Our Money Advisers' answer to these questions is yes but no but maybe. Let's look at the options:
As a mortgage is the largest debt that most people will have and for the longest term, we can understand why the borrower would want to reduce their debt. However:
Check that your mortgage agreement allows you to over- pay and by how much.
Most lenders will usually only allow you to pay up to 10% of the balance owed each year or else face a penalty.
Think about what interest rate you are paying and whether you could get more interest from putting that money into a savings account?
Consider putting a monthly amount into a stock market linked investment to run for the re- maining term of the mortgage and you may have a very nice nest egg at the time you pay off your mortgage.
Most people’s wages are expected to increase over the term of a mortgage so payments that seem high now but will be much lower in comparison in, say, 10 years from now. Just look back at a payslip from 10 years ago.
Some lenders offer a product called an offset mortgage which does as the name suggests. If you have savings with them of say £3,000 and have a £60,000 mortgage, then you will pay interest on just £57,000.
If you have other borrowing on credit or store cards, it may be worth paying them off first, as they are usually higher interest rates. There are plenty of options to consider and you could consider speaking to an independent mortgage adviser or broker.
Martin Lewis has a calculator on Mortgage Overpayments (moneysavingexpert.com).
If you've got a mortgage, find out more about it and the options that you've got. Chat to your family, friends and colleagues - #talkmoney week is a great time to get chatting and finding out more - #DoOneThing
For lots of money-saving tips, also download our FREE 'reducing everyday living costs' booklet and start saving today
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