Overpayments ‘can reduce costs’
Making mortgage overpayments is one of the most effective ways of using a pay rise, it was claimed today.
Katie Tucker of independent mortgage broker John Charcol explained that overpayments can have significant financial benefits, particularly if they are made with money that would not be missed.
"If you have had a pay rise this year, but you have lived comfortably without it this long, you should seriously consider using the extra money as a regular monthly overpayment to your mortgage," she said.
Anyone with a £150,000 25-year repayment mortgage could save £17,415 and reduce the loan term by three years simply by making a £50 overpayment each month, added Ms Tucker.
However, she advised paying off more expensive debts, such as credit cards and personal loans, before trying to save money on a mortgage.
Ms Tucker's advice comes just days after David Kuo of personal finance website Fool.co.uk said that making mortgage overpayments is a good way for homeowners to increase equity in their properties and to persuade banks that they are low-risk borrowers.
You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.