Many home owners ‘paying off mortgage debt faster than planned’
Nearly half of home owners with a mortgage say they have been making overpayments on their home loan in recent months – potentially meaning they will be mortgage-free earlier than they had expected – a survey has found.
Young home owners, many of whom may have decades of paying a mortgage off ahead of them, are particularly likely to have been making overpayments, the survey of home owners from Which? Mortgage Advisers has found.
Paying off extra chunks of their mortgage could potentially help home owners to clear their debt earlier than they had originally planned – and some surveyed said they are chipping away at their mortgage debt in this way each month.
Some 46% of home owners said they had made overpayments during the 12 months leading up to June 2018, including 69% of 18 to 24-year-olds and 52% of home owners aged 25 to 34.
Of those surveyed, people in London (60%) and the West Midlands (52%) were the most likely to be making overpayments on their mortgages, while Scotland had the lowest level of overpayments, with 38% saying they had done so in the year up to June.
Poor interest rates from money sitting in savings accounts could be one factor driving the high levels of home owners using their cash to make mortgage overpayments, those behind the research suggested.
Continued low interest rates on mortgages, making debts relatively affordable, could also mean some borrowers have a bit of spare cash left over which they can put towards paying their loan off more quickly.
David Blake, principal mortgage adviser, Which? Mortgage Advisers, said: “While it might be surprising to hear that so many people have paid off extra chunks of their mortgage recently, the benefits can be massive, cutting months off the total length of your loan – and, in turn, saving you hundreds or even thousands in interest.”
More than 3,500 home owners with a mortgage were surveyed.
Here are some mortgage overpayment tips from Which? Mortgage Advisers:
– Some mortgage lenders limit the amount you can overpay to 10% per year.
– You could consider either making regular overpayments or doing it in lump sums.
– Before making an overpayment consider what else you might need the money for, such as home improvements.
– Consider re-mortgaging to a cheaper deal so that you can afford to pay off your mortgage even faster.
Here are the percentages of home owners with a mortgage surveyed who made an overpayment on their mortgage in the year to June 2018, according to Which? Mortgage Advisers:
– South West, 44%
– South East, 48%
– East of England, 40%
– West Midlands, 52%
– East Midlands, 43%
– Yorkshire and the Humber, 43%
– North West, 41%
– North East, 41%
– London, 60%
– Scotland, 38%
– Wales, 46%
– Northern Ireland, 48%