Barry Sanchez Posted 7 January, 2014 Share Posted 7 January, 2014 (edited) We overpay ours in a lump sum every 3 months which works at about £4,500 a year, this has taken the monthly amount down but the length of the loan is still 20 years! We shall now pay it monthly on a direct debit alongside the mortgage every month as it would seem to bring down the length of the loan, have I thrown £4,500 away? Or has it simply taken off a small amount per month over the length of the mortgage? Edited 8 January, 2014 by Barry Sanchez Link to comment Share on other sites More sharing options...
The Kraken Posted 7 January, 2014 Share Posted 7 January, 2014 I overpaid my mortgage over a few years and it was the best thing I ever did. I chose to keep my monthly payments the same but it meant that the mortgage would have been paid off earlier. Any work bonus or payout always went into my mortgage, and the length of term just came down each time. Living mortgage free Link to comment Share on other sites More sharing options...
Whitey Grandad Posted 7 January, 2014 Share Posted 7 January, 2014 We overpay ours in a lump sum every 3 months which works at about £4,500 a year, this has taken the monthly amount down but the length of the loan is still 20 years! We shall now pay it monthly on a direct debit alongside the mortgage every month as it would seem to bring g down the length of the loan, have I thrown £4,500 away? Or has it simply taken off a small amiunt per month over the length of thd mortgage? It's not been wasted. You've reduced the loan but presumably you've taken the option of keeping the term the same length which is why the monthly payments have gone down. If you speak to your mortgage people they should explain to you your options. Basically, the longer the period over which you pay off the loan then the more interest you will pay in total. Link to comment Share on other sites More sharing options...
Hamilton Saint Posted 7 January, 2014 Share Posted 7 January, 2014 We made our mortgage payments every week, instead of four times per month - 52 payments per year, instead of 48. Significant saving in interest over the life of the mortgage. We've paid off our house - great feeling. And one year left on a two-year loan for the new car. Then I'm completely debt-free. Nice! Link to comment Share on other sites More sharing options...
Barry Sanchez Posted 7 January, 2014 Author Share Posted 7 January, 2014 They have basically said we have two options, lump sums up to £10,000 a year or monthly direct debit alongside the mortgage, I am going for the monthly now as it seems to take off the amount of the loan whilst keeping the mortgage the same so in turn reducing the length of the mortgage and not the amount we pay every month, or I hope so:lol: Link to comment Share on other sites More sharing options...
Barry Sanchez Posted 7 January, 2014 Author Share Posted 7 January, 2014 We made our mortgage payments every week, instead of four times per month - 52 payments per year, instead of 48. Significant saving in interest over the life of the mortgage. We've paid off our house - great feeling. And one year left on a two-year loan for the new car. Then I'm completely debt-free. Nice! We are moving this year but want to continue overpaying when we find and buy our new house as well, no debt for me other than a mortgsge but its about to rise considerably ha ha! Link to comment Share on other sites More sharing options...
Whitey Grandad Posted 7 January, 2014 Share Posted 7 January, 2014 They have basically said we have two options, lump sums up to £10,000 a year or monthly direct debit alongside the mortgage, I am going for the monthly now as it seems to take off the amount of the loan whilst keeping the mortgage the same so in turn reducing the length of the mortgage and not the amount we pay every month, or I hope so:lol: It should reduce the length. As long as you've made it clear that you want the extra payments to come straight off the capital loan. I don't think it's the case now but many years ago some mortgage lenders would just tuck the extra payments somewhere safe and only do the recalculations once a year. If you're mathematically minded I can PM you the formula for interest rate, capital and repayments. It's basically a summation of a geometric series. Link to comment Share on other sites More sharing options...
Barry Sanchez Posted 7 January, 2014 Author Share Posted 7 January, 2014 No thanks mate all done now, just wanted to know if anyone has been in the same boat. Link to comment Share on other sites More sharing options...
whelk Posted 8 January, 2014 Share Posted 8 January, 2014 definitely preferable to keep monthly payments the same. The length doesn't have to show as reduced but can clearly calculate when you owe nothing which will inevitably be sooner. Each month that payment will be paying a larger % of the equity and less interest as well. I don't bother saving anymore just overpay and call back if ever need a lump sum. Nationwide have the money back to you in a week. Link to comment Share on other sites More sharing options...
thefunkygibbons Posted 8 January, 2014 Share Posted 8 January, 2014 I was mortgage free by 38 The easiest way for me was to pay a fixed amount each month regardless of what the bank thought the monthly amount should be If you want to see the benefit of over payments, use this calculator http://www.moneysavingexpert.com/mortgages/mortgage-overpayment-calculator Link to comment Share on other sites More sharing options...
Channon's Sideburns Posted 8 January, 2014 Share Posted 8 January, 2014 The other benefit of keeping the term the same is that if you had a mild calamity like the car packing up, one month you could revert to the basic contractual payment if you needed to. Link to comment Share on other sites More sharing options...
Unbelievable Jeff Posted 8 January, 2014 Share Posted 8 January, 2014 F*** me, just by paying 10% extra a month (we have to do it in a yearly lump sum unfortunately), we will save £50k in interest alone. That, my friends, is mental. Link to comment Share on other sites More sharing options...
Whitey Grandad Posted 8 January, 2014 Share Posted 8 January, 2014 F*** me, just by paying 10% extra a month (we have to do it in a yearly lump sum unfortunately), we will save £50k in interest alone. That, my friends, is mental. That's unusual and unfortunate, a lot of providers let you pay off lump sums up to an annual limit. Still probably worth putting some away every month and not touching it for a year. You're quite right though, early repayment of some capital can drastically reduce the interest paid. Link to comment Share on other sites More sharing options...
View From The Top Posted 8 January, 2014 Share Posted 8 January, 2014 We overpay monthly and if will have effectively knocked 8 years off our mortgage and that includes a mortgage holiday when I had a 7.5month queens holiday! We will be mortgage free in a few years. Link to comment Share on other sites More sharing options...
Barry Sanchez Posted 8 January, 2014 Author Share Posted 8 January, 2014 I was mortgage free by 38 The easiest way for me was to pay a fixed amount each month regardless of what the bank thought the monthly amount should be If you want to see the benefit of over payments, use this calculator http://www.moneysavingexpert.com/mortgages/mortgage-overpayment-calculator Yes I have used that, its amazing to see, after this year though will see if we can continue as well are buying a house here in Liverpool for sort of insurance purposes, we will probably be overseas in the next few years or so so want to get a nice house here to rent out and have for or if any reason we come back. Link to comment Share on other sites More sharing options...
KelvinsRightGlove Posted 8 January, 2014 Share Posted 8 January, 2014 Can't see me ever getting a mortgage, let alone being mortgage free Link to comment Share on other sites More sharing options...
buctootim Posted 8 January, 2014 Share Posted 8 January, 2014 Can't see me ever getting a mortgage, let alone being mortgage free Look on the bright side. You're mortgage free now. Link to comment Share on other sites More sharing options...
KelvinsRightGlove Posted 8 January, 2014 Share Posted 8 January, 2014 Look on the bright side. You're mortgage free now. True, but I still pay more than the average mortgage repayment (for where I live) and the house isn't and never will be mine. Link to comment Share on other sites More sharing options...
COMEONYOUREDS Posted 8 January, 2014 Share Posted 8 January, 2014 True, but I still pay more than the average mortgage repayment (for where I live) and the house isn't and never will be mine. I know that feeling, and its rubbish but hang in there. 12 months ago I was basically insolvent, paying a fortune to live in a box. and now I'm on the verge of starting my first ever mortgage in the next few weeks. Keep the faith, you never know what can happen in life and your time will come eventually. I was surprised at how easy it is to get a mortgage again now Link to comment Share on other sites More sharing options...
Halo Stickman Posted 9 January, 2014 Share Posted 9 January, 2014 True, but I still pay more than the average mortgage repayment (for where I live) and the house isn't and never will be mine. I’m sure it’s no consolation, but people with mortgages don’t really own their houses – they need only default on their repayments for 6 months or so to find out who does. Link to comment Share on other sites More sharing options...
KelvinsRightGlove Posted 9 January, 2014 Share Posted 9 January, 2014 I know that feeling, and its rubbish but hang in there. 12 months ago I was basically insolvent, paying a fortune to live in a box. and now I'm on the verge of starting my first ever mortgage in the next few weeks. Keep the faith, you never know what can happen in life and your time will come eventually. I was surprised at how easy it is to get a mortgage again now I’m sure it’s no consolation, but people with mortgages don’t really own their houses – they need only default on their repayments for 6 months or so to find out who does. Thanks guys, these have both cheered me up. Link to comment Share on other sites More sharing options...
Barry Sanchez Posted 9 January, 2014 Author Share Posted 9 January, 2014 I’m sure it’s no consolation, but people with mortgages don’t really own their houses – they need only default on their repayments for 6 months or so to find out who does. Anybody who has a mortgage and thinks that own that house is a fool, same with a car loan though. The trick in this though and its not particularly shrewd is to continue payments of your said mortgage and hey presto after 25 years or less or a bit more its yours. Link to comment Share on other sites More sharing options...
Barry Sanchez Posted 9 January, 2014 Author Share Posted 9 January, 2014 True, but I still pay more than the average mortgage repayment (for where I live) and the house isn't and never will be mine. But you choose to live in the greatest City on Earth, not owning a house and paying extortionate rents for a box in you shall never own is a small price to pay. Link to comment Share on other sites More sharing options...
KelvinsRightGlove Posted 9 January, 2014 Share Posted 9 January, 2014 But you choose to live in the greatest City on Earth, not owning a house and paying extortionate rents for a box in you shall never own is a small price to pay. Didn't really have a choice. I lived in Leeds, but was unemployed and getting into stupid amounts of debt, plus the stress was really exacerbating some previous illnesses. I was applying for jobs all over the country, I'd have gone wherever the work was - which happened to be London. Link to comment Share on other sites More sharing options...
Whitey Grandad Posted 9 January, 2014 Share Posted 9 January, 2014 I’m sure it’s no consolation, but people with mortgages don’t really own their houses – they need only default on their repayments for 6 months or so to find out who does. True, but if house values rise then your equity in the property will increase but the loan stays the same (or reduces gradually, at first). Link to comment Share on other sites More sharing options...
iansums Posted 9 January, 2014 Share Posted 9 January, 2014 This is why ever since my daughter was born all the child benefit payments have gone straight into a savings account for her. She's 14 now and will have a tidy sum by the time she is looking for her first house, enough to put down the deposit. Link to comment Share on other sites More sharing options...
tony13579 Posted 9 January, 2014 Share Posted 9 January, 2014 What interest rate are you paying? You could invest that money and get 5.5-8% in corporate bonds. (Investment grade, provident 7.0 &7.5, Halifax 9 3/4% bg transco etc) If your interest rate was low you could have extra cash for retirement. Or you could buy shares. Or buy funds. Link to comment Share on other sites More sharing options...
Dig Dig Posted 9 January, 2014 Share Posted 9 January, 2014 5% deposits available now. Another bubble which will burst in the foreseeable future. Ultimately, if you have a roof over yours and your families head until the day you die, you've done alright. Link to comment Share on other sites More sharing options...
Unbelievable Jeff Posted 10 January, 2014 Share Posted 10 January, 2014 This is why ever since my daughter was born all the child benefit payments have gone straight into a savings account for her. She's 14 now and will have a tidy sum by the time she is looking for her first house, enough to put down the deposit. We don't get them for our daughter, which is annoying, but I suppose that's for the greater good of the country. Link to comment Share on other sites More sharing options...
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