Mortgage Overpayments

[greenlily]

Hi all,

My mortgage allows 'additional capital repayments of up to 10% of the loan for each year'. Does this mean 10% of the total mortgage amount (i.e. the amount I borrowed), or the outstanding balance each year?

Thanks in advance,
GL

[granny grump]

Check with your mortgage provider it can mean either but usually 10% of the original loan

[greenlily]

Thanks for the quick answer, granny grump (love that name!). Hopefully it's 10% of the original loan - I want it paid off asap! :)

[granny grump]

Your welcome greenlily - also be careful because it may not be Jan to Dec but the 12 month anniversary year from when the mortgage completed. If you are looking to repay the mortgage early and your mortgage provider will let you you can reduce the term - your payments will go up and you will still be able to make 10% lump sum overpayments. There is usually a fee of about £50 to change your term but it is likely that you will save a lot more than this in interest.

[greenlily]

Thanks again! I've used one of the moneysavingexpert calculators to work out that if I double my mortgage payments (that makes me sound loaded - I'm not, I just have a very small place), I'll save an absolute fortune in interest payments - not to mention years of payments! I'm a bit scared to reduce the actual mortgage term, just in case I lose my job at some point, but I may let it go to the variable rate mortgage once my fixed term is up (in October), so I won't be limited to the amount I can overpay. I didn't get my mortgage until later on in life - so it would be good to think that I might be mortgage-free before I'm 50 :D

[granny grump]

Good thinking greenlily - good luck

[Skyline D]

I never had any intention of letting my mortgage run to term and deliberately picked a product that allowed overpayments of whatever I chose whenever I wanted.

I intended to get it paid off in 15 years instead of 25. In fact I'll almost certainly clear it next year meaning it's done in about 13 years. I haven't bothered to sit down and work out how much interest that will save but I guess it's a lot, though it wasn't an especially large mortgage in the first place (house needed a lot of work when bought so purchase price was low and much of the cost was in work done after purchase - it was six months before we actually moved in).