You can find out how much you can save by paying extra each month with an overpayment calculator.
The idea is to pay a little extra on your monthly payments. If your payments are 500 a month then pay 600 a month.
You may be shocked by the savings later on. You could knock years off and save yourself thousands.
It’s difficult to give examples as everyone’s situation is different, it’s best if you put your own figures into an overpayment calculator and see what comes out.
We could use an example mortgage of 100k at an interest rate of 5%, which would give you monthly payments of around 580.
If you could pay 680 every month your mortgage would be finished in just over 18 years and you’d save 20 grand in interest fees.
Add into that you don’t have to pay anything for the last 6 years of an original 25 year deal.
In my opinion if you can afford to make the odd overpayment then you definitely should. It all adds up and makes for a great return towards the end of the term.
I can give you another example, but paying 200 extra instead of 100. Yes this is much more but the savings are vast.
You could save nearly 10 years off the length and save somewhere near thirty two thousand by paying this 200 a month. They are great savings, both in time and money.
Another benefit to paying extra and getting the mortgage over with early is the fact you aren’t paying anything for the years you save. And that can add up to a lot of money saved.
If you were paying 580 a month and you could knock 6 years off, you wouldn’t have to shell out another 40 grand!
All these savings are going in your pocket and that’s got to be appealing.
We have been brainwashed over the years by the financial industry to believe we have to keep the mortgage for the agreed period but this is pure rubbish.
Would you keep your mortgage for 25 years if you became rich overnight? My guess is not, and with overpayments you can also reduce the length of your mortgage.
Of course, your lender will never tell you any of this!
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