Latest Blog Posts

Overpay for a mortgage-free future

Friday, 26th April 2013

Categories: Sales

Author: Peter Barry

Many homeowners are discovering that by upping their monthly mortgage repayments by just a fraction, they can shave years off their loan term. This particularly applies to those lucky enough to have reverted to variable rates when interest rates plummeted. If you were savvy enough to maintain your repayments at the same amount, you will have seen your mortgage term take a slide in the right direction without having to curtail your lifestyle. But anyone who can spare an extra bit of cash from their disposable income pot is well advised to increase their mortgage repayments (if the conditions of their mortgage allow). Of course, the amount of interest and the number of years you can slash from your term is dependant on your existing mortgage balance but even an increase of £50 a month could see the average homeowner pay off their loan sooner than they’d anticipated.

It’s possible to get a fairly accurate overview of how much you could save with an online calculator – you can adjust the amounts to see the difference that an extra tenner could make over the remainder of your term. Online calculators like this are a good starting point and when you see how much you could save, it’s likely to focus your financial attention more acutely. Obviously, if you’re struggling financially in the current economic climate, you might decide that it’s not a good time to pour every last penny into your mortgage but if you do set a little money aside every month for a rainy day, you might find you’ll get a better return by using the cash to pay down your mortgage. When you consider the paltry rates of return on most savings accounts at the moment, it makes sense to look into mortgage overpayment.

If the terms of your mortgage are flexible and you can overpay, or pay into a linked account, your money will probably be working harder for you than in a savings account. Begin by overpaying a small amount that won’t be missed too greatly on a monthly basis, and you’ll be surprised how the years will topple off your mortgage mountain.