I don't understand this but I think it's moot anyway - if the lender did not deduct your "overpayments" from capital then they may simply have kept the money in your account doing nothing (unless you missed a repayment in which case the float would be dipped into).1. I want to know how bad this is, i.e. what's the approx net difference between a couple of years of overpaying a few hundred off capital versus a couple of years overpaying a few hundred off interest
If he does not understand accelerated capital repayment on a variable rate mortgage then I suspect that he does not know much alright.2. The mortgage guy at my branch refuses to put anything in writing and doesn't seem to know what I'm talking about what I mention this distinction i.e. he says "look, it's ALL coming off capital". But I think the relatively small deduction in my capital over 2008 tells a different story.
While you are at this, I would recommend that you pay weekly if possible or fortnightly (which I am doing at present. As I understand it, you are chipping at the capital 26 a year as opposed to 12 times a year. This has very positive impact if you work it out over the life of the mortgage. e.g. in 5 years 60 times (12 x 5) versus 130 (26x5) times. Work out teh savings on Karl's calculator.
Let us know if bank agree to weekly payment, if BOI account
Sorry for opening an old thread but I'm not clear on exactly what the distinction is between paying off the capital and paying off the interest.Making accelerated capital repayments will reduce your total mortgage cost and effective term - significantly in many cases. See Karl Jeacle's mortgage calculator to estimate the possible cost savings. If you do go for an accelerated capital repayment strategy then put your instructions in writing and get written agreement from your lender that they will deduct additional overpayments off capital!
usrbin - your lender may not have been deducting additional payments off your capital. Many (most?) will not do this without explicit instructions!
Sorry for opening an old thread but I'm not clear on exactly what the distinction is between paying off the capital and paying off the interest.
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