Hi all,
I have searched this and it has been covered before but I'm still unsure what is best for me so hoping for some advice! Currently have a Coventry BS mortgage which is 0.75% above base rate, so at time of writing, 1.25%. It's term ends in May 2036 and it is £490pm, however over the last year or so I've been overpaying by £760pm in a bid to be mortgage free sooner :) Have been finding this amount to be manageable so intend to keep it that way!
However, I've now been paying closer attention to the T&C's of overpaying, this is taken from Coventry's website and is the category I currently fall into:
The bit in bold being what is currently happening. I had to study this for a long time to realise what they were saying! Now that I do understand the difference between a capital repayment and an overpayment, my next problem is that my maths isn't good enough to work out what it best for me! It occurred to me that over a 2 month period, I'd fall into the capital repayment category anyway, as I'm paying a total of £1520 over what I should be. My options then are to reduce the calculated monthly payment, or reduce the term. I guess reduce the monthly payment would be better, because then a higher percentage of my total payment would become an overpayment, correct?
What I'd like to know is, on the interest rate I'm on, will it really have much of a beneficial impact? In reality what I'd do is ask them to take £500pm on my direct debit, then setup a regular payment of £1500 every 2 months to keep the numbers simple.
Hope this all makes sense and look forward to hearing your advice :)
I have searched this and it has been covered before but I'm still unsure what is best for me so hoping for some advice! Currently have a Coventry BS mortgage which is 0.75% above base rate, so at time of writing, 1.25%. It's term ends in May 2036 and it is £490pm, however over the last year or so I've been overpaying by £760pm in a bid to be mortgage free sooner :) Have been finding this amount to be manageable so intend to keep it that way!
However, I've now been paying closer attention to the T&C's of overpaying, this is taken from Coventry's website and is the category I currently fall into:
Quote:
|
If the equivalent of 3 x your normal monthly payment is greater than or equal to £1,000 then: Any additional payment greater than three times your monthly payment will be treated as a capital repayment. Any additional payment less than three times your monthly payment will be treated as an overpayment. |
What I'd like to know is, on the interest rate I'm on, will it really have much of a beneficial impact? In reality what I'd do is ask them to take £500pm on my direct debit, then setup a regular payment of £1500 every 2 months to keep the numbers simple.
Hope this all makes sense and look forward to hearing your advice :)