It has been a tough time for people to try and get the mortgage and property that they want/need. But once you get a mortgage it means getting the house you need but you do not officially or fully own it until the mortgage payment term is finished, and you have paid all of your repayments of course.
When paying for a mortgage you are given set payments that you have to give to your mortgage lender. You have taken a loan therefore you have to pay it back, in instalments, and of course interest. Mortgage lenders don’t just give out money for free they are a business after all.
Most mortgages are a loan with a fixed period. Usually 20-30 years. Which is quite a chunk of time if you think an average person lives to around 70-80. So speeding up the paying back of a loan could be pretty useful, don’t you think.
To shorten a mortgage you can in theory pay more than what you have to. This is called over payments. Not all mortgages allow this but if it is something you can do, then you are able to pay more than your set mortgage payments. This means that you are paying more of your loan back, quicker than planned. which means that not only do you pay off your mortgage quicker but also you will be able to save money in interest payments over time.
The Mirror reported that 46% of people over paid on their mortgage, and not only that but 18 – 24 year olds are really steaming ahead with overpayments, with 70% of them paying more than they were asked in their mortgage agreement.
Please see the full article here
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The interest rates which can be a really small amount each month really add up, so shortening the time you have to pay, can mean real savings over a long time. With interest rates changing over time, especially if it’s variable rates it could be in the thousands you end up saving. Could be!
It does sound wonderful – but please ensure you speak to your lenders, everyone’s mortgage is different and lenders have different rules to how you can pay it back.
If this is something that you could afford, and please make sure that you can afford to pay more, work your budgets out people. Then speak to your lender and organise what you can.
And it could save you a lot of money in the future.