According to new research by Comparethemarket only 18% of mortgage borrowers regularly overpay on their monthly mortgage payment.
The research shows that the majority of borrowers hesitate to put extra money towards their mortgage each month - with 58% admitting to having never overpaid.
Borrowers could save a significant amount through making regular overpayments due to the interest saved by repaying their mortgage quicker.
Overpaying each month by as little as £59 (around 10% of an average monthly payment) means that borrowers could repay their mortgage 1 year and 4 months quicker which could save a significant £1,842 on interest alone.
First Time Buyers could see an even greater saving as borrowers between the age of 25 and 34 could see their mortgage repaid approximately 2 years and 8 months quicker by overpaying by 10%, equating to a saving of approximately £6,553.
According to Comparethemarket, with nearly eight million mortgage holders in the UK this potential saving totals around £14.3 billion nationwide.
It seems that many mortgage owners are aware of the benefits of overpaying. A poll carried out by Comparethemarket found that out of almost 2,000 borrowers, 52% said that overpaying on their mortgage every month would make them feel more financially secure. In addition 15% of those surveyed admitted to overpaying by more than 10% in the last twelve months.
Simon Butler, Associate Director at Contractor Mortgages Made Easy, said: “With the bank of England Base rate recently being reduced to 0.25%, it makes sense to overpay on your mortgage as opposed to putting surplus income into savings with low savings rates. This could provide larger savings for mortgage borrowers in the long term due to the interest saved by repaying your mortgage quicker.”
“Many mortgage products allow you to overpay up to 10% of the outstanding balance each calendar year during an initial deal such as a fixed interest rate, with many standard variable rate mortgages having no limit to overpayments. However some will add a charge for paying the mortgage early so it is advisable to check your mortgage offer or with your lender for details.”
Article by: Bradley George, Senior Protection Consultant at Contractor Mortgages Made Easy
Media Contact: Sarah Middleton, Public Relations Manager
Tel: 01489 555 080