Why should I consider overpaying my mortgage?

Paul Demarco talks us through the advantages of making overpayments to your mortgage.

If you are looking to pay your mortgage off quicker, then making overpayments could be for you. Most people are unaware but the majority of mortgages have an overpayment facility available, which allows you to pay in lump or regular overpayments without any penalty. This is typically up to 10% of the capital balance during the preferential rate period of your mortgage and is often available on fixed and tracker mortgages.

A little overpayment can be very rewarding

Not only can you pay your mortgage off quicker by making overpayments, you will also benefit from a potential saving in interest over the whole mortgage term therefore making a little overpayment highly rewarding in the long term.

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There is of course another benefit to flexible mortgages where you may be able to reduce payments in line with the revised balance. This is particularly helpful for maternity leave or sabbatical breaks in employment.

Offset mortgages may suit you more

If making 10% overpayments is not enough for you then there are other options available. Offset mortgages are popular. These allow you to use existing savings to be offset against the mortgage balance and you only pay interest on the difference between the two.

Piggybank and House

Another option is no tie-in products which allow you to make unlimited overpayments at any given time without any penalty. Rates are likely to be higher for the additional flexibility on the offset and no-tie in options so to benefit from this facility you must fully use it.

Pay off your mortgage quicker

To summaries an overpayment facility is an option that is not used enough even though it is available on most mortgages. If circumstances allow it can be a very powerful tool as the total interest payable could be considerably less during the mortgage term. To find out if making overpayments or using an offset mortgage is right for you then pop in to the ESPC showroom for a chat.

Want to know more?


Paul DemarcoPaul Demarco is a Financial Planning Consultant who helps clients with all their mortgage needs and requirements, identifying any other gaps that they may have and advising on a solution to any potential gaps.

You can call him on 07778 066595 for more information.

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The initial consultation with an adviser is free and without obligation. Thereafter, ESPC Mortgages charges for mortgage advice are usually £350 (£295 for first-time buyers). YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER LOANS SECURED AGAINST IT.