Is Overpaying On Your Mortgage A Good Idea?

Thursday, April 18, 2013

No matter how healthy your finances are, overpaying on your mortgage has its pros and cons. You may be considering paying more towards your mortgage in the form of lump sum payments, or bi-weekly payments, and this can help you to reduce your debt as well as the interest you pay. Every homeowner’s dream is to pay off their mortgage before their final payment, however there could be drawbacks to this plan.

There are a number of common pitfalls to watch out for when considering paying off your mortgage, most notably early repayment fees. Thankfully however, very few people have large amounts of cash tucked away to pay off their mortgage, so any contribution is going to have to be a lot smaller. In order to decide whether or not to overpay on your mortgage, let’s take a look at some of the most common ways to enhance the impact of any extra payments you put toward your mortgage.

Why Overpay?

Many people decide to overpay on their mortgage because it will save them money in the long run. The more you pay off, the less you’ll have to pay later down the line, and you can also benefit from the interest savings you will make. If you have lots of equity in your home, then you’ll most likely be able to benefit from the current market deals. The more you overpay, the more equity you build up in your home, meaning when it comes to looking for a better mortgage deal, you’ll be in a great position.

Paying off your mortgage will also be tax efficient, as you’ll benefit from interest savings much more than if you’re spare cash was in a savings ISA. As the interest you earn on your savings in taxable, you’ll certainly save more money by paying as much of your mortgage off as you can through overpayments. On the other hand, if you’re going to make more money through ISA interest, compared to the savings you’ll make paying off your mortgage, then this would be the better option to take.

Overpaying Drawbacks

At the time, making overpayments on your mortgage could seem like a great idea, however it’s always best to get a second opinion from an independent financial advisor. Firstly, you will have to check with your bank to see if they’ll allow you to overpay. In essence, the more you pay, the more savings you’ll be making on interest, and the less money the bank makes from you. Check your contract to see if your lender will accept overpayments.

Additionally, you might want to consider using any spare money to pay off other debts, like credit cards and store cards, before you pay off your mortgage. If you’re paying a high rate of interest on these debts compared to your mortgage repayments, then it makes sense to pay these debts off as quickly as possible. Once this has been done, you can then focus on paying off your mortgage.

You Might Also Like

0 kommentarer

Labels

4-Slice Toaster AC Accessories Air Air Conditioners Air Purifiers Air Quality Animals Animals - Horses Apartments Apartments - College Appliances Architecture Attic Auction - Home Australia Away from Home Babies Baby Furniture Baby Shower Backyard Activities Backyard Revamp Baking Baptismal Basements Bathroom Bathroom Pampering Tips Bathtubs Beat the Heat Bedroom Bedroom - Luxury Bedroom Ideas Bedroom Mistakes Beds Bidets Bills Blinds and Curtains Blogs Boilers Budget Style Buying a Home Cakes Canine Canopies Car Maintenance Care Homes Carpets Carpets and Rugs Cars Cars - Uses Cats Ceiling Fans Celebrations Children Chores Christening Ideas Christmas Christmas lighting ideas City Life Claims Cleaning Cleaning Services Coffee Tables Comfortable Living Commercial Lease Common Problems Community Spaces Concrete Condo Condominium Conservatories Cool Stuff Cooling Ideas Cost of Living Costumes Couch Credit Scores Curbs Curtains Curtains - Scalloped DA Dates Decking Dining Room Dining Table Dishwashers Display Racks DIY DIY - Carpet Cleaning DIY - Cleaning Products DIY - Soundproofing DIY Addiction DIY Schools Dog Breeds Dogs Dogs - Diet Dogs - Health Dogs - Hygiene Doors Dream Home Dreams and Hopes Earning Tips Eco Friendly Ideas Eco-Friendly Eco-Houses Electric Bills Energy Saving Tips Energy System Entertainment Room Entertainment Space Ethical Living European Inspired Expo Extra Rooms Family Family Room Fans Few Things in Between Filters Fireplace - Outdoor Fireproofing First Time Homeowners Flags Flooding Flooring Flooring - Bamboo Flooring - Tiles Florida France Furnace Furnished Properties Furniture Furniture - Dining Sets Furniture - Shopping Guide Gadgets Garage Garden Gardening Gardening - Allotments Germ-free Home Gift Ideas Gift Ideas - Babies Gift Ideas - Christmas Gift Ideas - Him Gift Ideas - Home Gift Ideas - House Warming Gift Ideas - Kids Gift Ideas - Parents Gift Ideas - Personalized Gift Ideas - Valentine's Day Gifts for collectors Gifts for her Go Green Living Grass Green Living Halloween Health and Home Health and Lifestyle Heater - Heat Pumps Heaters Heaters - Parts Heating Hen Parties Holiday Homes hom home Home - Building Home - Gadgets Home - Luxury Home - Technology Home Accessories Home Appliances Home Builders Home Buying Home Cooking Home Decorating Home Decorating - Christmas Home Designs Home Disasters Home Essentials Home Extensions Home Flooring Home Heating Home Hunting home imp Home Improvement Ideas Home Insurance Home Investing Home Maintenance Home Office Home Organizing Home Projects Home Reconstruction Home Redesigning Home Remodeling Home Renovation Home Repair Home Repair - Foundation Home Repair - Professional Home Restoration Home Safety Home Security Home Spas Home Tech Ideas Home Theater Home Upgrades House Problems House Warming Household Chores Housewarming Gifts Housewarming Party HVAC Hygiene IKEA Indonesia Indoor Designs Insulation Insurance Insurance - Car Insurance - House Insurance - Pets Interesting Architecture Interior Additions Interior Design Interior Design - Modern Interior Ideas Jewelry Jewelry Organizer Keeping Warm Kitchen Kitchen - Cabinets Kitchen - Spanish Inspired Kitchen Designs Kitchen Flooring Knives Landscaping Lawn Mowers LED Lights Lifestyle Lighting Lighting - Chandeliers Lighting - Garden Lighting - Lamps Lighting Options Lights Living Room Living Room - Designs Loans Loans - Home Loft London Luxury Home Luxury Houses Maintenance Malls Minimalist Mirrors Mitigation Mobile Apps Modern Home Designs Money Saving Tips Morphy Richards Mortgage Moving Moving Tips New Home Nursery Online Shopping Orangeries Organizer Organizing tips Outdoor Designs Outdoor Living Outdoor Living - Furniture Outdoor Living - Patio Outdoor Room Outdoor Spas Ovens and Cooktops Painting Paintings Parenting Parties Passion Patio Pest Control Pets Pets - Ailments Pets - Cats Pets - Dogs Pets - Health Pets - Sitters Pets - Toys Phones Pillows Plans and Visions Planting Ideas Plastering Plumbing Plumbing Issues Pool Accessories Pools Power Cut Quilts Quotes Rabbits Real Estate Recycling Relationships rent Renting a Home Retirement Reviews Rodent Problems Romantic Dates Roofing Roofing Contractors Safety tips Saving - for a Home Saving Tips Saving Tips - Water Security Self Improvement Selling Your Home Septic Tanks Shaving System Shaving System - for Men Shopping Shutters Sinks and Countertops Skincare Sleep Small Spaces Sofa Soft Furnishings Solar Energy Solar Panels Soundproofing Space Saving Ideas Spring Ideas SR Stains Steel Storage Ideas Student Life Study Room Summer Survival Tips Taps the UK the USA Toaster Toilet Toolbox Tools Travel Treehouses Trends Trimmer Trimmer - Cordless Trimmer Tubing TV Bench Urban Living Vacation Preparation Valentine's Day Ventilation Video Surveillance Vine Covered Homes Vineyard Vintage-Inspired Walk in Wardrobes Wall Decorations Wallpaper Wardrobes Washing - Clothes Water Water Damage Water Heaters Water Softeners Water Usage Weather Welding Windows Wine Racks Winter Tips Wish List Wood Work Area