mortgage payment acceleration

[daviedog]

I took out a repayment mortgage in 2002 for �40,000 over 20 years. My repayments are currently �240.33 per month at a rate of 5.44%. I could now afford to up these payments to �650 per month. Is this a better idea than trying to invest the extra �410. I am ultimately saving for my sons college fund in 10 years time

[Postdog]

I am no expert, just another mortgagee.

I personally would NOT up the amount I pay, but I would - and do - pay more than the monthly amount. My company allows this, some don't, tho I believe most allow you to pay in extra as lump sums providing the mortgage remains in the spirit it was arranged.

The reason I don't permanantly up the amount, aside from having the flexibility anyway, is that I have had my share of "lean" months where I couldn't afford the extra, and simply reverted to the "official" amount.

I think if it was me, I'd split the difference on what I should pay and could pay, and get a new mortgage on that basis and still pay over.

[WoWo]

You should always where possible pay off debt rather than invest. Or at least that should be the priority and therefore take a bigger chunck of any "spare" cash.

It's unlikey (especially given the current climate) that you would get more in interest from an investment than you would save by paying off a debt quicker.

By my (back of a fag packet) calculations increasing your payments to �650 means you could pay off the total mortgage in just over 6 years, this would save you a massive amount in interest payments.

Postdog's advice however is good, try and get a mortgage which allows over payment but don't commit to the higher figure, the trouble with that however is that many mortgages have an upper limit on how much you can over pay.