The first few months in a new house is usually followed by a financial adjustment period. Budgeting for your new mortgage repayments and household bills can be difficult to gauge. Especially after factoring in the costs of renovations and home improvements that you may also be considering.
Over time, you may find that you have extra disposable income, whether that’s through overbudgeting or being in a better financial position than you initially thought. So the next question is: what should you do with the money – spend it or save it?
On first thoughts, you might think about treating yourself to a fancy holiday, an impromptu shopping trip, a new car, or you could decide that it’s better to invest it or save it for the future. But have you thought about making overpayments on your mortgage?
What are the benefits of making overpayments?
There are two main reasons to make overpayments on your mortgage:
- You could potentially pay less interest and more capital off
- Lower the term of your mortgage
By paying as little as £100 extra a month, you could significantly reduce the term of your mortgage. For example, if you have a £100,000 mortgage over 25 years with an interest rate of 4%, and you pay off an extra £100 a month, you could reduce your mortgage term by 6 years and save £15,534 on interest. Even better, if your circumstances were to change financially, you can make changes to your overpayments at any time, whether this is to reduce or increase them.
Just be aware that some lenders may charge an early repayment fee, and so it’s worth sitting down with your mortgage adviser to see if the overpayment charge outweighs the other benefits of making overpayments.
If you are already consulting with a mortgage adviser from our partner business, Life Financial Services, they will happily help you weigh up whether this is the right decision for you. If not, please don’t hesitate to contact us if you would like any further help or guidance when it comes to managing your mortgage repayments.
For further information call: 0333 6000 008
Email: firstname.lastname@example.org or visit: www.lifefinancialservices.co.uk
Your home may be repossessed if you do not keep up repayments on your mortgage.
There will be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 1.5%, but a typical fee is 0.3% of the amount borrowed.
If you are a looking to sell or let your property then please call us on 0333 6000 060 to speak to a local property expert to arrange a free no obligation market appraisal.
Correct at time of publication. The views and opinions expressed herein are those of the individual contributor and do not necessarily reflect those of the Chancellors Group of Estate Agents Ltd or its subsidiaries. References to legislation, best practice and other matters with legal implications such as fees, rules and processes are included for information and editorial purposes only and are not authoritative, nor should they be interpreted as advice. When in doubt you should only take advice from an industry professional or solicitor where appropriate. E&OE.