Have you ever wondered whether it’s worth making overpayments on your mortgage? This new research* could help you decide…
Data shows the benefits of a monthly £10 mortgage overpayment with interest rates at their current low level and illustrates that even modest overpayments can make a difference.
If a borrower took out a £200,000 mortgage over a 25-year term, they could save £1,146 in interest (based on current rates) and become mortgage-free four months earlier. By making a £100 overpayment each month on a £200,000 mortgage, a borrower could save £9,948 in interest and reduce their mortgage term by three years.
Those with a £500,000 mortgage, making the same £100 overpayment, could save over £10,000 in interest and become mortgage-free one year and five months earlier.
Don’t forget to save too
Whilst these figures show that modest levels of overpayment can prove effective, it’s important to remember to keep some savings aside for rainy day events such as unexpected bills and expenses.
*Santander, 2018
As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments.
3ONS, Jan 2019 and 4Oct 201
Clifford Osborne are Independent Financial Advisors (IFA) based in Eastbourne, East Sussex, offering mortgage advice, early retirement advice, pension advice and more. Our clients often come from Uckfield, Lewes, Brighton, Tunbridge Wells, Hastings, Bexhill, Newhaven, Seaford, Crowborough and further afield. Read more mortgage news and other financial advice in our blog.
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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.
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