Welcome to day 5 of 7 days of our New Year money tips – today we look at the benefits of overpaying your mortgage.
Overpay your mortgageWith interest rate rises potentially looming it may not be long before the lower rates we have become accustomed to, start to rise. Of course no one can predict exactly when rates will rise, but its unlikely at this stage that they will fall from 0.5% where they currently stand. Overpaying by even a small amount can put you in a more solid position when rates rise. Most Lenders will let you overpay by 10% of the outstanding mortgage amount without being charged a fee, but be sure to check your own terms and conditions. A crucial rule of debt repayment is clear the most expensive debts first. Do so and the interest doesn’t build up as quickly, saving you cash and giving you more chance of clearing debts earlier. Therefore, as a rule of thumb. clear credit cards and loans before overpaying your mortgage, as they’re usually more expensive. As well as, this ensure you have a cash emergency fund that covers at least 6 months’ living costs.
Disclaimer: This article not constitute financial or other professional advice. You should consult a professional adviser if you require financial advice.
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