The term overpaying your mortgage refers to the voluntary additional payment of cash into your mortgage account over and above the agreed monthly sum.
There are a variety of reasons you might want to do this.
If you have no outstanding debt elsewhere (which is likely to be more expensive) and surplus net income or cash sitting in a savings account earning you little or no interest, then reducing your mortgage is a prudent option. Saving 3.85% in mortgage interest when you are only earning 2% gross interest in your best ISA might seem like a ‘no brainer’.
Alternatively, you might want to use a windfall or bonus to reduce the mortgage sum in case interest rates rise in the future, making payments hard to meet. Or perhaps you are planning a few months sabbatical and you want to take a ‘mortgage holiday’ thus making no payments whilst you aren’t earning.
We all have different priorities and financial circumstances and it’s impossible to consider whether or not you should consider making over payments without knowing more about your personal circumstances. For example, it might be prudent to keep some cash readily available for that rainy day, especially if you are self employed or currently find in a precarious state of employment!
The starting point should be to make sure that your mortgage agreement allows you to do what you are considering. Not all lenders will allow repayment holidays or over payments and some of those that do might charge significant fees for this activity, even if you only slightly exceed what may be allowed.
For more information or to speak to a mortgage adviser, contact us on 01628 507477.
Download our Free First Time Buyers Guide
Recent posts
Budgeting over the Christmas Period
3 days ago
The most wonderful time of the year can easily turn into the most expensive time of the year. Watching the pennies doesn’t mean that the Christmas festivities have to stop, following a few budgeting tips can mean you still have a special Christmas and don’t go into the new year in debt.
Preparing your home to sell in winter
7 days ago
December is usually a less desirable time to buy as many people don’t want to move over the holidays. However, prospective buyers do start to look at this time. Selling your home in winter may require a bit of extra attention to showcase your property at its best.
We look at why mortgage rates increased following the Bank of England's choice to reduce the bank rate, and should you fix now?
UK 2024 Autumn Budget: Housing
30 Oct 2024
On 30th October 2024 the Chancellor, Rachel Reeves delivered the Autumn budget which we had previously been warned would be “difficult”. Below we have summarised the main housing points.
Talking about money with kids
23 Oct 2024
In an increasingly cashless society, money is an intangible concept for children to grasp. In the days of coins and notes, kids could see money as something physical you require to purchase goods and services.
In order to help teach your children about money, we have listed some tips below;
Labour Autumn Budget Predictions: Housing
18 Oct 2024
The UK’s chancellor, Rachel Reeves will deliver the Labour government’s autumn budget at the end of the month, we take a look at what could be announced in relation to housing.
Recent research from Halifax has revealed the most sought-after locations for first time buyers in Britain.
The data which was taken from the Halifax House Price Index looked at areas outside of London where those looking to purchase their first property were buying. Despite high property prices and increased rates, these first time buyer hotspots have remained popular.
How can I look after my mental health?
7 Oct 2024
Taking care of your mental health means looking after your emotional, psychological, and social wellbeing. There are several ways we can practice self-care that will help to improve our physical and mental health. This can help to reduce our risk of illness, manage stress, and boost our energy levels!
More information
Trusted by
