Tips to pay off your mortgage faster
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2. Make overpayments wherever possible
If you aren’t certain you can pay extra off your mortgage every month and reduce its overall term, just remember that every little bit extra helps to knock money off the capital of the loan.
This also reduces the interest you have to pay and can help you repay your mortgage faster.
Some lenders restrict the level of overpayments – for example on some products Nationwide restrict overpayments to £500, while others such as Halifax restrict overpayments to 10% of outstanding balance in any given year – but Louise Cuming, head of mortgages at Moneysupermarket.com, says if you’re planning to regularly overpay make sure you choose the right product from the start.
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“Some products are designed to be fully flexible and allow partial repayments of any amount without penalty,” Cuming says. “Some banks even have a specially designed ‘flex’ range of products and a variety of lifetime trackers are available that allow unlimited overpayments without penalty.”
These include tracker deals are available from Mansfield BS (5.55% with a maximum loan-to-value rate of 75%), Cumberland BS (5.69% with a LTV of 90%) and HSBC (5.99% with a LTV of 90%).
If you have irregular income, it may be easier to make lump sum overpayments, rather than commit to a regular sum.
However, Cuming warns that making a capital repayment against some mortgage accounts in effect means the loss of your readily accessible cash.
“Fully flexible products ‘hold’ the overpayments separately – rather like an ‘emergency’ fund – so any capital repayments made could be redrawn for emergencies,” she adds.
