The ins and outs of overpayments
The first few months in a new house can sometimes be tough, financially. No doubt you’ve just worked really hard to save enough money to afford to move house, or buy for the first time, and now not only are you getting used to your new mortgage repayments and household bills, but you may also need money to redecorate and make the house your own.
But once you’ve settled into your mortgage and have gotten used to your new outgoings, you may find that you have a bit more disposable cash than you first thought. So the next questions is: what should you do with the money, spend it or save it?
You could splash out on a fancy holiday, splurge on an impromptu shopping trip, treat yourself to a new car, or you could decide that it’s better to invest it or save it for the future. But have you thought about making overpayments on your mortgage?
What are the benefits of overpaying?
There are two main incentives to overpaying on your mortgage:
- Pay less interest and more capital off
- Lower the term of your mortgage
By paying as little as £100 extra a month, you could significantly reduce the term of your mortgage. For example, if you have a £100,000 mortgage over 25 years with an interest rate of 4%, and you pay off an extra £100 a month, you could reduce your mortgage term by 6 years and save £15,534 on interest.
Just be aware that some lenders may charge an early repayment fee, so it’s worth sitting down with your mortgage adviser to see if the overpayment charge outweighs the other benefits of making overpayments.
You can make changes to your overpayments at any time, whether this is to reduce or increase them. For instance, if you get engaged and suddenly need that extra cash to save for a wedding, you can reduce your overpayments or revert back to your original mortgage payment. Similarly, if you get a promotion at work, you might decide to invest some more money in your mortgage, so you can simply call your lender and increase your payments to an amount you feel comfortable with.
Please don’t hesitate to contact us here at CAPC, if you would like any further help or guidance when it comes to managing your mortgage repayments.
For further information call: 01789 201 914
Or email: firstname.lastname@example.org
Contact our expert advisers now
Call free from landline or mobile
Not the right time for a call? Email us and we can arrange a good time to discuss your needs
Whether you should remortgage or not will depend on your individual circumstances and needs. If you have found a lower interest rate and it’s financially the better option then it might be more suitable for you to remortgage. You also might want to remortgage for the following reasons:
From the 30th September this year, landlords with four or more buy-to-let properties will have to satisfy different criteria to secure mortgage borrowing, as they will be considered ‘portfolio investors’ under new rules being introduced by the Prudential Regulation Authority.
As a landlord, no matter whether you have one property or a large portfolio, it’s important to keep on top of all the paperwork associated with owning the buy to lets. Here are ten key pieces of documentation you should have up to date and to hand:
Just like everyone has their own style when it comes to fashion, it’s the same when it comes to houses. Some people prefer period houses that have character and unique features, whereas others might prefer a new build property with a clean, modern look and feel that you can make your own.
How To Guides
Is it your ultimate dream to one day design and live in a home that you’ve created yourself? But perhaps the thought of going into the unknown is putting you off making it happen? In this article, we’re taking a closer look at the journey of a self-build project…
Buying, renovating and potentially furnishing a property is an expensive process and it’s natural to want to keep costs as low as possible, particularly if you are trying to make a limited amount of capital stretch far. However, as legions of landlords before you have learned…
Have you been rattling around your big, old house for quite some time now? If so, downsizing might be the right thing to do. A driving force for many to downsize is an empty nest. If the kids have grown up and moved on, having to look after a big, empty house can become a burden.
A fee of up to 1.5% of the mortgage amount may be charged depending on individual circumstances. A typical fee is 0.67%.