Overpay mortgage

C

cloneen

Guest
Apologies if this has been posted before but have a questions.
Hypothetical figures below.

1.
Imagine I am a year into my mortgage and have a mortgage of 310,000 over 30 years resulting in repayments of 1,390 per month.

This is 1390 per month for 30 years.


However, if I overpay my mortgage with a once-off lump sum of, say 10,000 Euro in year 5 will this mean my interest and subsequent repayments will be less each month?

Will the bank automatically recalculate my montly repayments?
thanks
 
If you make a lump sum payment you can either reduce the ongoing payments and keep the term the same or reduce the term and keep the ongoing payments the same. Or a mixture of both. The bank will be able to automatically calculate the reduced payments/term based on your instructions to them. Have a play around with Karl Jeacles Mortgage Calculator to see the sort of difference a lump sum payment might make.
 
my mge is with ics building society , recently i made a lump sum lodgement. The guy in ics told me that they automatically reduce the monthly repayment when there is a lump sum lodgement unless the customer specifically requests otherwise thereby keeping the mge over the same term. Of course if you want to reduce the term of mortgage tell the bank that and by keeping the pre - lodgement repayment you will shorten the term
 
Thanks guys. I'm with The Mortgage Store. I'll go ask them too.
 
As club92 has alluded to, it is important that the lender is aware that the extra payments are to go towards the capital outstanding. Not all lenders will assume that this is the case.
 
Make sure your mortgage provider allows you to overpay your mortgage-also make sure that if you can pay a lump sum against the mortgage,that you direct your bank in writing, to have the lump sum paid against the capital of the mortgage,rather than the interest-it is important that you specify this when making the payment.If possible it is advisable to make regular overpayments as this will shorten the life of your mortgage and save you a small fortune!

daithi
 
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