Re. Overpaying Mortgage

[decembersal]

I’ve increased my mortgage repayments with the building society and am wondering should I have asked for the extra money to be taken off the capital amount?

Thanks

 

[suemoo1]

they may do that automatically but it would be better to make sure

 

[TRipley]

decembersal - can I ask where else do you think the overpayment would be taken off other than from the capital amount?

I open this question to all by the way and not just yourself -I ask this question because I've seen a few posts now where this question has been asked

- the interest accrued on a mortgage is based on the capital balance - overpaying a mortgage accelerates the repayment of capital so there is a lower capital balance after each over payment - therefore the interest on the capital balance will be lower.

 

[NorfBank]

Some lenders do not take the overpayments off the capital immediately unless instructed to do so. They put the overpayments in a separate account until it reaches a certain balance. I think this is where the confusion lies as regards overpayments.

 

[decembersal]

I wasn't sure if the building society would use the extra repayment money to pay off the interest, as we're aren't too far into the mortgage.

I'd definitely recommend other people who are interested in overpaying their mortgages to look at the Additional mortgage repayments calculator that is available on the It's Your Money website: http://www.itsyourmoney.ie/index.jsp?1nID=93&2nID=94&3nID=103&pID=118&nID=299