Should You Overpay Your Mortgage? (Plus an App Worth Looking At)
One of the questions I'm asked most often as a mortgage broker is: "Should I overpay my mortgage?"
My answer is always the same: "It depends. Understand your mortgage before making any decisions."
Many residential mortgage lenders allow borrowers to overpay up to 10% of their outstanding mortgage balance each year without incurring an early repayment charge. However, every lender and every mortgage product is different, so it's important to check your mortgage offer or speak to your lender before making any overpayments.
Overpaying can have some significant advantages:
- Reduce the amount of interest you pay over the life of your mortgage.
- Become mortgage-free sooner.
- Potentially improve your loan-to-value position ahead of your next remortgage.
However, it's not always the right move. Before making overpayments, you should also consider whether:
- You have an emergency fund in place.
- You have higher-interest debts that should be cleared first.
- Your mortgage has any overpayment restrictions or early repayment charges.
- Your money could achieve a better return elsewhere.
Recently, my wife Leila and I started using an app called Sprive, which you may have seen on Dragons' Den. One feature I particularly like is that it shows you how much interest you could potentially save by making regular overpayments. It also allows you to earn cashback from everyday shopping and use those rewards towards reducing your mortgage balance. Sprive also includes tools to monitor your loan-to-value, track your overpayment allowance and identify potential remortgage opportunities.
I'm not suggesting it's right for everyone, but if you have a residential mortgage, it's worth doing your own research to decide whether it fits your circumstances.
If you decide to give it a try, you're welcome to use my referral code: XQGD1UTM
As mortgage brokers, we're often asked about ways to reduce the overall cost of homeownership. Sometimes it's about finding a better mortgage. Sometimes it's about understanding whether overpayments make sense. The key is making informed decisions rather than following generic advice.
If you're considering buying your first home, moving, remortgaging, investing in a buy-to-let property, or simply reviewing your current mortgage, I'd be happy to help.
Disclaimer: This article is for general information only and should not be considered financial advice. Overpayments are not suitable for everyone and may be subject to lender restrictions or early repayment charges. Please check your mortgage terms, speak to your lender or mortgage adviser, and carry out your own research before using any third-party app or making overpayments.
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