Worried about rising interest rates eating away at your hard-earned cash? Inews reports the story of savvy homeowner, Cedric Felder, who is fighting back and on track to save £42,000 in interest payments while shaving five years off his mortgage term. His secret? Overpaying!
Cedric, a 38-year-old father of two from Hemel Hempstead, bought his three-bedroom townhouse in 2021 for £295,000 with a £25,000 deposit. Like many homeowners, he’s feeling the pinch of increased interest rates. His initial two-year fixed rate of 3.29% with Halifax jumped to 4.42% when he recently refinanced.
Determined to stay one step ahead, Cedric decided to take action. He prioritised paying down his £251,000 mortgage balance as quickly as possible. “I am worried by high interest rates and mortgage rates,” he admits. “There is nothing we can do about it sadly, apart from trying to overpay.”
Cedric’s goal is to be mortgage-free by retirement, giving him financial peace of mind and the ability to support his children. “I want to be able to support my kids in the future for whatever they need,” he explains.
To achieve this, Cedric uses a two-pronged approach: overpaying his mortgage and investing in his pension. Every month, he chips away at his mortgage, paying an extra £200 on average. With his lender’s overpayment allowance capped at £349, this brings his total monthly repayment to £1,256.
Cedric’s secret weapon? A clever app called Sprive. This handy tool analyses spending habits to identify potential overpayment amounts and automatically sets aside the funds. Users can then make secure payments directly to their lender.
“I started using the app in July last year after reading an article about overpayments,” Cedric shares. “We have seen in recent years that interest rates are very unpredictable. Overpaying my mortgage every month is definitely helping in being mortgage free earlier but it also gives me an idea of my monthly budget to repay my mortgage in case interest rates increase again after my current fixed rate.”
Sprive also offers a unique way to boost mortgage overpayments: Sprive Surveys. By completing short online surveys, users can earn up to £1.75 per survey, with new surveys added daily. According to Sprive, someone with a £250,000 mortgage over a 30-year term at 4.5% interest could save £22,250 in interest and become mortgage-free two years and nine months earlier by completing just one survey per day.
While overpaying on your mortgage can be a fantastic way to save money in the long run, it’s important to check your lender’s terms and conditions as many impose limits on overpayments. Before making any decisions, consider your options carefully. If you have spare cash, explore whether a high-interest savings account or easy-access account might be a better fit for your needs.