To make the largest possible savings on the total cost of the loan, the earlier you start the better (you save on 30 years interest instead of 24 years interest) [obviously not taking into account other routes of investment which may provide higher returns than mortgage savings provide*].....paying for example €500 extra/month starting 3/4 years down the line when your wages have naturally increased - & remember the original loan amount is now that bit smaller compared to your wages - will go further into the the capital(& reduce it quicker) than by overpaying it right away?
To be honest, I haven't really said anythingCheers Satanta for that comprehensive response - your right in what you say too I think.
Any payments over and above your normal monthly repayment can be used to reduce the capital outstanding. Use Karl Jeacle's mortgage calculator to estimate the potential savings attributable to an accelerated repayment strategy.However I once read, possibly in one Eddie Hobbs' books I can't remember exactly, that it is crazy to overpay at the start as the interest portion of the repayment is so high it will swallow up all of ones efforts.
Try searching the forum for previous threads on this topic.Just to clear up. If you pay extra mortgage it comes off the capital. It's a mathematical impossibility that it would be coming off the interest.
Not as such - they basically hold it in a suspense account, which is of no value to you.So they offset it against future interest?
For example as a reserve fund to be used to pay the monthly repayments if you happened to miss them. You generally want to avoid this unless you are on an offset/current account mortgage.Not as such - they basically hold it in a suspense account, which is of no value to you.
Ask! Or simply accompany any overpayment with a clear written instruction / put a standard instruction on your account on how periodic overpayments should be dealt with.How do you know which bank uses a suspense account and still charges interest in full and which credits your mortgage account to reduce the interest due?
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