum of £5000 would probably take a year or two off your loan (at least), once you take into account the power of compound interest.

Google for a lump sum calculator and play around with the figures.

MissLanaBanana Wed 10-Feb-16 19:18:09

There's a good calculator on moneysavingexpert that you can input different figures and it tells you how much you'll save.

MissLanaBanana Wed 10-Feb-16 19:19:13

www.moneysavingexpert.com/mortgages/mortgage-overpayment-calculator

NotAMumbutOnMN Wed 10-Feb-16 22:10:29

Thanks... That's great

Toomanytrousers Wed 10-Feb-16 22:13:06

I am not an expert, but I know when we did overpayments, the banks default was to reduce monthly payments but keep the term the same. We had to specifically Request the term was reduced. So watch out for that one!!

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