If you could afford to pay a little extra each month, then an overpayment calculator can show you how much you might save.
The general theme is to pay extra on your monthly mortgage payments. Pay 600 instead of 500 if you can.
The savings made at the end may stagger you. We're talking thousands saved and years knocked off.
As every mortgage deal is slightly different it's hard to give examples for your figures. You should put your figures into an overpayment calculator and see your own results.
A pretty standard example is a 100,000 mortgage at 5% interest. Your monthly payments would be in the region of 580.
If you could pay 680 every month your mortgage would be finished in just over 18 years and you'd save 20 grand in interest fees.
Considering you agreed to 25 years on the deal you are now free 6 years early.
I think that you should most certainly make overpayments if you can. The interest saved snowballs into huge savings later on.
Another quick example, using the same figures as earlier but paying 200 a month over the top. I know this is a lot more but if you could stretch to it now it's worth your while.
If you did pay this two hundred extra you would save almost ten years off the mortgage and save cash to the sum of 32 thousand. They are really eye opening figures.
Another benefit to paying extra and getting the mortgage over with early is the fact you aren't paying anything for the years you save. And that can add up to a lot of money saved.
You could save yourself another 40 thousand because you aren't paying the 580 per month for the last 6 years.
It's got to be great news for you when all this extra saving doesn't even come out of your pocket. It stays there.
We've been talked at and advertised to over the years. And we now firmly believe we have to stick with the deal offered, but that's poppycock.
Would you keep your mortgage for 25 years if you became rich overnight? My guess is not, and with overpayments you can also reduce the length of your mortgage.
However, your lender won't tell you any of this!
However, your lender won't tell you any of this!
Article Source: the-Articles.com
About the Author
Author: MontyBurn
Monty Burn was head of the Voluntary Mortgage Regulator until his sacking for assisting too many people
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