Mortgage Ideas


Mortgage Ideas

Overpaying on your mortgage

While interest rates are so low, maybe now is a good time to overpay on your mortgage. Dependent on your mortgage, you should be able to over pay by with 10% or 20% per annum without penalty. In this environment if you are looking to make the most of your savings the other option is to take an offset mortgage product.


So how do you go about making overpayments?

David Copland, of mortgage advice firm TMA states: ‘Customers should check if the interest rate payment on their mortgage are due daily, monthly quarterly or annually. They’ll need to pay it off a day before the interest is due, to avoid entering into the next period of interest owing.’


Switching to an Offset Mortgage

The alternative is to re-mortgage to an offset mortgage. This links your savings account to your mortgage debt and allows you to pay less interest on your mortgage by forgoing the interest on your savings.

Aaron Strutt, of mortgage broker Trinity Financial, states: ‘Offset mortgages can save clients a considerable amount of money and reduce their mortgage term when they put bonuses or savings in the linked account. They should also still be able to withdraw the money at any time in case they need.’

The major benefit of the offset mortgage is that you will avoid paying tax on the interest the deposit would have earned. In addition, with this type of mortgage interest is calculated daily, therefore every pound you deposit will reduce the cost of borrowing.