vertex interest only mortgage calculator

“Overpaying isn’t necessarily going to be looked at more favourably by a lender as they will always want to see that the mortgage is affordable,” said Mr Hollingworth. Overpaying may help when you come to remortgageīorrowers with more equity in their property may be able to secure a better rate when they come to remortgage. “It could make sense to build up a savings fund that could then be used to reduce the mortgage when the current deal ends,” said David Hollingworth, of broker L&C Mortgages.

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If you also make sure your cash is earning as much interest as possible with a top fixed account – many of which are well above 5pc – your cash could earn more interest than it would cut through overpaying the mortgage.įor example, SmartSave currently pays 5.31pc on a one-year savings bond. Right now some borrowers will still be locked into a super-low fixed mortgage rate. This suggests overpaying your mortgage could be a good choice, as saving £53,120 in mortgage interest may be preferable to the savings interest you’d earn.īut box clever. In comparison, if you put the same £200 a month into a savings account that pays a rate of 2.15pc over 21 years – the amount of time it would take to pay off your mortgage with overpayments – you’d earn £13,345 in interest. With mortgage rates rising again, paying down your home loan can have a big effect.įor a borrower with a £350,000 mortgage on the average two-year fixed rate of 5.38pc (as of May 30, according to Moneyfacts) and a 25-year term, overpaying by £200 a month would save nearly £53,120 in interest and result in the debt being cleared four years early, according to the broker L&C Mortgages. You can either commit to overpaying by a regular monthly amount, or pay as a lump sum whenever you have some cash to spare. Most lenders allow customers to repay up to 10pc of their mortgage balance each year without incurring an early repayment charge – earlier this year NatWest increased its cap on overpayments to 20pc. Overpaying your mortgage can save you tens of thousands in interest

Vertex interest only mortgage calculator