Many lenders are writing to borrowers, you may be one of them, informing them if they make overpayments they can drastically reduce the time it takes to repay the loans. Lenders are of course doing this to improve their liquidity but it is highly recommended to pay as much you can afford to your mortgage as it will benefit you too.
With interest rates at 5% just four months ago, repayment amounts have fallen sharply but if you can continue to repay your mortgage at the rate you were paying you could take years off your mortgage. It is estimated those on tracker mortgages last year could take nine years off a £150,000 mortgage by making the same repayments. Savings in the region of £120,000 in interest!
The first thing to do is check the terms of your mortgage.
Many lenders won’t allow you to overpay while others will but only by a certain amount.
If you are happy with your mortgage rate and are able to make the repayments you want to then great. If not you should search the market to find the best deal available.
Whether you want a mortgage in England or mortgage Scotland, using the services of a mortgage broker will take the pain out of doing the groundwork yourself plus you can benefit from the expert advice. There are many excellent brokers on the market and some charge a fee for their service. You can get the same service with a free one so find a fee free mortgage broker and one that will search the whole of the market to find all the products on offer.
It is always best to use your savings to overpay on your mortgage because you are very unlikely to get more interest in a savings account than you are being charged by a mortgage lender. Now so more than ever, the average savings account will give you just £80 interest after tax on £10,000, pitiful. Using the money to overpay your mortgage would save you thousands in interest.
Do it now!
