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  1. #1

    To overpay or not to overpay?

    I have a 123k mortgage with 30 years left on it.
    My husband and I have been fortunate enough to accrue a small amount of savings (about 18K) in a 3 year contract working in another country while leasing out our property, but do not expect to be in a position where we will be able to build on these savings much once we move back this time next year. Out here we have very few outgoings so are able to save whereas in the UK we were stretched meeting our monthly expenditures.

    Should I use 10,000 pounds to overpay on our mortgage? Our mortgage rate is 3.99 and unchangeable while we are leasing. There are no overpayment charges as our product has expired.

    The property is a small 1 bed flat and when we move back we intend to start a family so will inevitably need to move somewhere and get a whole new mortgage anyway long before the 30years is up on this one.

    From what Ive read on this site I believe overpaying by 10K would be good for us, while still keeping us some savings aside if we need them, but neither of us are very confident with financial decisions and these savings are a big deal to us to have in the first place.

  2. #2
    Personally, I would always overpay if you have the option and there are no penalties / charges for doing so.

    There is a mortgage overpayment calculator on the Money Saving Expert main site. I just plugged your numbers in based on what you've said above and it estimates by doing so you'll save 20,210 in interest and pay off your mortgage 4 years and 3 months earlier!

  3. #3
    At 4% mortgage rate, I would overpay. You'll still have 8k left over for emergencies

  4. #4
    i) speak to a mortgage broker to find out if I could get a cheaper deal elsewhere
    ii) not overpay, but keep that money as an emergency fund because moving can be very expensive

  5. #5
    If you can't get a better rate as suggested by Tropically, I'd certainly consider overpaying, 4% guaranteed return is not to be sniffed at.


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