Taking on a mortgage is a significant financial commitment, but there are effective ways to save money in the long run.
Marlon Wijeyasinghe, a 35-year-old London resident, has found a smart strategy to reduce his mortgage interest and shorten his loan term. By utilizing an app called Sprive, Marlon has been able to make extra payments towards his mortgage, leading to substantial savings.
Sprive, a user-friendly app that links to your bank account, tracks your expenses and helps you allocate affordable overpayments towards your mortgage. Additionally, it offers cashback rewards on purchases made with selected retailers, allowing users to accumulate savings that can be directly applied to their mortgage payments.
Marlon’s preferred cashback method is using the feature for his Tesco grocery shopping. Thanks to this strategy, he has saved an estimated £3,822 in mortgage interest and reduced his term by over a year.
If Marlon maintains this approach, he is projected to save approximately £33,000 in interest and shorten his mortgage term by more than 11 years.
Marlon mentioned, “I buy gift cards through Sprive since the cashback I get on the gift card is essentially a discount on my shopping. I’ve always been efficient with my money and so I will use whatever platforms available to improve my efficiency.”
While apps like Sprive can be useful, direct communication with your lender to make additional payments is also an option. Most mortgage providers allow up to a 10% overpayment of the outstanding balance annually without any penalties, although terms may vary.
Before making significant overpayments, it is essential to consider factors like maintaining an emergency fund equivalent to three to six months of essential expenses and prioritizing the repayment of high-interest debts.
Mary-Lou Press, NAEA Propertymark President, emphasized the importance of striking a balance between reducing mortgage debt and maintaining financial flexibility for unforeseen expenses.
Lastly, ensure that any overpayments directly reduce the principal mortgage amount rather than just lowering monthly payments.