subject: Mortgage overpayments for a brighter future [print this page] Mortgage overpayments for a brighter future
In today's market, there are many features you can expect from your mortgage. Often these can make the facility a more flexible option that allows greater control - and one option you might want to be on the lookout for when shopping for a mortgage is the ability to overpay.
Although there are some providers who won't allow you repay more than your agreed monthly amount without incurring a charge, others are happy for you to do so - up to a certain amount. As there are multiple benefits to making overpayments on a mortgage, you might want to put this high on your list of priorities when comparing what is on the market. You might find you want to reduce the term of your mortgage later on - a more viable prospect when interest rates are low - as this can help contribute towards a more financially stable retirement. Some people even set specific targets to work towards this end and being able to overpay can help you achieve theses. For example, research conducted recently by onepoll.com showed 62 per cent of UK mortgage holders were aiming to have paid their mortgage completely by the age of 50.
In many cases, you'll find your provider lets you make higher mortgage payments at any time. You should be able to pay up to 10 per cent of the remaining term as part of a 12-month rolling period, but you should also remember that unused concessions from previous years cannot be carried over - while some concessions will not apply if you repay in full. Of course, charges may be applicable where early repayment fees form part of the terms of the mortgage.
Other providers will offer facilities that make their mortgage deals even more flexible. This might include the ability to take a payment holiday. With this, the can take a short break on monthly repayments for anything between one and six months. However, they would need to have had the mortgage in place for at least three months before your provider will consider this - and you will need to have made sure all previous payments have been on time. Where there is a second charge on the property or loan to valuation figures exceed the provider's criteria, it might be that you are not eligible for this feature and you should also note interest charges will remain relevant during this time.
Changing your repayment term might also be an option you want to consider if you want to spread it out over a longer period of time. This will mean paying more interest over the long term, but having that level of flexibility might give you the peace of mind you need.
