Humble mortgage overpayments add up
Home >
All >
Humble mortgage overpayments add up
A boost in UK savings as a result of reduced expenditure on travel and leisure during lockdown could be the key to cutting thousands in interest and months from the terms of mortgages, according to research1.
With Bank of England figures suggesting Brits saved an extra £200bn during lockdown, overpaying on your mortgage could prove more fruitful than squirrelling away this cash into low interest savings accounts.
Overpayment benefits
It is estimated that fewer than half of people take advantage of overpayments, despite most mortgages allowing borrowers to overpay on either a regular or ad hoc basis without penalty. Yet paying an extra £90 a month towards a £200,000 mortgage from the first payment onwards would reduce the loan’s total cost by more than £16,800 and the term by more than three years, says the data.
Overpayments don’t have to start early in the mortgage to make a noticeable impact either. Paying an extra £90 each month from the mortgage’s 10th anniversary could still save £5,300 in interest and shave 18 months off the term.
Mortgage overpayments won’t be suitable for everyone, however, and you should consider your personal and financial circumstances first.
1Halifax, 2021
It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor. No part of this document may be reproduced in any manner without prior permission.
The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. If you withdraw from an investment in the early years, you may not get back the full amount you invested. Changes in the rates of exchange may have an adverse effect on the value or price of an investment in sterling terms if it is denominated in a foreign currency.
Information is based on our understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from, taxation are subject to change.
Tax treatment is based on individual circumstances and may be subject to change in the future.
Other Insights of interest
26th March, 2024
Residential Property Review of March 2024
RICS responds to the Spring Budget The Royal Institution of Chartered Surveyors (RICS) has released…
Read full insight
26th March, 2024
Commercial Property Review of March 2024
Commercial property industry largely disappointed by the Spring Budget The Chancellor’s Spring Budget has been mostly…
Read full insight
20th March, 2024
Financial pitfalls primarily impacting women
Research1 has shone a spotlight on the financial challenges that prevent women from accumulating the…
Read full insight
20th March, 2024
The scammers targeting YOU
According to a study from NatWest1, seven in 10 people have been targeted by scams…
Read full insight