If you have a mortgage and are comfortably making your monthly repayments, overpaying could help you save money in the long term.
But it’s not for everyone – some people might prefer to put money into a savings account or pay off other debts instead. We can’t offer financial advice, so seek independent advice before you make an overpayment.
Here are some reasons someone may or may not overpay.
Reduces how much you owe
Overpaying lowers the total amount you owe more quickly. Overpaying means you might reduce monthly payments later in your mortgage term by reducing how much you pay in interest.
Overpaying won’t necessarily reduce the length of your mortgage
Making overpayments on your mortgage doesn’t necessarily reduce the length of your mortgage term. It may increase your monthly payments in the shorter term and lower your monthly repayments in the long term.
Fees may be involved when overpaying
Each mortgage deal is different, so it’s worth checking if you can overpay and whether there’s a fee to do so. People on fixed rate mortgages can usually overpay by up to 10% before having to pay an early repayment charge. Check with your lender to find out.