I’m trying to work out the optimum time to make a one-off mortgage overpayment. I want to do it without a monthly reduction – so a term reduction only – which carries a per payment fee of £30.
Lets use £1000 as an example on my rate of 2.84%. Roughly speaking, it attracts £28.40 interest per annum. So paying it off early in the year would seem the cheapest option, to avoid paying the the £28.40 interest on top of the fee.
BUT – what if I was expecting more money available during the year of an unknown amount and unknown time, how do I work out the optimum amount/time to pay to reduce overall costs if I wanted to make a single payment of £30 for the admin fee.
It’s given me a headache – any boffins able to help with an equation?