UK homeowners could save almost £6k by overpaying on mortgage

UK homeowners on a fixed rate repayment mortgage could save £5,895 and reduce their term by three years and two months by overpaying an extra £100 a month, new research has shown.

According to comparethemarket.com, for first-time buyers on a fixed rate, the potential savings are even greater; through regular overpayments of £100 every month, this demographic could reduce their mortgage term by two years and seven months and save £6,129 in interest.

Furthermore, for those on a standard variable rate mortgage (SVR), they will see higher savings by overpaying on their mortgage of £13,000, because they are likely to be on a more expensive rate.

Director of mortgages at the firm Mark Gordon said: “Even though committing more of your pay cheque towards your mortgage can seem financially daunting, even modest but regular overpayments can save you thousands in the long run.

“Households on standard variable rates are likely to be paying higher interest rates and have more expensive monthly mortgage commitments. If you are on an SVR, instead of overpaying on your mortgage it may be wise to switch to a fixed rate product which is always cheaper. You can then use that extra money to make overpayments and reduce your term even further to avoid paying unnecessary sums in interest.” 

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