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  1. #1

    Overpaying mortgages

    Anyone here caught the mortgage overpayment bug? We remortgaged in the summer and started overpaying by £281 per month, just received our annual mortgage statement today and we've knocked a whopping eight and a half years off our repayments.

    I'm thinking about putting some more into it. Anyone done similar?


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  3. #2
    Took 7 years off our mortgage but have often wondered if investing the overpayments might've been more profitable with such low interest rates.

  4. #3
    @hibs.net private member danhibees1875's Avatar
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    Not yet, but I did see I could overpay by 10% of the balance per year without fee recently. I assumed that could be as a lump sum at any point in the year so wasn't too worried about making regular overpayments like you have done.

    I was considering looking into it in the new year as some quick online calculators show that the savings can be huge down the line.

    Did you have to tell your provider that you wanted your overpayments to reduce your term? I've heard stories of people overpaying and expecting that to be the case and then just having their monthly DD reduced so they have to pay less per month but over the initial term agreed.
    Mon the Hibs.

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    @hibs.net private member NORTHERNHIBBY's Avatar
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    We did it and paid it off six years ahead of time. The TSB were not overly helpful nor keen for us to do it though.

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    @hibs.net private member GlesgaeHibby's Avatar
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    Quote Originally Posted by H18 SFR View Post
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    Anyone here caught the mortgage overpayment bug? We remortgaged in the summer and started overpaying by £281 per month, just received our annual mortgage statement today and we've knocked a whopping eight and a half years off our repayments.

    I'm thinking about putting some more into it. Anyone done similar?
    I did similar with the flat I've just sold. Took out a 30 year mortgage, overpaid by around £500 a month. Sold the flat after 4 years with just under 9 years (effective) term remaining on the mortgage. Found it to be the best way to build up a healthy deposit for us to make the move to what will (hopefully) be our forever home.

    Will overpay again if we can afford to. Waiting a few months to see how we adjust before doing so as we've jumped to a much larger mortgage, and much higher council tax band.

  7. #6
    Quote Originally Posted by danhibees1875 View Post
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    Not yet, but I did see I could overpay by 10% of the balance per year without fee recently. I assumed that could be as a lump sum at any point in the year so wasn't too worried about making regular overpayments like you have done.

    I was considering looking into it in the new year as some quick online calculators show that the savings can be huge down the line.

    Did you have to tell your provider that you wanted your overpayments to reduce your term? I've heard stories of people overpaying and expecting that to be the case and then just having their monthly DD reduced so they have to pay less per month but over the initial term agreed.
    We just phoned and informed them we wanted to up it. We waited until the first payment of the new fixed period came off. It was very straightforward to organise.

  8. #7
    Testimonial Due Hibby Bairn's Avatar
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    Pay off debt as quickly as possible. Although interest rates are low just now they might not be in 5/10 years time.

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    @hibs.net private member Jamesie's Avatar
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    Have done this for the last couple of years and intend to do so again this year - generally one lump sum 10% overpayment at the end of the mortgage year. I'm just short of 13 years into a 25 year term and at some point over the next couple of years, savings permitting, I might think about clearing the lot - I figure with interest rates as they are at the moment I'll never receive more on savings than the circa £150 per month outlay I spent on mortgage interest so that may make sense. I'm 2 years into a 5 year fix at present which has an early repayment fee but even repaying that will be cheaper than the interest over the remainder of the fixed term.

  10. #9
    We overpayed a lot on our last house which gave us the money to buy our current place would love to pay more again but school fees have put paid to that for a while.

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    With interest rates so low and esp. if you can get one of the ludicrous low fix rates there is a strong logical argument that with little effort you should invest the money and gain superior returns. You can then use that to pay down more that you would have by just over paying.

    This though takes a bit of discipline and effort as well as carrying some risk (which would vary in size and type depending on where and what you invested in).

    So despite knowing the above Iíd say keep it simple and overpay what and when you can. A regular overpayment is best as you soon get used to the fact that the mortgage is the mortgage, almost forgetting that you are paying x amount more than the minimum.

    Also if I get any windfalls (bonus or bookie wins or ppi whatever) I always take some of that and pay an additional lump sum to the mortgage. Sometimes itís as little as £50 but they all soon add up. For example the council tax doesnít get collected in Feb or Mar so I always pay half of what that would be as a lump sum to the mortgage, Iím still ahead on a normal month but have also cut my debt.

    One good tip to bear in mind though is to keep your mortgage term as long as possible. This gives you the flexibility to drop back to the minimum payment if you come across hard times, or even temporarily for Christmas or the likes.

    Finally I also set mini goals re reducing the outstanding amount. Often the thought of clearing such a large figure is daunting but getting to the next round figure is much easier. So if I see that in 6 months Iíll be at, for example, £150,800 outstanding Iíll look at that £800 and see if I canít chip away at it with a few extra bits n bobs over the next few months so when I get to that date itís now below the magic £150k mark...rinse and repeat for each mini target and you can be surprised what you can do when you try! And over time you can end up quite a few grand ahead of where you would have been even with a Ďstandardí overpayment.

    And yes I spend far far too much time obsessing about how I can get rid of that mortgage noose around my neck!! :-) :-). Iím forever wondering what I would do with that huge chunk of cash I give to the bank every month and live for the day when finally I donít have to!!

  12. #11
    I pay roughly 1.81 a week into my mortgage on top of what I pay normally.

    Works out about .00001%!!

  13. #12
    @hibs.net private member Future17's Avatar
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    Quote Originally Posted by danhibees1875 View Post
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    Not yet, but I did see I could overpay by 10% of the balance per year without fee recently. I assumed that could be as a lump sum at any point in the year so wasn't too worried about making regular overpayments like you have done.

    I was considering looking into it in the new year as some quick online calculators show that the savings can be huge down the line.

    Did you have to tell your provider that you wanted your overpayments to reduce your term? I've heard stories of people overpaying and expecting that to be the case and then just having their monthly DD reduced so they have to pay less per month but over the initial term agreed.
    If you're overpaying every month, with a view to reducing your mortgage term, it's almost irrelevant whether the lender recalculates your payments or your term when the payments are received as the effect will ultimately be the same. However, if you stopped overpaying, you'd need to check the lender had recalculated your term, rather than your required payment, at that point. If you overpay by lump sum, rather than by regular payment, you'd need to check the lender had recalculated your terms as a result.

    Provided your lender calculates interest on a daily basis, which I think almost all now do, it's financially beneficial to overpay the same sum by regular instalments when you can, rather than waiting and overpaying a lump sum instead.

  14. #13
    @hibs.net private member O'Rourke3's Avatar
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    We overpay but not to reduce the term of this mortgage but reduce the amount of borrowing the next. Just started year 5 of a 5 year fixed interest rate in a 25 yr mortgage. Be getting my last mortgage later in rhe year. Thanks to affordable overpayments we'll have moved from 160000 of borrowing to 50000 on the same property. We know its possible to build that capital up via investments but as a previous poster said, you need to be sharp. Since we havent missd the cash, the reducing capital feels pretty good.

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    Quote Originally Posted by O'Rourke3 View Post
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    We overpay but not to reduce the term of this mortgage but reduce the amount of borrowing the next. Just started year 5 of a 5 year fixed interest rate in a 25 yr mortgage. Be getting my last mortgage later in rhe year. Thanks to affordable overpayments we'll have moved from 160000 of borrowing to 50000 on the same property. We know its possible to build that capital up via investments but as a previous poster said, you need to be sharp. Since we havent missd the cash, the reducing capital feels pretty good.

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    Iíve bought a house this week fixed for 2 years, after reading this thread yesterday it got me thinking that my next mortgage I should be trying to get into a position where I can overpay as much as is affordable as it will more than likely be a 5 year deal, i have a few questions if thatís ok, is this something you need to agree with the lender prior to re-mortgaging? If circumstances change can you easily resort back to the initial repayment agreement? and obviously Iím not wanting to pry into your business but what kind of ball park figure over payment wise would make a significant difference?
    Im starting a 25 year term at 38 and my mortgage guy was big on decreasing the amount as fast as possible, before that meeting and reading here Iíd never considered overpaying so Iím quite interested.

  16. #15
    @hibs.net private member Jamesie's Avatar
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    Quote Originally Posted by Dmas View Post
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    Iíve bought a house this week fixed for 2 years, after reading this thread yesterday it got me thinking that my next mortgage I should be trying to get into a position where I can overpay as much as is affordable as it will more than likely be a 5 year deal, i have a few questions if thatís ok, is this something you need to agree with the lender prior to re-mortgaging? If circumstances change can you easily resort back to the initial repayment agreement? and obviously Iím not wanting to pry into your business but what kind of ball park figure over payment wise would make a significant difference?
    Im starting a 25 year term at 38 and my mortgage guy was big on decreasing the amount as fast as possible, before that meeting and reading here Iíd never considered overpaying so Iím quite interested.
    In terms of your three questions:

    1. Generally most mortgages will allow up to 10% of the remaining sum in overpayment per year - worth checking this out though in your small print but it's pretty standard.

    2. Again, generally yes - double check with the lender though.

    3. Take a look at this calculator which will give you an idea of the difference that an overpayment can make: https://www.moneysavingexpert.com/mo...nt-calculator/

  17. #16
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    Quote Originally Posted by Dmas View Post
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    Iíve bought a house this week fixed for 2 years, after reading this thread yesterday it got me thinking that my next mortgage I should be trying to get into a position where I can overpay as much as is affordable as it will more than likely be a 5 year deal, i have a few questions if thatís ok, is this something you need to agree with the lender prior to re-mortgaging? If circumstances change can you easily resort back to the initial repayment agreement? and obviously Iím not wanting to pry into your business but what kind of ball park figure over payment wise would make a significant difference?
    Im starting a 25 year term at 38 and my mortgage guy was big on decreasing the amount as fast as possible, before that meeting and reading here Iíd never considered overpaying so Iím quite interested.
    Most big lenders allow you to manage your mortgage on line, check out who you are with and see if they have that option.

    Iím currently with RBS and making an overpayment is easy. I can either log in and make a lump sum overpayment either from a card or direct from an RBS account. I can also set the regular overpayment amount so can vary that whenever I want. A good example of this is I changed it back to the regular amount for Christmas to give me an extra bit of spending money and have added it back on for Jan which will then repeat every month until I change it again. This is why keeping the term long makes sense as it gives you the power to overpay when you can afford to do so but keeps the standard payment as low as possible (as long as the 10% thing doesnít interfere).

    As other have said itís pretty standard for the max overpayment in a year to be 10% of the starting capital in that year. Anything above that tends to suffer a charge...normally a % figure depending on the years left of the fix. So if you have 2 years left then anything over 10% will have a 2% charge, 1 year a 1% charge etc.

    All of this though will be in the small print of your agreement so DoF that our and make sure you understand the specifics of your deal. Ultimately if you are just setting out then 10% should give plenty of scope!

    Over pay as much as you can afford but make sure you are also thinking about cash / rainy day savings, investment ISA savings and pensions etc as well. It makes sense to be trying to do them all to some degree if you can but whatís right for you depends on your personal circumstances.

    In the end of the day anything over paid now will save you interest all the way down the line so there is no minimum, anything at all reduces your debt and saves you interest.

  18. #17
    Coaching Staff Smartie's Avatar
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    I've still got a 2% above base interest only tracker mortgage that I took out about 13 years ago, so my mortgage is only about £400.

    The bad news is, I'm absolutely up to my eyeballs in debt - credit cards (the worst kind) and I'm making no headway with any of it at all. They total about £1200 per month, most of which is interest with very little being repaid.

    It's hell tbh and I wouldn't wish it on anyone.

    Please continue to be careful with the finances everyone.

  19. #18
    Testimonial Due Hibby Bairn's Avatar
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    Quote Originally Posted by Smartie View Post
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    I've still got a 2% above base interest only tracker mortgage that I took out about 13 years ago, so my mortgage is only about £400.

    The bad news is, I'm absolutely up to my eyeballs in debt - credit cards (the worst kind) and I'm making no headway with any of it at all. They total about £1200 per month, most of which is interest with very little being repaid.

    It's hell tbh and I wouldn't wish it on anyone.

    Please continue to be careful with the finances everyone.
    Not good my friend. Have you tried to consolidate all into one single loan to help get the capital paid down and get away from the higher interest debts (eg credit cards)?

  20. #19
    Quote Originally Posted by Dmas View Post
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    Iíve bought a house this week fixed for 2 years, after reading this thread yesterday it got me thinking that my next mortgage I should be trying to get into a position where I can overpay as much as is affordable as it will more than likely be a 5 year deal, i have a few questions if thatís ok, is this something you need to agree with the lender prior to re-mortgaging? If circumstances change can you easily resort back to the initial repayment agreement? and obviously Iím not wanting to pry into your business but what kind of ball park figure over payment wise would make a significant difference?
    Im starting a 25 year term at 38 and my mortgage guy was big on decreasing the amount as fast as possible, before that meeting and reading here Iíd never considered overpaying so Iím quite interested.
    Stick some numbers into a calculator like this:

    http://www.n-ram.co.uk/helpful-tools...ent-calculator

    We lucked out with our mortage by taking an offset from IF (not sure if anyone is selling offset mortgage/savings any more) which was tracking 0.5% above the BoE base rate. This was at the start of 2006 so when interest rates dived in the next couple of years we just left the payments the same. I haven't actually paid it off but left savings in that account at the same level as the mortgage balance so effectively mortgage free. I've kept it like that just in case we ever need to give ourselves a cheap loan.

  21. #20
    @hibs.net private member vein's Avatar
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    Quote Originally Posted by Smartie View Post
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    I've still got a 2% above base interest only tracker mortgage that I took out about 13 years ago, so my mortgage is only about £400.

    The bad news is, I'm absolutely up to my eyeballs in debt - credit cards (the worst kind) and I'm making no headway with any of it at all. They total about £1200 per month, most of which is interest with very little being repaid.

    It's hell tbh and I wouldn't wish it on anyone.

    Please continue to be careful with the finances everyone.
    Have you checked the money saving expert site? Huge amount of info and advice available on trying to get debts down (or completely gone). The forums on there are very good too.

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    Quote Originally Posted by Smartie View Post
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    I've still got a 2% above base interest only tracker mortgage that I took out about 13 years ago, so my mortgage is only about £400.

    The bad news is, I'm absolutely up to my eyeballs in debt - credit cards (the worst kind) and I'm making no headway with any of it at all. They total about £1200 per month, most of which is interest with very little being repaid.

    It's hell tbh and I wouldn't wish it on anyone.

    Please continue to be careful with the finances everyone.
    As others have said there is a lot of help out there for this kind of debt where you are in a never ending cycle.

    With payment levels like that Iíd strongly advise you to seek that help and Scotland has a number of schemes primary being the DAS.

    This link might help you on your way:

    https://www.moneyadviceservice.org.u...debts-scotland

  23. #22
    @hibs.net private member Jones28's Avatar
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    Quote Originally Posted by Smartie View Post
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    I've still got a 2% above base interest only tracker mortgage that I took out about 13 years ago, so my mortgage is only about £400.

    The bad news is, I'm absolutely up to my eyeballs in debt - credit cards (the worst kind) and I'm making no headway with any of it at all. They total about £1200 per month, most of which is interest with very little being repaid.

    It's hell tbh and I wouldn't wish it on anyone.

    Please continue to be careful with the finances everyone.
    Sounds like a nightmare Smartie - could you maybe consolidate it all by paying it off by borrowing more on your mortgage? The reason I ask is that with the base rate being so low and mortgages being relatively cheap to maintain over credit cards etc it will save you a hell of a lot in interest and allow you to spread it over more time. Itíll at least help you keep your head and shoulders above water.

    Good luck.

  24. #23
    Testimonial Due Just Alf's Avatar
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    Smartie, it's a nightmare that I've been in myself.

    There's a bit at the end of your credit card bills that guides you to a credit help agency, give them a call.

    I ended up getting advice which resulted in me calling each card company and agreeing a new payment schedule, some gave me reduced interest and one, MBNA, stopped interest altogether and agreed fixed monthly payments.
    All but one are now paid off.

    I did try to remortgage as I had around £120k equity to play with but I'd missed the odd mortgage and council tax payment so that was a no go, ironically I could have increased my mortgage, paid most of my debt off and because I'd have moved onto a better deal my mortgage payment would only have gone up around 30 whilst saving around a 1000 odd in card payments.

    After a shade over a year paying stuff back I was able to get a new mortgage deal which took me off the expensive standard rates although I still couldnt increase the borrowing but has reduced that monthly payment.

    I strongly recommend signing up to something like Clearscore, the app let's you track your personal credit score and is a great way to keep you focused as you see it slowly improve.

    Good luck mate, if you're like I was you probably couldn't see an end to it all, but I totally promise you, there is a way forward.



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    Last edited by Just Alf; 11-01-2020 at 03:36 PM.

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