The average British mortgage holder could pocket more than £1,800 in just interest alone by regularly overpaying on their mortgage, so says CompareTheMarket.
Out of the 2,000 mortgage holders surveyed by the comparison site, almost one in five (18 per cent) said they overpaid on their mortgage every time a payment was due.
However, tight finances can’t facilitate this luxury for most people, with more than half (58 per cent) saying they’ve never been able to contribute extra on their repayment.
Overpaying by £59 every month, or around 10 per cent of an average monthly payment, mortgage holders could reduce their mortgage term by around 16 months and save £1,842 in interest, according to CompareTheMarket’s calculations.
For 25-34 year olds, it’s even better with a potential saving of £6,553 and a 32-month reduction, given a £68 or 10 per cent overpayment.
Additionally, if every mortgage holder in the UK – and there’s nearly eight million of them – could manage this kind of overpayment, it would result in a nationwide saving of £14.3 billion.
British mortgage holders are well aware of the benefits of overpaying too, it seems. Over half (52 per cent) admitted that they’d feel more financially secure if they contributed extra each month, while almost one in five (18 per cent) overpay every time a payment is due.
Those who are able to contribute extra to their mortgage overpay by 4.7 per cent on average, but a sixth (15 per cent) have overpaid by more than 10 per cent in last 12 months.
Jody Baker, CompareTheMarket’s head of money, acknowledged that not everyone would be able to overpay but said those that can, should.
“Whilst committing more of your pay-cheque towards your mortgage can seem financially daunting, making small contributions each month, or even a one-off lump sum overpayment, could save mortgage holders thousands of pounds in the long term,” she commented.
“With interest rates already very low and the prospect of further rate reductions on the horizon, overpaying on your mortgage could be seen as a savvy alternative to traditional saving.”