Half of home own­ers pay ex­tra on mort­gage

OVERPAYMENTS CAN MEAN BIG SAV­INGS

Sunday Sun - - News - By Vicky Shaw Re­porter scoop.sun­day­[email protected]­dia.co.uk

NEARLY half of home own­ers with a mort­gage say they have been mak­ing overpayments on their home loan in re­cent months – po­ten­tially mean­ing they will be mort­gage-free ear­lier than South West ......................................... 44% South East .......................................... 48% East of Eng­land ................................ 40% West Mid­lands .................................. 52% East Mid­lands ................................... 43% York­shire and the Hum­ber .......... 43% North West ......................................... 41% North East .......................................... 41% Lon­don ................................................ 60% Scot­land .............................................. 38% Wales .................................................... 46% North­ern Ire­land .............................. 48% they had ex­pected – a sur­vey has found.

Young home own­ers, many of whom may have decades of pay­ing a mort­gage off ahead of them, are par­tic­u­larly likely to have been mak­ing overpayments, the sur­vey of home own­ers from Which? Mort­gage Ad­vis­ers has found.

Pay­ing off ex­tra chunks of mort­gage could po­ten­tially help home own­ers to clear their debt ear­lier than they had orig­i­nally planned – and some sur­veyed said they are chip­ping away at their mort­gage debt in this way each month.

Some 46% of home own­ers said they had made overpayments dur­ing the 12 months lead­ing up to June 2018, in­clud­ing 69% of 18 to 24-year-olds and 52% of home own­ers aged 25 to 34.

Of those sur­veyed, peo­ple in Lon­don (60%) and the West Mid­lands (52%) were the most likely to be mak­ing their overpayments on their mort­gages, while Scot­land had the low­est level of overpayments, with 38% say­ing they had done so in the year up to June.

Poor in­ter­est rates from money sit­ting in sav­ings ac­counts could be one fac­tor driv­ing the high lev­els of home own­ers us­ing their cash to make mort­gage overpayments, those be­hind the re­search sug­gested.

Con­tin­ued low in­ter­est rates on mort­gages, mak­ing debts rel­a­tively af­ford­able, could also mean some bor­row­ers have a bit of spare cash left over which they can put to­wards pay­ing their loan off more quickly.

David Blake, prin­ci­pal mort­gage ad­viser, Which? Mort­gage Ad­vis­ers, said: “While it might be sur­pris­ing to hear that so many peo­ple have paid off ex­tra chunks of their mort­gage re­cently, the ben­e­fits can be mas­sive, cut­ting months off the to­tal length of your loan – and, in turn, sav­ing you hun­dreds or even thou­sands in in­ter­est.”

More than 3,500 home own­ers with a mort­gage were sur­veyed.

Here are some mort­gage over­pay­ment tips from Which? Mort­gage Ad­vis­ers: Some mort­gage len­ders limit the amount you can over­pay to 10% per year. You could con­sider ei­ther mak­ing reg­u­lar overpayments or do­ing it in lump sums. Be­fore mak­ing an over­pay­ment con­sider what else you might need the money for, such as home im­prove­ments. Con­sider re-mort­gag­ing to a cheaper deal so that you can af­ford to pay off your mort­gage even faster.

The ben­e­fits can be mas­sive, cut­ting months off the to­tal length of your loan – sav­ing you hun­dreds or even thou­sands in in­ter­est.

DAVID BLAKE

Per­cent­age of over-pay­ers by re­gion:

■ 46% of home own­ers paid ex­tra off their mort­gages

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