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Should I overpay my mortgage?

Should you use savings to overpay?

Should I overpay my mortgage with my savings?With savings rates at an all-time low, many home-owning savers might be thinking overpaying on their mortgage is a no-brainer.

But there are spanners in the works such as repayment penalties, how you keep emergency funds, and more. This guide helps you decide if it's right for you.

Important checks before you start

Before you begin, you need to establish a few key facts. Without them, you can't make this substantial financial decision.

Ready to remortgage?

If you want to change mortgage, this free guide has tips on when you should & shouldn’t remortgage and how to grab top deals.

Ready to get a mortgage?

Want to get on that first rung? Our free guide helps you find the cheapest mortgage and boost your chances of getting accepted.

Thinking of buying to let?

Property investing newbie or an old hand wanting the top deal? Our free guide outlines all you need to know about buy-to-let.

Paying off a mortgage versus saving

Before getting on to mortgages specifically, it's important to understand the basic principle of how all debt and savings interact. Borrowing and saving are two sides of the same coin...

Is it worth overpaying my mortgage? Take our test

To really cement this, start to think of overpaying your mortgage as a form of saving. Take repaying a 5% mortgage...

To earn £500 a year after tax on £10,000, a basic-rate taxpayer needs an account paying 6.25%, higher rate 8.33% & top rate 9.1%

How much will I gain by overpaying?

Working out the savings made by overpaying your mortgage isn't simply a matter of chopping the lump sum repayment from your balance. It cuts future interest and hopefully will mean you're mortgage-free much earlier.

Time mortgage overpayments correctly

Mortgage repayment frequencyMortgage companies have four ways of calculating the interest you owe - daily, monthly, quarterly or annually. Check your mortgage to see which it is - though thankfully the majority of new mortgages are on daily interest, which is better for you as an overpaying borrower.

Key alternatives to overpaying

If it all adds up that overpaying is the right option for you, there are a couple of other things worth considering flirting with before you take the plunge. We're not saying "these are better" - but we'd be a little remiss if we didn't at least nod to them.