Advantages and disadvantages of making overpayments on your mortgage

advantages and disadvantages of making overpayments on mortgage

Should I be making overpayments on my mortgage – what are the advantages and disadvantages of making overpayments on your mortgage.   Overpaying on your mortgage can cut down the time it takes for you to repay the loan, and therefore the amount of interest you pay in total. If you’re beyond an introductory deal and are paying your lender’s standard variable rate (SVR), you can usually overpay by as much as you want.

Most lenders allow you to pay 10% of your mortgage balance as an overpayment per year if you’re still in your introductory fixed, tracker or discount period. However, the 10% rule is not universal.

There are also downsides to be aware of.  Some lenders may penalise those who try to overpay. Fees for paying too much can typically range between 1% and 5% of the amount overpaid, depending on your mortgage. But the fee you pay usually decreases the closer you are to the end of the fixed or discount period. The amount you pay as a penalty will vary between mortgage deals.

WHY SHOULD YOU OVERPAY YOUR MORTGAGE?

There are several great reasons to make overpayments:

  • TO REPAY THE LOAN SOONER – The faster you can repay the amount you borrowed, the sooner you’ll be debt-free. Many people dream of being mortgage-free and living without the burden of this monthly repayment schedule.
  • TO PAY LESS INTEREST – Because interest accumulates over time, the total you pay in interest increases the longer you have the loan.  So, repaying more quickly also reduces the total amount you repay, in most situations.
  • TO MAKE THE BEST USE OF YOUR MONEY – Interest rates are currently very low, meaning that most savings accounts may offer very little growth. If you have spare money, or have just received a windfall, you may be looking for a smarter way to use that money. Some of your options are: shopping around for a better interest rate, making a lump sum contribution to your pension, or making an overpayment on your mortgage.

WHEN SHOULD YOU NOT OVERPAY YOUR MORTGAGE?

There are a number of reasons to think twice before making overpayments:

  • WHILE YOU’RE IN AN INTRODUCTORY PERIOD – Often, mortgage providers will charge you a penalty for making overpayments while you’re
    in the introductory period of your mortgage (for example, a two-year fixed rate). So, it’s less certain that you’ll benefit financially from making an overpayment, and you’ll need to make some calculations first.
  • IF YOU’VE ALREADY MADE OVERPAYMENTS THIS YEAR – Usually, mortgage providers will have a cap on how much you can overpay in a year. Making overpayments above this amount can result in financial penalties, potentially costing you thousands of pounds.
  • WHEN YOU HAVE HIGHER PRIORITY DEBTS – Your mortgage repayments are likely to be among your highest monthly outgoings, but you may have other, higher- interest loan repayments. When you’re considering which to pay off first, this is a more important factor. So, if you have high-interest credit card debt, for example, look at reducing that before making mortgage overpayments.
  • IF YOU DON’T HAVE ENOUGH SAVINGS – While your cash savings may not be growing much right now, it is still important to have some cash set aside for emergencies, especially as we’re living in unpredictable times. So, if your total savings would cover less than three to six months’ worth of living costs, it might be more sensible to hold onto them rather than overpay.

HOW DO YOU MAKE OVERPAYMENTS?

Check first with your mortgage provider to see how much you can overpay without additional fees. Most providers have an annual limit of 10% of the remaining balance, but yours could be more or less than that.  You’ll also want to check how your interest is calculated, so you can make your overpayment at the right time. Sometimes your mortgage interest is calculated daily, in which case you’ll want to make the overpayment as soon as possible. In other cases, the interest is calculated annually. Then you’ll need to time your overpayment so that it’s counted in the annual calculation.

Usually, you can choose whether to make a lump-sum overpayment (best if you’ve had a windfall) or to pay a little more some months (best if you have extra money from overtime or commission). Speak to your mortgage provider about your options.

Are you working towards mortgage freedom?  Are you in position to consider making overpayments on my mortgage? Have you been able to reduce your monthly household outgoings or received an inheritance recently and want to make some of that money work for you? To see how making an overpayment could reduce your mortgage term and interest paid, don’t second guess what you can and cannot do – book a call and talk to one of our brokers. We are a whole of market broker, who will not charge you a broker fee but you will get honest, straight talking advice and support.   You might also be interested in our blog 7 things to think about before paying off your mortgage early. 

 

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At Yes Mortgage Services, we offer a comprehensive range of products from across the market.

Irrespective of whether you are looking to buy a new home, re-mortgage an existing property, or looking to protect your family from the unpredictability that life throws at it or protect your income if you are unable to work due to accident or ill health.

Yes Mortgage Services are committed to offering you the highest possible standards of service. We can undertake the whole process from answering the initial questions through to handling multiple product applications. Ensuring that everyone gets treated with the same urgency and maintaining your best interests are our main goals irrespective of the value of the mortgage.

We recognise that both we and our customers have everything to gain if we look after your best interests and treat you fairly in all aspect of our dealings with you.

Yes Mortgage Services

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YES Mortgage Services Limited
The Old Barn
Brooklands Farm
Mannington
Wimborne
BH21 7JU

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We don’t charge a broker fee

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Your property may be repossessed if you do not keep up repayments on your mortgage. Yes Mortgage Services Limited do not charge a broker fee.⁣

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All lenders have different forms of acceptable income. ⁣

Your salary is an obvious form of income. But there are some lenders who will accept alternative forms of income and not just your salary, things like;⁣

👉 Zero hours contacts⁣
👉 Foster parent income⁣
👉 Rental income⁣
👉 DWP income & allowances⁣
👉 Irregular commission⁣
👉 Bonuses & shift allowances⁣

By discussing your whole situation and income with one of our Mortgage Advisors, we can explain which lenders are most likely to accept your income. ⁣

Give us a call on 0800 612 5596 or tap the link in our bio to learn more.⁣

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Your property may be repossessed if you do not keep up repayments on your mortgage. Yes Mortgage Services Limited do not charge a broker fee.⁣

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The best bit? We don't charge a broker fee! ⁣
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Get in touch for a chat on 0800 612 5596 or tap the link in our bio to learn more!⁣
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Tired of trawling through mortgage deals?⁣

Let us guide you through your options and help you find the right mortgage for your needs.⁣

We have access to a comprehensive panel of lenders to ensure we research the most suitable mortgage solution for your situation.⁣

And we`ll be by your side every step of the way, from understanding your financial situation to guiding you through the mortgage application process.⁣

The best bit? We don`t charge a broker fee! ⁣

Get in touch for a chat on 0800 612 5596 or tap the link in our bio to learn more!⁣

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Your property may be repossessed if you do not keep up repayments on your mortgage. Yes Mortgage Services Limited do not charge a broker fee.⁣


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#mortgageadvisor #nobrokerfee #dorset #dorsetbusiness #ukmortgages #mortgagespecialists
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To move or not to move? That is the question!⁣

Making the decision to move home is a personal one and depends on your unique circumstances. But here are some things to consider when weighing the pros and cons:⁣

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If you’re self-employed and looking to get a mortgage, there's a few things you should take into account. ⁣
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If you’re self-employed and looking to get a mortgage, there`s a few things you should take into account. ⁣

👉 Lenders will typically require proof of income and tax returns for the past three years in order to assess your affordability. ⁣

👉 They will also ask for additional information, such as bank statements and invoices.⁣

👉 As a self-employed borrower, you may be considered a higher risk by lenders, so it’s worth shopping around to find a deal that’s right for you. ⁣

We`re here to help you navigate the self-employed mortgage process. Give us a call on 0800 612 5596 to arrange a chat. ⁣

We are available outside usual working hours, and we don`t charge a broker fee 🌟⁣

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Your property may be repossessed if you do not keep up repayments on your mortgage. Yes Mortgage Services Limited do not charge a broker fee.⁣


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Tap the link in our bio to learn more.⁣
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Your property may be repossessed if you do not keep up repayments on your mortgage. Yes Mortgage Services Limited do not charge a broker fee.⁣
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#bournemouthbusiness #southcoastuk #mortgagebroker #mortgageuk #mortgagespecialists #nobrokerfee

"I`d heard about Yes Mortgages via word of mouth and hadn`t heard a bad word word, now I know I why."⁣

Maybe you’re looking to buy your first home. Or refinance the one you’re already in 🏡. No matter your situation, our personal goal is to see that it ends with you getting the loan you need when you need it. At the rate you deserve. And with a level of care beyond anything you expect 🌟⁣

Tap the link in our bio to learn more.⁣

...⁣

Your property may be repossessed if you do not keep up repayments on your mortgage. Yes Mortgage Services Limited do not charge a broker fee.⁣

...⁣

#bournemouthbusiness #southcoastuk #mortgagebroker #mortgageuk #mortgagespecialists #nobrokerfee
...

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What's the best mortgage? How much can I borrow? What deposit will I need? 🤯 It can all get a bit much. ⁣
⁣
But our mortgage advisors are here to guide you every step of the way, cut through the jargon and answer any questions you may have (even the ones you think might be silly). ⁣
⁣
We don't charge a broker fee, so get in touch for a chat - call us on 0800 612 5596 or send a DM⁣
⁣
...⁣
⁣
⁣
Your property may be repossessed if you do not keep up repayments on your mortgage. Yes Mortgage Services Limited do not charge a broker fee.⁣
⁣
...⁣
⁣
#firsthometogether #firsttimehomebuyertips #firstimebuyer #firsttimebuyersuk #househunters #letsbuyahouse

What`s the best mortgage? How much can I borrow? What deposit will I need? 🤯 It can all get a bit much. ⁣

But our mortgage advisors are here to guide you every step of the way, cut through the jargon and answer any questions you may have (even the ones you think might be silly). ⁣

We don`t charge a broker fee, so get in touch for a chat - call us on 0800 612 5596 or send a DM⁣

...⁣


Your property may be repossessed if you do not keep up repayments on your mortgage. Yes Mortgage Services Limited do not charge a broker fee.⁣

...⁣

#firsthometogether #firsttimehomebuyertips #firstimebuyer #firsttimebuyersuk #househunters #letsbuyahouse
...

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Big changes in your life, planned or unexpected, could mean that your current mortgage no longer suits your needs.⁣
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But with so many lenders out there, it can be overwhelming to navigate the varying interest rates, terms, and fees 🤯⁣
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Well, we're here to do the legwork for you...⁣
⁣
We'll compare different offers and find the most suitable mortgage deals for your situation and be there to guide you through every step until completion.⁣
⁣
The best bit? We don't charge a broker fee!⁣
⁣
Call us for a chat on 0800 612 5596, or visit our website for more info (link in bio)⁣
⁣
...⁣
⁣
Your property may be repossessed if you do not keep up repayments on your mortgage. Yes Mortgage Services Limited do not charge a broker fee.⁣
⁣
...⁣
⁣
#homeownerlife #homeownertips #mortgageuk #mortgageadvice #mortgageexperts #westcountry

Big changes in your life, planned or unexpected, could mean that your current mortgage no longer suits your needs.⁣

But with so many lenders out there, it can be overwhelming to navigate the varying interest rates, terms, and fees 🤯⁣

Well, we`re here to do the legwork for you...⁣

We`ll compare different offers and find the most suitable mortgage deals for your situation and be there to guide you through every step until completion.⁣

The best bit? We don`t charge a broker fee!⁣

Call us for a chat on 0800 612 5596, or visit our website for more info (link in bio)⁣

...⁣

Your property may be repossessed if you do not keep up repayments on your mortgage. Yes Mortgage Services Limited do not charge a broker fee.⁣

...⁣

#homeownerlife #homeownertips #mortgageuk #mortgageadvice #mortgageexperts #westcountry
...

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What is an agreement in principle, and do you need one? 🤔⁣
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An agreement in principle is a statement offered by lenders to give you an estimate of how much they're likely to lend you.⁣
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Having one will help you narrow down your house hunt to those properties in your price range and will help you prove to sellers and agents that you’re a serious buyer. ⁣
⁣
Learn more about the world of mortgages on our blog (🔗 in bio)⁣
⁣
...⁣
⁣
Your property may be repossessed if you do not keep up repayments on your mortgage. Yes Mortgage Services Limited do not charge a broker fee.⁣
⁣
...⁣
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#agreementinprinciple #firsttimehomebuyertips #firstimebuyer #homebuyingprocess #buyingyourfirsthome #househuntingadventures

What is an agreement in principle, and do you need one? 🤔⁣

An agreement in principle is a statement offered by lenders to give you an estimate of how much they`re likely to lend you.⁣

Having one will help you narrow down your house hunt to those properties in your price range and will help you prove to sellers and agents that you’re a serious buyer. ⁣

Learn more about the world of mortgages on our blog (🔗 in bio)⁣

...⁣

Your property may be repossessed if you do not keep up repayments on your mortgage. Yes Mortgage Services Limited do not charge a broker fee.⁣

...⁣

#agreementinprinciple #firsttimehomebuyertips #firstimebuyer #homebuyingprocess #buyingyourfirsthome #househuntingadventures
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1 0
If you're about to buy your first home, you've probably heard a lot about home insurance. But what is it, and do you need it?⁣
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There are two parts to home insurance: ⁣
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🏠 Buildings insurance covers the structure or fabric of your house; the walls, roof, windows, floors, and often fixtures and fittings too. ⁣
⁣
🛋 Contents insurance is for things like furniture, TVs and personal belongings. ⁣
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A simple way of putting it; if you turned your house upside down, contents insurance would cover you against the belongings that fall out of it. Buildings insurance should cover the rest.⁣
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Mortgage lenders insist you take out buildings insurance when you exchange contracts. ⁣
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And while you don't need Contents Insurance to buy a house, it might offer peace of mind to have it (particularly given that the average household owns around £35,000 of stuff!). ⁣
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If you need help finding the right policy, our insurance advisor Kelly is available. Send us a message or call 0800 612 5596.

If you`re about to buy your first home, you`ve probably heard a lot about home insurance. But what is it, and do you need it?⁣

There are two parts to home insurance: ⁣

🏠 Buildings insurance covers the structure or fabric of your house; the walls, roof, windows, floors, and often fixtures and fittings too. ⁣

🛋 Contents insurance is for things like furniture, TVs and personal belongings. ⁣

A simple way of putting it; if you turned your house upside down, contents insurance would cover you against the belongings that fall out of it. Buildings insurance should cover the rest.⁣

Mortgage lenders insist you take out buildings insurance when you exchange contracts. ⁣

And while you don`t need Contents Insurance to buy a house, it might offer peace of mind to have it (particularly given that the average household owns around £35,000 of stuff!). ⁣

If you need help finding the right policy, our insurance advisor Kelly is available. Send us a message or call 0800 612 5596.
...

0 0
We believe in providing quality financial advice to everyone, regardless of their financial status. ⁣
⁣
That's why we don't charge a broker fee 🤩⁣
⁣
You won't pay us a penny for our services! ⁣
⁣
We'll look after you for the lifetime of your mortgage/home ownership, ensuring you never pay more than you should on your loan. Whether you're remortgaging, moving home, or making any subsequent property purchase, we've got you covered.⁣
⁣
Visit our website (🔗 in bio) to learn more.⁣
⁣
...⁣
⁣
⁣
Your property may be repossessed if you do not keep up repayments on your mortgage. Yes Mortgage Services Limited do not charge a broker fee.⁣
⁣
...⁣
⁣
#mortgageadvisor #nobrokerfee #dorset #dorsetbusiness #ukmortgages #mortgagespecialists

We believe in providing quality financial advice to everyone, regardless of their financial status. ⁣

That`s why we don`t charge a broker fee 🤩⁣

You won`t pay us a penny for our services! ⁣

We`ll look after you for the lifetime of your mortgage/home ownership, ensuring you never pay more than you should on your loan. Whether you`re remortgaging, moving home, or making any subsequent property purchase, we`ve got you covered.⁣

Visit our website (🔗 in bio) to learn more.⁣

...⁣


Your property may be repossessed if you do not keep up repayments on your mortgage. Yes Mortgage Services Limited do not charge a broker fee.⁣

...⁣

#mortgageadvisor #nobrokerfee #dorset #dorsetbusiness #ukmortgages #mortgagespecialists
...

1 0
Let us find the right property finance to fund your investment portfolio...⁣
⁣
We know a buy-to-let investment can be a big commitment, so our dedicated mortgage advisers will help you consider the costs, responsibilities, and risks whether you’re starting or expanding your investment property portfolio.⁣
⁣
Have a chat with one of our buy-to-let mortgage experts on 0800 612 5596 - we don't charge a broker fee!⁣
⁣
...⁣
⁣
Your property may be repossessed if you do not keep up repayments on your mortgage. Yes Mortgage Services Limited do not charge a broker fee.⁣
⁣
...⁣
⁣
#propertyinvestmentuk #buytolet #ukproperty #ukpropertyinvestor #landlordsecrets #investmentproperty

Let us find the right property finance to fund your investment portfolio...⁣

We know a buy-to-let investment can be a big commitment, so our dedicated mortgage advisers will help you consider the costs, responsibilities, and risks whether you’re starting or expanding your investment property portfolio.⁣

Have a chat with one of our buy-to-let mortgage experts on 0800 612 5596 - we don`t charge a broker fee!⁣

...⁣

Your property may be repossessed if you do not keep up repayments on your mortgage. Yes Mortgage Services Limited do not charge a broker fee.⁣

...⁣

#propertyinvestmentuk #buytolet #ukproperty #ukpropertyinvestor #landlordsecrets #investmentproperty
...

1 0