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One fifth regularly overpay their mortgage

paulajohn
Written By:
paulajohn
Posted:
Updated:
20/11/2013

Research shows that 19% of borrowers overpay their homeloan every month by an average of

Research carried out by Santander found that 2.5 million borrowers are taking advantage of relatively low mortgage rates to repay more than they are contractually obliged to every month.

Collectively UK mortgage borrowers are overpaying to the tune of £9bn a year.

A further 6% usually make one lump sum overpayment a year while 9% more don’t overpay on a regular basis but have done so at least once in the past year. Those who have made a one-off overpayment in the past year (nearly two million people) overpaid an average of £1,919.

Overall, a third of all borrowers overpay their mortgage to some extent.

More than half (52%) of those currently overpaying their mortgage have started doing so in the last two years, as mortgage rates have fallen.

Santander found that of those borrowers who don’t overpay, more than a third (36 per cent) say they could afford to, by an average of 18% extra.

Overpaying a mortgage allows borrowers to cut years off the term of their mortgage, potentially saving many thousands of pounds in future interest payments.

According to Santander’s research, one in four Brits with a mortgage (23%) have no idea whether their mortgage provider allows overpayments; 14% say their provider allows overpayments but might charge penalties, while 8% believe their provider definitely charges customers for making overpayments.

Phil Cliff, director of Santander Mortgages, said:

“If you overpay on your mortgage you will pay less interest over the full term, so it’s a good thing to do if you can afford to. Nearly half of those people who have never overpaid on their mortgage still put money into savings each month, and given the average interest rate on these people’s savings accounts is just 1.6%, in the long-term they may be better off using this money to make mortgage overpayments instead.”


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