The overpayment calculator clearly demonstrates the impact you can make by making extra payment on shortening the length of the mortgage and the total amount of interest you pay.

“Many of our customers will make overpayments to reduce the terms to work in line with their retirement, when the extra cash will more useful.”

For example purposes, say you had a £150,000 mortgage with a remaining term of 20 years, with an interest rate of 4% per year, the monthly repayments would be approximately £909.

By paying an extra £50 per month, the term of the mortgage would be decreased by approximately 18 months, saving a total of £5,807 in interest, provided that the 4% interest rate remained in effect throughout the term of mortgage. Or by making a lump sum of £10k, would save you approximately £11,400 and finishing the mortgage by 2 x years earlier.

“Historical with mortgage rates being at their all time low, if the interest rates start going back up again in the near future, the benefits of making overpayments now will be even bigger.”

Alternatively, you could add your mortgage account to your internet banking as a payee. You’ll be able to make quick overpayments whenever you desire this way.

Contact your lender and tell them that you wish to make overpayments to lessen the terms of the mortgage, get I clear understanding of the terms and conditions, make sure that making overpayments is correct for you.

With some lenders you are able to adjust your monthly payments online or via an app to increase the monthly direct debit payments or simply make the overpayments with a separate standing order sent directly to the lenders.

With great thought, please consider how much you can afford to make as an overpayments on your mortgage and whether you should pay off your mortgage with savings you have made or via large cash lump amounts that is normally inheritance or redundancy payouts.

Always keep a safe net of cash separately, say if you lose your job or need to make unexpected repairs on a vehicle, getting the overpayment back after you’ve used it to pay off a portion of your mortgage debt can be retrieve the payment back, you may need to remortgage in some circumstances to get the equity back.

If the interest rates rise, you may not be able to do so at a competitive mortgage rate you are currently on. They will be additional expenses associated with refinancing your mortgage loan.

Making overpayments on your mortgage has many benefits and drawbacks; you must consider all the factors before making a decision on making the extra payments to clear the debt quicker, the disadvantages of making overpayments may exceed the benefits, depending on your financial situation.

Overpaying your mortgage has a number of benefits, including:

• Making the extra payments will mean that your mortgage is cleared quicker and you will pay less interest on the property, something that will potential save you thousands of pounds over the course of the mortgage. Every extra payment that goes toward the mortgage will bring you that step closer to being mortgage-free!
• Making overpayments is far better than having the cash sat in a savings account, you will be saving more money on the interest of the mortgage than you will gain interest on the savings the old traditional saving accounts.

Some of the disadvantages of making overpayments are:

• There is less cash on hand. It’s a good idea to maintain an emergency fund in case you have unforeseen bills or your financial status changes, such as job loss — if you spend up all of your extra cash on overpaying your mortgage, you risk becoming financially vulnerable.
• You will have less cash to spend and could potentially leave you exposed if you were to lose your job without any savings, we must all keep an emergency fund spare for any changes that can happen to our financial situation
• Mortgage interest rates are normally the lowest compared to other debt if you have other debts like credit cards, car loans, store cards, etc. It’s best if these are cleared first before making any overpayments on your mortgage.
• Many lenders will charge you a fee if you go over the term and conditions of the amount of overpayment you can make, potentially making a large lump payment could end up costing you more in fees and charges.