Mortgage Overpayment Calculator
A mortgage overpayment in simple terms, is paying additional amounts of money than your agreed monthly sum with your bank or mortgage provider. You can overpay in one lump sum. You can opt for one lump sum a year, or you can over pay a smaller amount each month. Most mortgage providers allow up to 10% yearly overpayment of the total amount of the mortgage outstanding. The main goal is to repay the debt early, therefore reducing the amount of interest owed.
By using The Money Pig’s mortgage overpayment calculator you can figure out not only how much money you will save on interest, but also how many years before your mortgage free.
The mortgage overpayment calculator will work for everyone, it just needs to know what current interest rate is and how many years are remaining in your term.
Should I Pay My Mortgage Off Early?
Paying off your mortgage early can have tremendous benefits. Not only will you actually save thousands of pounds vs paying it over the full term. But you will be surprised at only a small over payment of £200pm can sometimes reduce your mortgage by 10 years! To be mortgage free 10-15 years early gives you much more flexibility in life. So sometimes, a little sacrifice now, can pay huge dividends in the future.
When Should You Not Pay Off Your Mortgage Early?
As enticing as it may seem when you punch the numbers into our mortgage overpayment calculator, paying your mortgage off early may not always be the best option. If you have any forms of high interest debt such as a credit card, then I would suggest you to pay that off first. Or if money is tight at the moment, and an extra £200pm may be a bit too much, I would recommend increasing your income first, maybe check out our guide on How To Make Money From Home.
Remember, failing to pay your monthly payments can have severe consequences and your home may get repossessed if payments are not made.
Things To Consider:
- Depending on the length of your current mortgage rate, interest rates can go up or down in the future.
- Check with your bank what percent of yearly overpayment you can make. Most are 10%, but don’t get caught out.
- The calculator doesn’t take into account any early repayment charges that you may incur. However, if you still under the limit, there shouldn’t be any.
Remember guys, this is not financial advice. Should you seek financial advice, please seek a professional financial advisor.