Mortgage overpayments

[Shallhaveafishyonalittledishy]

Sorry I’m posting for traffic, I just need to soundboard to see if my thinking makes sense because I’m sort of confusing myself

dc 2 gets 30 funded hrs in the new year and we always said (dh and i) we’d use some of this extra cash to make overpayments. The childcare bill will fall from about £600 to £300. So I was thinking, half that we’d use as overpayments and the rest savings. And then at the end of the year make an overpayment. But is there really any point?

then when the rate comes down (which it will, we’re on a high fix, so likely will come down as rates are falling), whatever the saving is, use that as over payment too. But that won’t be until end of 2025.

those overpayment amounts seem so minuscule though? Is there much point? We’ve got a long term right now, so the plan was to make overpayments when the monthly repayment is cheap and then reduce the term later.

does this make sense, I feel I’ve confused myself

the plan was to make overpayments when the monthly repayment is cheap and then reduce the term later.

I mean, if this is your aim then overpaying makes sense?

But if you've decided to reassess your ultimate goal, that's valid too. I'm not convinced by the obsession to overpay and pay the mortgage off ASAP. I'd rather enjoy my life more and have a bit more cash.

Money saving expert has a good calculator that shows if it's worth it or not. Generally if the mortgage interest rate is higher than the savings rate then you are better off overpaying your mortgage

The overpayment calculator on money supermarket is great and has been really helpful for me working out the impact of overpaying. It will tell you if you overpay £300/month how much interest you save and how much you take off the term. How much other savings do you have? We have an offset mortgage so that we can put as much as we like into the linked saving account and get the 'overpayment' benefit but we can get it back out if we really need it

Paying fortnightly is a big saving even without overpaying. https://www.loans.com.au/home-loans/first-home-buyer/does-paying-your-mortgage-fortnightly-save-money

But we found that overpaying meant that we didn’t feel any increases for a long time as we were already covering it. (We weren’t on a fixed rate). Eventually we had to up our direct debit but as the interest rates went down, we didn’t reduce our payment as we could manage it so each reduction increased our overpayment.

We paid a 30 year mortgage in 13 years and 11 months.

Do an overpayment calculation. We overpay around £350 a month and it will cut nearly 4 years off our term and save us £30k in interest! I think that’s definitely worth it.

I didn’t know there was an overpayment calculator. I’ll check it out.

the long term plan 5-7 years, to upsize with an annex, DM will sell her home and use the value to buy another home, plus what ever equity we have in our home to buy, mortgage free. Then potentially a small mortgage for any repairs or renovations needed to the property if the cash from DMs house isn’t enough and maybe a deposit for a BTL property.

with that in mind, is it worth it?