‘I’m saving £45,434 on my mortgage by doing one thing every month’ | Personal Finance | Finance
A woman from North Yorkshire is managing to save tens of thousands of pounds on her mortgage by paying a little extra each month.
Lisa Stubbs, 37, who purchased her three-bedroom semi-detached house in 2018, has seen her mortgage rate double in the years she’s owned the property.
In an effort to reduce the overall interest faster, Ms Stubbs has opted to overpay her mortgage.
Ms Stubbs told Express.co.uk: “I didn’t want to have a mortgage into my sixties. I wanted to be comfortable knowing that when I get to retirement, I will own my home with no mortgage payments to make.
“It would be nice to be mortgage-free earlier so I can save the mortgage payment I would usually make to build my own nest egg for retirement.”
She added: “I also wanted to overpay to reduce the interest charged, as that money is much better in my pocket.”
Ms Stubbs had to remortgage her house on a two-year fixed rate of 4.68% after her five-year fix of 2.34% came to an end in 2023.
By paying between £50 to £200 extra per month, Ms Stubbs, who uses the mortgage app Sprive to manage her payments, says she’s set to save £45,434. According to Sprive’s forecast, this will see her pay the debt off nine years early.
Ms Stubbs said her job role as a financial controller helps with the need to budget better to keep up with the higher payments.
She said: “Budgeting comes with the job role so it’s something I like to do and it makes me feel more in control. I have a budgeting journal that I update every month to help me keep on track with what bills are coming out and when contracts are up for renewal, which makes it much easier to budget when you see it on paper.”
Ms Stubbs added: “The higher rate change from 2.34% to 4.68% did make it more difficult for me as my mortgage payment increased by £200 a month.”
However, she noted: “I made necessary adjustments to savings and looked at what I spent my money on, making cut backs or moving providers for utilities where I could to allow for the increase.
“I still feel in control as I am still able to make my monthly mortgage payments. If interest rates were to increase again I would make more cut backs where necessary, but it’s nice to have the little extra for myself.”
Jinesh Vohra, founder and CEO of Sprive said: “Overpaying a mortgage can save significant amounts over the life of the loan.
“The exact savings depend on factors like your mortgage interest rate, the loan term, and how consistently you overpay but on average, Sprive users cut their mortgage term by four years and save £10,000 in interest.
“The savings are even greater for couples – those who work together save an additional £5,550 in interest and will be mortgage free more than two years earlier compared to users who are going at it alone.”
However, before opting to make overpayments, Mr Vohra urged: “I’s crucial to check your lender’s terms. Many allow overpayments but may impose limits, often 10% of the outstanding balance per year.
“Exceeding this limit could result in early repayment charges (ERCs), typically ranging between 1% to 5% of the overpayment. It’s also important to verify whether overpayments will affect your existing mortgage deal or shift your interest rate.”
He added: “Most lenders offer overpayment options, but policies vary, so reviewing your lender’s specific rules and possible penalties is vital to avoid unexpected costs.”
Sprive it is a free mortgage app that helps users remortgage, make overpayments and earn money towards the mortgage through everyday shopping.
