Overpaying on mortgage

[AIMD]

I am wondering how people have found is most useful to overpay their mortgage?

Do you save a lump sum then overpay or make regular overpayments.

I’m thinking of paying maybe an additional £100 a month on the mortgage (we have daily interest).

I overpay on my mortgage to the same tune that I add to my pension. I am both old and with a whopping mortgage with a long lifespan so retire at 60 I need to do both. Gulp.

We overpaid ours every time our wages increased, knocked it out in ten years and have not only paid easily a third less in total but have been able to sock away money ever since and ride over redundancies and one of us going back into full time education. It's tremendously freeing.

I love this. After years of being married to a spend thrift I'm so enjoying saving money.

Where can I find out my interest rate?

Ohio - do you have the paperwork for when you took out or renewed your mortgage? It will say on there.

I'll be able to get it when the kids are in bed. I thought I'd find it on the app. I'm torn as to what to do. On the one hand I've not much money behind me. On the other hand saving money and the relief of being mortgage free, amazing.

@OhioOhioOhio I’m Halifax and mine says on the app.

Paid extra each month

We do a combination of both. I get pains 13 wages a year so my 'extra' wage goes to the mortgage. We also rounded our monthly payment up from £518 to £600. According to the estimates we've knocked off 7 years already!

Wow thank you so much everyone

I will check out if there are any penalties before I proceed. Our mortgage has just moved from tesco to Halifax so waiting for details from them.

I like the idea of being able to pay overpayments a little bit at a time as that suits my mentality too and will keep me motivated. That how I pay into my savings at the moment. Fingers crossed I can do it online.

In terms of investment....I’ve never even though of investing and it all seems scary and uncertain. I’m unlikely to have a lot of spare cash so I’d rather put that into something that will offer security.

I have been saving for a while and have about £4000 in an account I had put aside as possible savings for the kids. However I’m wondering if it would make more sense to pay that off the mortgage? Anyone got thoughts on this? Obviously I’d like to have some savings to give the kids when they’re adults and looking at mortgages themselves. However I’m wondering if we’d be better putting that off the mortgage and then obviously we’d be mortgage free earlier and possibly have more prospect of offering children financial support when we don’t have a mortgage??

ohio yes, I did a tenner for a few years (I'm a LP) and it's already shaved a year off it. I was SO excited when I realised I'd reached the halfway point sooner than planned.

Thank you pp, I found it on the app. Woulf it also say about regulations for overpayment?

I forgot I was going to try and organise my savings into 13 months. I love that idea. Actually does anyone do 14 month savings for summer? Quite like that idea too. Am a bit scared to give any money away on mortgage payments because there's not much extra at the moment and can't see there being.

Yes increased my direct debit and dropped lump sums into the account as and when a spare chunk of cash built up.

@ohioohioohio we started out paying £10 a month. As I earned more after DS2 got older we could afford £100 a month. Hoping to do more also. We were pleased that, having been awarded a mortgage holiday during covid, our repayments will only go up by £3 after. We think it must be because we've always overpaid 🤷🏼‍♀️

@AIMD with regards to savings for the kids, I think it depends on when you would need the money and what it could earn elsewhere. We've just remortgaged and put in a lump sum of inheritance I'd planned for DS. The way I've squared it off with DH is that we won't need it for DS for a long time to come, plus we intend to move house in about five years time, so for now it makes sense not to be paying mortgage interest on it, but with the agreement that we review in five years, and if we need it out then, we would put less capital into a new property if needs be.

Keep the £4000 separate - it's not just a kid's fund but a super-emergency fund in case something happens.

When you get to £4000 left on the mortgage, you can choose then :)

@AIMD is that your only savings? If so I'd keep it as emergency money/kids because you can access it at any time if you need it.

You could do overpayments then put rest to build up more savings then at the end of the year just pay in a one off lump sum overpayment if you realise you won't be accessing it for a while.

Best of both.

I'm always disappointed when I read threads like this... If I overpay by £200 a month, I'll reduce my 15 year mortgage to 12 years..... I guess my mortgage is bigger than average.....

Yeah, I'm wondering over paying my mortgage in a different account then when it's reached say £1000.00 deposit it in my actual mortgage and start again. I'll phone tomorrow and find out about over payments.

Yes, good points from pp, further to my reply about the kids' savings, if those are your only savings, you should keep some emergency cash more accessible, but I'd assumed separate from your rainy day pot.

It really depends on where you are in your mortgage if your within first 6yrs best pay as much as u can every month after that you change it up a bit. Like I said I'm into 8yrs now so my priority is building up emergency savings incase of job loss so I'm not overpaying right now but I did in my first 7 years because that is where you save the most interest.

My rate was 3.25% back then got it down to 2.34% and finally got it down to 1.65% remortgage this month. So I saved more interest in y early yrs then I will now

I just calculated ours and for a monthly increase, it only equals 1 year early. How shit is that?

@Oblomov20 are you on a low interest rate? How long are you into your mortgage?

I think it’s normal for there to be no penalties unless you’re overpaying by more than 10% of the total amount owed per year.
Anyway, your mortgage provider can advise. DH and I have a huge mortgage as we’re in London, so we overpay by £225 a month to reduce the total term to 21 years instead of 25.

We overpaid as much as we could on our flat (first purchase) and then our house, though we were never in any danger of managing 10% a year except when I got a redundancy payout.

We now have 9 years and are overpaying into DH's pension instead, as for complicated reasons that should be a much better deal (he's a 40% taxpayer and hopes to retire in 5-8 years), and we can pay off the mortgage with a lump sum then - which will also be needed to pay for kids' college etc.

Also trying to future-proof by doing as much maintenance and repair on the house as possible. We keep some savings in cash but as overpayments can be got back from the mortgage whereas I'm getting essentially zero interest, it might be better to overpay.

Once I've bought a new Brexit stockpile, that is. Used it up when we got Covid.