Britons are making over £9 billion in mortgage overpayments every year, according to recent research by Santander Mortgages.
It has emerged that 19 per cent of Brits with a mortgage (2.5 million) are currently overpaying at an average rate of £181 per month. This means that these mortgage holders are collectively paying an extra £455 million every month on top of their normal repayment plans.
Furthermore, six per cent of those sampled tended to make a one-off overpayment once a year of £1,919 on average, while nine per cent may not regularly overpay but admit to having done so at least once in the past year.
The research suggests that many people have been recently overpaying in order to make the most out of current low interest rates. In total, 54 per cent of those overpaying began to do so in the last two years, while 24 per cent started in the last 12 months.
Phil Cliff, director of Santander Mortgages, said: “If you overpay on your mortgage you will pay less interest over the full term, so it’s a good thing to do if you can afford to. Nearly half of those people who have never overpaid on their mortgage still put money into savings each month, and given the average interest rate on these people’s savings accounts is just 1.6 per cent, in the long-term they may be better off using this money to make mortgage overpayments instead.”
However, it is important to note that 23 per cent of those with a mortgage did not even know that their provider even allowed overpayments, while 14 per cent knew that their provider did so but were unsure if there were any charges.
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