From: "CQMMAN" 
Newsgroups: uk.finance
Subject: Re: Offset mortgages and over-payments
Date: Fri, 6 Feb 2004 06:18:18 -0000


"Tumbleweed"  wrote in message
news:4022c6a5$0$29817$afc38c87@news.easynet.co.uk...


> >
> > 2) Over paying? It is interest only, so lets say I need to pay
£300/month
> in
> > interest, but decide to pay £600/month, am I actually any better off
> > presuming I don't spend the other £300/month and it is left in my
account?
> >
>
> Yes, because next month there will be £300 less mortgage you'll be charged
> interest on.

Thanks for the reply.

Is that still true for an offset though? Because if the money is in the
savings account, or has been xfered to the mortgage, either way, it is
deducted from the total amount on which interest is calculated? In effect,
isn't it the same question and answer as above?

Not trying to catch anyone out, but it just seems to me that it is, but that
seems very simple.


> Wont make much difference at first because interest on £300 would be v
small
> (lets say 5%/12*300 = £1.25 I think) but over time that will add up.
> Hopefully my calculationis correct?
> If you did that over a year then in the last month there would be £3,600
> less mortgage you'd be charged interest on, and that will continue to
> increase. So at the end of the 10th year that would be £36,000 you'd not
be
> paying interest on which owuld obviously bea substantial sum. There are
> sites with calculators which will show you the effect of overpayment in
> terms of reducing the lenght of the term, and the total amount of money
> saved.



>
> --
> Tumbleweed
>
> Remove theobvious before replying (but no email reply necessary to
> newsgroups)
>
>
>