We will use your email address only for sending you newsletters. Please see our Privacy Notice for details of your data protection rights.
Amassing the cash for a mortgage deposit will be a huge challenge for many people. But, having built up the savings and bought a property, there are usually plenty more tasks to come when it comes to mortgages.
According to the Money Advice Service, the average mortgage will last 25 years – however it may be that this period is shorter or longer.
Some homeowners may decide to make a steadfast effort to reduce the length of their mortgage, in an effort to cut costs.
Those who are looking to pay off their mortgage sooner rather than later may consider a number of options.
It’s something which Matthew Boyle, mortgage specialist at personal finance comparison site finder.com, has shared some insight on.
Speaking to Express.co.uk, he said: “Homeowners have a few options open to them if they want to reduce the amount of time it takes to pay off their mortgage.
“One would be to ‘overpay’ their mortgage every month, which would ultimately mean the balance is paid off sooner.”
However, while making mortgage overpayments may be the route some people choose to take, Mr Boyle has issued a warning.
That’s because borrowers may face charges, depending on how much they overpay by.
And, this is something which the mortgage specialist has urged borrowers to look into.
“Most mortgages allow a certain level of overpayment (either monthly or in the form of an annual lump sum); but be sure to check the small print of the policy first, in case your lender doesn’t allow it or imposes penalties for overpaying by too much,” said Mr Boyle.
According to research by comparethemarket.com, UK homeowners could avoid nearly £6,000 in interest by overpaying on their mortgage.
The price comparison website has found that homeowners on fixed rate mortgages could shave £5,895 off and reduce their mortgage term by more than three years via this method.
But that’s not to say it’s for everyone. More than half of homeowners (56 percent) have never made overpayments on their mortgage, the findings suggest.
Many of those who do overpay, however, appear to have made significant lifestyle choices.
Comparethemarket.com said it had found a fifth (19 percent) of people who do overpay have not taken a holiday abroad in order to afford the overpayments.
Mortgage specialist Mr Boyle went on to flag another financial move which some homeowners may consider.
“Another option is to reduce the length of your mortgage when it’s time to remortgage after a fixed-term deal comes to an end,” he said.
However, while it may be that this tactic reduces the time it takes to pay back the money, it would incur a more immediate impact.
Mr Boyle explained: “This would reduce the total number of years that you have to make repayments for, but as with the overpayment route, this will put up your monthly mortgage cost.”
Source: Read Full Article