Some families have found it easier to save more than normal during the pandemic, due to reduced outgoings on things like commuting, holidays and entertainment. If you have a mortgage, overpaying is an option worth considering.
Benefits of overpaying
In a low-rate environment, savings rates are likely to be lower than your mortgage rate, so any overpayments are likely to save you more in interest payments than you could earn in deposit savings. Even small mortgage overpayments could result in a significant saving in interest payable, as well as reducing your mortgage term.
Considerations
- Before overpaying, make sure that you have a financial safety net that will cover your outgoings if your circumstances suddenly change
- Some mortgages will have a charge for overpaying, so make sure you check the mortgage terms
- Do you have other debts, such as credit cards or loans, that are likely to have a higher interest rate?
- Are you saving enough for other long-term plans, such as retirement?
- Although it can often make financial sense to overpay on your mortgage, this option won’t be right for everyone. We can help you to understand your mortgage options.
Talk to a Mortgage Advisor
If you’re still looking for advice on mortgages please get in touch. Clifford Osborne are Independent Financial Advisors (IFA) based in Eastbourne, East Sussex, offering mortgage advice, early retirement advice, pension advice and more. We’d be delighted to help you.
We see clients across Sussex and Kent, including Eastbourne, Uckfield, Lewes, Brighton, Tunbridge Wells, Ashford, Hastings, Hailsham, Bexhill, Newhaven, Seaford, Crowborough and further afield. Please contact us to arrange a free initial mortgage review.
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As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments.
It is important to take professional advice before making any decision relating to your personal finances. Information within this blog is based on our current understanding of taxation and can be subject to change in future.
It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK; please ask for details. 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.
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*Moneyfacts, 2021