We don't like Annual interest

Whilst making overpayments is virtually always in the borrower's best interest, there are two key things to look out for - early repayment charges and annual interest.

Although annual interest is slowly dying out many borrowers with repayment mortgages. Instead of calculating interest on the outstanding mortgage balance every day or month, the interest is calculated on the amount owing at the beginning of the year.

This means that interest continues to be paid on the capital that they have already paid off.

The good news is that this is often just the right time to make an overpayment despite annual interest as most lenders calculate next year's payments on the balance at the beginning of the calendar year.