Britons are being urged to take advantage of a “once in a lifetime” opportunity to pay off their mortgages.
MILLIONS of individuals dream to be mortgage-free, and the perfect moment to do so may have offered itself to Britons.
A mortgage is one of the most significant financial obligations a person will face in their lifetime, with loan amounts frequently reaching the hundreds of thousands of pounds. The sooner a person pays this off, the better, and many people want to be free of this debt as soon as feasible. Experts have emphasized how the lockdown could encourage borrowers to pay down their mortgage sooner, assisting Britons in achieving this aim.
According to Halifax, a rise in the UK’s savings during the lockdown might be the key to saving thousands of pounds in interest and perhaps shortening the duration of a mortgage.
In what has been characterized as a “once in a lifetime financial opportunity,” additional lockdown cash might be used to cover mortgage overpayments.
Most mortgages allow for some level of overpayment, either ad hoc or on a monthly basis, without incurring a penalty, according to Halifax.
However, it is believed that less than half of mortgage borrowers are now using this option.
With over 10 million mortgages outstanding, millions of homeowners may be able to save significant amounts of money on interest.
One example given is a £200,000 mortgage and the effects of changing one’s payment attitude.
From the first payment onwards, if a person paid an extra £90 per month – 50 percent of median monthly savings – the overall cost would be cut by more than £16,800, and the term by more than three years.
Overpayments, on the other hand, do not need to begin this early in order for Britons to save money.
Even if a person pays an extra £90 per month starting on the 10th anniversary of their mortgage, they might save £5,300 in interest and decrease their term by 18 months.
If someone was able to save money during the lockdown, putting some or all of that money toward a mortgage can make a big impact.
For example, putting down a £5,000 lump amount on a £100,000 loan with 15 years left might save £3,866 in interest and cut the term by 13 months.
Halifax’s Managing Director, Russell Galley, had something to say about it.
“The last year has been difficult, but there are.Brinkwire Summary News,” he remarked.