If you are only paying interest, what do you overpay, i.e. does the capital start to come down after a period?
Any payment should theoretically come straight off the capital.
So if my mortgage is £250 interest only on say 100k, I owe 100k every year but if I pay an extra £200 a month after year one I owe 97,600 etc etc. If my capital goes down year on year will the £250 part of the interest only remain as the mortgage was initially for 100k?
You cannot "overpay interest" it is a fixed amount.Stick to insults about religion
Quote from: T Fearon on September 13, 2014, 12:01:53 PM
You cannot "overpay interest" it is a fixed amount.Stick to insults about religion
I think you will find you very much can, stick to advocating the facilitators of child abuse.
If you have a fixed charge you cannot "overpay" it, contradiction in terms.
Quote from: T Fearon on September 13, 2014, 12:38:34 PM
If you have a fixed charge you cannot "overpay" it, contradiction in terms.
You are covering yourself with glory on many threads now Tone. ;)
Quote from: Zip Code on September 13, 2014, 11:27:34 AM
So if my mortgage is £250 interest only on say 100k, I owe 100k every year but if I pay an extra £200 a month after year one I owe 97,600 etc etc. If my capital goes down year on year will the £250 part of the interest only remain as the mortgage was initially for 100k?
Your interest payments each month will start to reduce as soon as you start to reduce the capital you owe.
Am i missing something? With interest only mortgages you are not repaying capital, therefore you cannot (should not) overpay MONTHLY as you will NEVER be paying off the principal amount. The only way to reduce the monthly payment is to reduce the Principal amount with a lump sump payment or change to a Capital & interest mortgage (mine is 10k in any calendar year without penalty).
I could of course be badly mistaken.
Your mortgage payment is to pay interest only - but if you most certainly can overpay to reduce your capital.
Found this. http://money.aol.co.uk/2013/05/15/10-tips-for-interest-only-borrowers/ (http://money.aol.co.uk/2013/05/15/10-tips-for-interest-only-borrowers/)
4. Overpay your mortgage One way to deal with an interest-only shortfall is to overpay your mortgage while rates are low. This will reduce your outstanding balance, giving you less to repay at the end of your term.
Mark Harris, chief executive of mortgage broker SPF Private Clients, explains: "With interest rates at record lows, sensible borrowers will take advantage of lower mortgage payments by using the cash they are 'saving' each month to overpay on the mortgage and reduce the capital they owe. Most lenders will let you overpay by up to 10 per cent of the mortgage amount per annum without penalty."
You need to assess whether the overpayment will be applied to the account immediately or only periodically e.g. once a year. In the latter case you'd do better with a regular savings account and then once a year make a lump sum payment.
as per previous comment you need to check if your overpayments are taken into account immediately or only at year end. Only when the account goes through payment change will you see any change in your interest payment.
Zip - does your mortgage lender have a phone number?
( :D )
thank christ fearon doesnt work in a financial institution of any sort ;D
Quote from: quit yo jibbajabba on September 13, 2014, 04:35:02 PM
thank christ fearon doesnt work in a financial institution of any sort ;D
But he does clearly belong in some institution!
Of course you can overpay your mortgage,but Zip Code specifically referred to overpaying "mortgage interest" which is a contradiction in terms.
Now who would sign up for a mortgage without understanding the terms and conditions,specifically the scope for overpayments,the limit of same and the penalties involved for exceeding these? Only Zip Code.
The title says - How does overpaying interest only mortgage work? But we all know you can't read. ;)
Quote from: T Fearon on September 13, 2014, 06:59:06 PM
Of course you can overpay your mortgage,but Zip Code specifically referred to overpaying "mortgage interest" which is a contradiction in terms.
Quote exactly where I said that.
Quote from: Zip Code on September 13, 2014, 07:09:02 PM
Quote from: T Fearon on September 13, 2014, 06:59:06 PM
Of course you can overpay your mortgage,but Zip Code specifically referred to overpaying "mortgage interest" which is a contradiction in terms.
Quote exactly where I said that.
If 'only' Tony read before posting.
Badly phrased title,ambiguous.
Enjoying the beef between Zip Code and T Fearon- is there any other threads I can follow this rivalry.