Recent figures from the consumer group “Which” show that nearly half (46%) of homeowners are overpaying their mortgage. The largest group overpaying being the under 25’s.
So, should you be thinking about overpaying your mortgage?
Why should you overpay your mortgage?
- Overpaying allows you to save on your interest payments. This saving can be substantial over the term of the mortgage.
- You will own your property outright sooner.
- With more equity (the difference between your house value and the outstanding mortgage) in your home, you could be able to get a better rate on your next mortgage deal.
- You would be less likely to move into negative equity if house prices fall.
- Low rates on savings accounts.
Why should you not overpay your mortgage?
- If you have other personal borrowings like credit cards or personal loans. Then these debts should be looked at first. The interest rate on this type of unsecured borrowing is normally higher compared to your mortgage.
- You need some available cash. You may have to dip into that emergency fund you have for unexpected car repairs or if the boiler needs replacing.
- Do not over commit. It may be easy to overpay but it is never as easy to take the money out again with an additional mortgage advance. Budget carefully especially if your income fluctuates with overtime and bonuses.
- Check that you can overpay your mortgage. Most lenders allow you to overpay your mortgage by up to 10% even if you have a fixed or discounted rate. Check your mortgage offer or speak to your mortgage broker.
Should I have an offset mortgage?
With an offset mortgage, your savings are linked to your mortgage. Instead of earning interest on your savings, the money is set against your mortgage. As a result, you pay less interest on that debt. This allows you to benefit from reduced payments or to use the savings to reduce the mortgage balance. So paying your mortgage off sooner.
Additionally, an offset mortgage provides you with the flexibility that you can draw the money back should you need it at any time. However, you will lose the benefits of the balances from your offset.
Interest rates on these flexible offset mortgages are normally higher. Our team of mortgage brokers will help you see if it is right for you.
How Anstee & Co can help with your mortgage.
We are a firm of Independent Mortgage Brokers. This means that we look at all of the mortgage options open to you. This unlike some mortgage advisers who will only offer their own products or work from a limited panel. Our advice is unbiased. We can show you how an offset mortgage works to see if it is the right solution for you.
The initial meeting is free and without obligation so why not arrange a meeting today.
We have offices located at-
- Kettering, Northamptonshire
- Towcester, Northamptonshire
- Stamford, Lincolnshire
Our team of mortgage adviser live and make use of meeting rooms in-
- Bedford, Bedfordshire
- Market Harborough, Leicestershire
- Northampton, Raunds and Wellingborough, Northamptonshire.
Due to the present government guidelines regarding COVID-19 (coronavirus) and social distancing we are making full use of video conferencing facilities such as –
- Microsoft Teams
We can also arrange a conference call. The choice is yours. There is no need to visit an office as all work can be handled remotely. So, the meeting can be arranged at a time that is convenient for you.
If you have any thoughts on this article, “Overpaying your mortgage? Should you?”, then we would love to hear from you.
Finally, the information contained in this article is for information purposes only and does not constitute advice. Anstee & Co. is authorised and regulated by the Financial Conduct Authority (FCA).
AS A MORTGAGE IS SECURED AGAINST YOUR HOME, IT COULD BE REPOSSESSED IF YOU DO NOT KEEP UP THE MORTGAGE REPAYMENTS