Repay your mortgage early – is now a good time to make overpayments on your mortgage !
If your home loan permits, and at MDFS we can check that for you if you wish, making regular or one-off overpayments can help reduce your home loan and even repay your mortgage early, saving interest.
Mortgage interest rates are still at record low. This provides borrowers with a great opportunity to use any savings they are making for overpayments. This could be of interest to older borrowers, as it can be more difficult to get competitive interest rate deals nearing retirement. Overpaying your mortgage now might help clear it in full before retirement. Worst case it might reduce your mortgage to a more manageable size.
Most mortgages permit overpayments. Usually overpayments are restricted to 10% without penalty. We’re not going to bore you with endless calculations but, just repaying an additional £100 per month can make substantial reductions in the overall amounts payable on a 25 year mortgage.
However, make sure you check your mortgage conditions for early repayment charges. Some mortgages have penalties if you repay too much.
Also, try to make sure you still maintain an emergency fund. Keep back some of your money as savings. Once you’ve used your savings to repay your mortgage that money has gone, and it might be difficult to get back, particularly if you hit hard times. If you’ve got credit cards or loans on higher rates, perhaps try to repay these first. The rates on credit cards and loans are likely to be much higher.
If you haven’t reviewed your mortgage in years, then you’re most likely paying too much in interest. Consider a re-mortgage. Apply any savings to reduce your mortgage capital quicker.
Finally, you might even be able to benefit from an Offset Mortgage. Contact us for more information about offsetting and repaying your mortgage early.