How to pay off my mortgage early - can someone kindly do the maths for me

[washinggotdarkedon]

Just re-mortgaged onto a fixed rate for 5 years. The actual term is for 17 years but I've come up with the pie in the sky idea of paying the whole thing off in 5!

I've borrowed £147,000 at 1.99%. Could someone please calculate how much I'd have to repay monthly to clear it in 5 years? I've been on the BBC site and come up with the figure of £2,598 per month. Does that sound right?

Yes, that sounds about right

That sounds a bit low as even without interest £147k over 5 years would be £2450/ month. Most mortgages also have an early repayment charge where you can only overpay by so much a month (usually about 10%).

Check your mortgage Ts & Cs, most allow you to repay an extra 10% per annum without charges, sounds like you will be well over that?

Tell a lie have just had a quick calculation and it seems about right, joy of low interest rates!

You may hit penalty charges going that quickly. With my mortgage it is fine to overpay but if you overpay by more than 10% of the outstanding amount in any 1 year then the overpayment is subject to a 2% penalty charge. You would be charged quite heavily as you would be effectively paying off 20% in y1, 25% in y2 33% in y3 so would be constantly incurring penalty charges unless your arrangement is very flexible.

Moneysavingexpert has the monthly payment as £2576.

moneysavingexpert

Lots of cross-posts saying the same thing.

Instead of incurring overpayment penalties, restrict your overpayments to 10% of what is owed and put whatever else you can spare into an isa. Then when the 5 year term is elapsed you will hopefully be able to pay off the remaining balance with no penalty.

Like others have said, you need to check the terms and conditions. Most fix rate mortgages have a limit on how much you can overpay- usually 10%.
We took out a 5 year fixed rate - taken out at nearly 8% - that only allowed the 10% overpay. As soon as it went to variable, there was no limit on how much we could overpay. There's a fixed charge for early repayment of £150 when we finally pay it off next year fingers crossed

I reckon that if you start your repayments at 1900 per month and reduce them by 10% each year on the anniversary of the loan then you should stay under the trigger for the 10% maximum repayment penalty charges.

Meanwhile each month put the difference between £2,620 and the current monthly repayment into a savings account so as to keep your outgoings constant.

After 5 years your fixed term ends, your outstanding debt will be just over £63k and your savings will be circa £63k.

This is slightly more expensive than you hoped as I have assumed effectively zero interest rate as rates for savers are so terrible at the moment. If you can find a decent savings vehicle you may be able to bring that monthly savings amount down a bit.