In the light of rising base rates and doggedly persistent inflation, an increasing number of homeowners who have some spare savings have been urgently making overpayments on their mortgage to reduce their debts and improve loan-to-value ratios.
Continuum independent financial adviser Anthony Harris told FTAdviser: “In simple terms a mortgage overpayment means the money you borrowed is being paid back quicker.
“Overpay by enough, and you could clear your mortgage several years faster.”
However, Harris warned that not all lenders permit this, so it is important to take advice. He also added: “Overpaying looks tempting, but it is not for everyone.”
Harris explained that overpaying could leave savers with no spare cash and acknowledged that it is “vital” to have enough in savings in case of an emergency.
simoney.kyriakou@ft.com
