I’m paying my mortgage off early and saving £10,000 – it’s very easy and takes just 5 minutes each day
Most of us think we could only dream of paying off our mortgages – but savvy saver Mark Rice has found an easy way to get out of debt early and it will save him £10,000.
The 59-year-old from Nottingham has been making use of an app that helps him to overpay the loan he owes to Nationwide on his home – and he has already paid off over £2,000 since he downloaded it last year.
Mark now has ten and a half years left on his mortgage and £61,000 left to pay.
If he keeps up with the overpayments he will have the whole lot paid off around three years early, meaning he will be mortgage free and saving himself in the region of £10,000 in interest payments.
“I was looking for a way of simplifying mortgage overpayments, so that I can pay down my mortgage as quickly as possible,” says Mark.
The Sprive app helps people with saving to pay off their homes in several ways.
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Firstly, it is a more simple way of saving and paying than doing it directly with your bank.
It also acts like a financial adviser, Mark said.
“It isn't that straightforward to overpay your mortgage directly with your lender – I suppose in terms of a business model, it's not in their best interest for you to be paying off your mortgage quicker,” Mark added.
“This app encourages you to set aside cash on a regular basis into a repository, which I can then release directly to my mortgage lender when I’ve accumulated a pot of over £500.
“It’s frictionless. It also encourages you to save by linking to your bank account and analysing your spending patterns, then suggesting affordable amounts to set aside for mortgage overpayments.”
Mark, a project manager for an NHS Trust, also makes easy extra cash to put towards the mortgage payments – by taking part in daily market research surveys through the app.
He added: “You can generate additional payments with very little effort. On a daily basis, I complete surveys on my phone while I’m commuting to and from work, or during my lunch break.
“They only take five minutes and they’re only small sums, up to around £1.40, but I can see them stacking up to around £25 a month,” he says of this easy earner, which will net him an extra £300 a year."
Mortgage coffers can also be added to by the cashback offers on the Sprive app.
“I use it in Costa Coffee and Cafe Nero," Mark said.
"I get about 40p cashback every time I buy my coffee and that gets automatically put into my Sprive account to pay towards my mortgage – and I’d be spending that money anyway.”
Users of the app can also get cashback from supermarkets like Asda, Tesco and Morrisons, as well as Primark, Halfords, IKEA and M&S, and even on their Deliveroo or UberEats takeaways.
Before you think about making extra payments, check with your lender first.
Some lenders might not let you make overpayments at all, so make sure you get all the information you need about whether you can set up a regular or one-off payment.
You should also be aware that you might be slapped with a fee if you overpay too much on your mortgage.
This is usually between 1% and 5% of the amount overpaid.
Lenders also don’t make it easy to do, but there are tricks which help you.
“If you make an overpayment, their default response is to reduce your next monthly payment rather than reducing the term, so you have to go online, check your settings and change them,” he said.
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“I did that so that, if I'm making an overpayment, it reduces the term of my loan because, if I didn't, I'd be 70 by the time I made the last payment – and I want to be retired before that.
“I want to make sure the house is paid for – and I’m on track to do that and save myself thousands in the process.”
SHOULD YOU OVERPAY YOUR MORTGAGE?
YOU might not have the spare cash to do this - but if you do, it could help you make a big saving.
On a £100,000 mortgage over a 25-year term, paying an extra £90 a month would save over £4,800 of interest and see the loan repaid nearly three years early, according to calculations by Halifax.
And even smaller overpayments can still have a big impact.
For example, paying an extra £25 each month on a £250,000 mortgage fixed at a rate of 5% would save £23,986 over a 40-year term, according to Sprive.
However, it’s important that you don’t over pay too much as lenders often cap the amount at 10% per year - or you’ll face a hefty charge.
If you do it yourself, your lender will give you two options. Either reducing your next payment or reducing your mortgage term.
You want to pick the second option as this will help reduce the debt and interest you will pay in total.
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