Debt Be Gone Today

A lot of people don’t realise but the standard 25 year mortgage term isn’t fixed. It’s not set in stone. If you won the lottery would you keep the mortgage for the full 25 years? I very much doubt it.

Imagine your payments every month were 500 for aguments sake. What would happen over the 25 years if you paid an extra 10 per week? So your monthly payment is 540 or thereabouts.

Let’s use an example mortgage of 25 years, 175,000 borrowed and we have an interest rate of 5%. We would pay back 175,000 at around 580 a month.

Now, using the same figures we would pay just 20 per month extra to make a rounded 600 a month. Our new total payback would fall to just under 170,000 we save an extra 5 thousand. And we shave a year and a half off the 25 years.

Over 25 years 5,000 and a year off doesn’t seem great but using a mortgage overpayment calculator we can put all sorts of different figures in and see what comes out if we paid a bit more.

Here’s an example if we were to overpay by 50 every month.

If we use the same example of 5% interest on a 100,000 mortgage and overpayed 50 every month we could knock just under 4 years off and save over 12 grand.

Mortgage overpayment calculators are a powerful tool that allow you to see how better off you could be later on. Better off you could be, not the lender.

Another example using bigger payments than we’ve used so far.

Same figures, 100,000 mortgage, 5% interest, 25 years but paying an extra 100 per month. Nowe were talking. 21,000 saved and over 6 years off the term. Serious savings later by paying a bit extra now.

An extra 100 per month isn’t easy you say. And over 18 years it’s an extra 23 thousand you’ve shelled out in overpayments.

Considering you won’t have to pay anything for the next 6 years you will have at least 680 every month to yourself. Nice sum of money.

Have a play with a mortgage overpayment calculator and see what you could save, you may be staggered at the savings you could make.