Overpaying your mortgage could save you thousands of pounds and reduce your term by years!
05 March 2016
Even a regular overpayment each month of £30 can have an impact!
£30 monthly overpayments for the next 20 years could save you £2031 in interest alone and reduce your mortgage term by 11 months
This is based on
Mortgage balance £150,000
Term remaining 20 years
Annual interest rate of 2.5%
Capital repayment basis
**Important note: The calculator used to create the example above is computer-generated and relies on certain assumptions. It has only been designed to give a useful general indication of costs. It is important you always get a specific quote from the lender or your mortgage advisor before acting on the information**
Many lenders allow you to overpay 10% of your mortgage balance per year if you're still in your introductory fixed, tracker or discount period. Outside of your initial product usually has no limit. That is not universal so do check with your lender before making overpayments as early repayment penalties could cancel out any saving you make or even cost you money.
Your lender may have a specific way they want to receive overpayments from you so do not just start paying, always talk to them first to ensure your overpayments are penalty free and that they are reducing your balance not reducing your next monthly mortgage payment.
Whether to save your money or overpay your mortgage will depend on a number of factors including what rate of interest you earn on savings and whether you prefer the idea of keeping your savings close to you in case you need access to an emergency fund.
Talk to your Financial Advisor or discuss what savings you could make by overpaying with your mortgage advisor or lender.