Mortgage hack: how to save thousands in interest payments

Mortgage hack: how to save thousands in interest payments

Overpaying by just £5 a month could shave over £2,000 off your mortgage

Overpaying on your mortgage can indeed have a substantial impact on your long-term financial health. Here's a breakdown of the potential savings and benefits of making regular overpayments on your mortgage, as shown in the table:

Significant savings over the life of your mortgage. Here's what these figures mean:

1. Total Amount Paid Back: This is the total cost of your mortgage, including both the principal (original loan amount) and the interest paid over the mortgage term.
2. Total Amount Saved: This is the amount you save in interest payments by making overpayments. The savings increase as your overpayment amount goes up.
3. Time Taken Off Mortgage Term: Overpayments result in a reduced mortgage term, which means you'll pay off your mortgage more quickly. The more you overpay, the more time you shave off your mortgage.

These calculations are based on a £200,000 mortgage with a 25-year term and an interest rate of 6.36%. It's important to note that the actual savings may vary depending on the specific terms of your mortgage and the interest rate. In a high-interest environment, like the one mentioned, overpaying on your mortgage can be a financially savvy move, as it helps you pay down your debt faster and save on interest costs.

Sourced from Which.co.uk