Overpayment - Lump Sum vs Monthly?

Discussion in 'Mortgages and buying and selling homes' started by Scoodle, 15 Mar 2019 at 4:30 PM.

  1. Scoodle

    Scoodle New Member


    After saving like crazy for the last few years, we’re now in the fortunate position that we can afford to pay a 10% lump sum off our mortgage (the maximum we can overpay with our bank - 10 year fixed).

    However, a friend advised that it would be more beneficial to pay an extra 10% monthly instead. He says that you save more in the long run that way. Is this correct?

    Surely it’s better to pay a lump sum off the capital & reduce the repayment amount enabling us to save more & hopefully pay off early once we have enough saved.

    Are there any benefits to monthly overpayments vs a lump sum (other than access to savings) that I’m not seeing?

    Thanks in advance!
  2. RedOnion

    RedOnion Frequent Poster

    Your friend could not be more wrong...
    HollowKnight likes this.
  3. dub_nerd

    dub_nerd Frequent Poster

    Unless the bank has some weird method of accounting, you can't save more money by reducing your mortgage in the future than by reducing it now.
  4. 1dave123

    1dave123 Frequent Poster

  5. username123

    username123 Frequent Poster

    Giving the benefit of the doubt to your friend, perhaps they meant that rather than saving up the lump sum and *then* paying it in one go, they meant you should just overpay as you go, say E200 extra a month, rather than saving up the equivalent of E2400 and paying it at the end of the year. THats the only logic I can think of!
    Coldwarrior, Dermot and gravitygirl like this.