Whether you are a First-Time Buyer in Newcastle aiming to take a step onto the property ladder, looking to move home in Newcastle or thinking about a Remortgage for Home Improvements, overpaying, even if it’s not by a lot, can make a large difference in the amount on the interest you pay back throughout your mortgage term. The earlier you begin the process of overpaying, the better the effects it will have on your mortgage payments.
Many homeowners are aware that overpaying can have a big impact on the amount of interest they end up paying back.
Even small overpayments can have a noticeable impact. The trick is to start overpaying early because then the extra payments have a longer period to take effect.
The survey suggests that the reason people don’t overpay is that they can’t afford it. However, we feel the main reason is that life simply gets in the way.
Given the figures, we all know that overpaying is the “right” thing to do. But, let’s be honest, there’s always something more exciting to spend your money on!
For some people, the issue also comes with remembering to overpay. To be honest, it’s not something that’s particularly likely to cross your mind too often if you don’t have a reminder setup.
Potentially, you might think about it more when your mortgage only has a few years left. However, at this stage, the impact isn’t as great as it could be if you do it earlier.
An easy way to make overpaying part of your routine is to set up a standing order. Even better, organise it so that it goes out at the same time as your regular mortgage payment. This way, it feels like just one amount and you will become used to it.
Another benefit of using a standing order is that you’re in control. Unlike a direct debit which the receiver controls, you can easily cancel a standing order if your financial situation changes. Whilst it would be a shame to stop overpaying, at least you aren’t committed to anything you can’t afford.
As we’ve discussed throughout this article, whether you’re a First-Time Buyer, Home Mover or looking to Buy to Let, overpaying your mortgage is a great habit to get into. You don’t need to pay huge amounts unless you feel you can.
But you’ll be grateful toward the end when you realise you’ve been able to shave a year or two off your mortgage repayments.
It’s not uncommon for some mortgage providers to even let you make reduced payments or take a payment holiday if you have been overpaying for a while.
However, before you take a payment break, it’s important to check with your lender that you are eligible to do so. Because, if you’re not, you could face a negative mark on your credit report.