Published On: Thu, Aug 22nd, 2019

Mortgage free: How UK borrowers could avoid spending £6,000 and pay off loan 3 years EARLY | Personal Finance | Finance

A mortgage will, for many people, be a substantial financial outgoing for a number of years. However, there may be ways that can see a borrower repay their mortgage sooner rather than later. New research from has suggested that some UK homeowners may be able to shave off three years and two months on their mortgage term. Furthermore, the analysis suggests that these fixed rate repayment mortgage-holders may be able to save themselves £5,895 in interest.

The price comparison website’s analysis suggests that this may be achieved by overpaying an additional £100 per month.

The savings are based on the average mortgage debt being £130,720, with a mortgage term of 20 years.

It assumes a 2.49 per cent fixed interest rate.

Meanwhile, First Time Buyers on a fixed rate mortgage could potentially make even greater savings, the figures suggest.

Should these borrowers make regular overpayments of £100 each month, this demographic could reduce their mortgage term by two years and seven months.

And, this could see them save £6,129 in interest.

Assuming the same term and loan size, should a person be on a 4.89 per cent SVR interest rate, said that £100 monthly overpayments could see a borrower make savings of £13,506 in interest.

What’s more, it could see them reduce their mortgage term by three years and four months.

According to the new research, the majority of mortgage holders (56 per cent) still hesitate to put aside additional money towards the debt each year.

More than half (55 per cent) said that they cannot afford to make the extra payments, with a third (33 per cent) stating that they have too many other outgoings – such as utility bills and credit card debt.

Early repayment fees may apply when it comes to mortgages, with 54 per cent of 2342 UK respondents agreeing that these charges discourage them from making the overpayments.

Mark Gordon, director of mortgages, at, said: “Even though committing more of your paycheque 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.”

READ MORE: Mortgage free: Homeowners reveal how they paid off their mortgage decades early

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