I took mortgage recently for £150000 for 4.99% fixed rate for 5 years. . I took mortgage thinking that if i over pay, my monthly deductions will reduce. But after taking mortagage i understood that only the number of years will reduce but not the amount of monthly deductions.
I have £ 10,000 at this moment to over pay. Is it wise to overpay now or after 5 years why ?
thanks
2007-03-08 03:38:26 · 3 answers · asked by tp 1 in Business & Finance ➔ Personal Finance
First make sure there is no penalty for early repayment of the loan (there usually isn't) Then the question , assuming you have no other immediate needs for the funds is whether you can earn more than 4.99% by investing the funds.
For example if you can earn 7% investing the funds , then you are 2% ahead of where you would be if you just applied the money to the mortgage. If all you can earn on the money is say 4% , then it;s better to apply it to the note.
2007-03-11 17:08:00 · answer #1 · answered by SantaBud 6 · 0⤊ 0⤋
Of course it is always better to pay it now than later.If you pay now your total amount of interest will be less than if you pay 5 yrs later. Hence again the number of yers will reduce. Also do you know that in the first few years most of your payment goes to interest. But make sure you pay the capital not the interest and also you have enough money for your regular monthly payments. also make sure there is NO penalty for early payments.
2007-03-11 17:32:14 · answer #2 · answered by sayeep 2 · 0⤊ 0⤋
There is a good site I found at http://www.mortgageawareness.com that has helpful tips and advice on mortgages.
2007-03-08 11:50:43 · answer #3 · answered by Anonymous · 0⤊ 0⤋