Overpay your mortgage and save

15 December 2005
Overpaying your mortgage can have a very positive effect on your finances, Charcolonline.co.uk says.

The website reveals that most borrowers have the ability to overpay their mortgage without incurring any ERCs and many may not be aware of the benefits.

Ray Boulger from the website said: "The most common amount which can be overpaid, without incurring ERCs is ten per annum but some allow five per cent or unlimited overpayments, all of which allow a large chunk of the mortgage to be overpaid."

However, Mr Boulger warned that borrowers must be aware of any conditions when overpaying may be seen as breaching terms – resulting in a large penalty.

"My advice would always be to check with your lender before making an additional payment," he said.

Mr Boulger also said that some lenders even allow over payments to be re-borrowed, allowing large bonuses to be parked in the mortgage saving interest until they are needed for large expenditures.

An example would be making a bonus payment of £15,000 to a £200,000 mortgage and in turn saving £26,500 and cutting three years and one month off the term.

track© Adfero Ltd