If you have additional disposable income at the end of the month, choosing to pay more into your mortgage may be a good option.
If you have recently received a promotion, got a pay rise or for whatever reason find you have some additional disposable income at the end of each month, then you may be considering over payment on your mortgage, making savings for other purchases or jetting off on a nice holiday.
Before you book your flights……. Did you know?
There are a couple of significant benefits to overpaying on your mortgage which may appeal.
You’ll pay less interest by clearing off more of the capital quicker, and you’ll lower the term of the mortgage. On a £200,000 mortgage with a 4% interest rate over 25 years, an over payment of £150 per month could reduce your mortgage term by almost 5 years and save you £25,023.57 in interest. That’s a lot of holidays!
Changes to increase or reduce over payments can be made at any time so if your situation changes you have flexibility to increase payment further or to revert back to your original agreement.
Be aware that most lenders have restrictions on how much you can overpay without incurring any early repayment fees, so it’s worth checking this and the financials with a mortgage advisor to check that the benefits are worthwhile all things considered.
Please don’t hesitate to contact us here at Number One Mortgages, if you would like any further help or guidance when it comes to managing your mortgage repayments.