Rather than feeling overwhelmed by their bigger mortgage, Eleanor and her family are using a free app to help make overpayments
A mum-of-two says she is on track to save £20,000 and cut three years off her mortgage by using a free app.
Eleanor and her husband have just moved into a new, larger property after selling their first home. But rather than feeling overwhelmed by their bigger mortgage, the family decided to make overpayments.
Eleanor started using Sprive in 2022 while interest rates were rising quickly and she was still on a lower rate.
Sprive is an app that connects to your bank account and monitors your spending, to help you set aside affordable mortgage overpayments.
You can set minimum and maximum payment limits, to avoid being hit with early repayment charges.
Most lenders let you overpay by around 10% of your outstanding balance per year without incurring any fees, but this does vary, so make sure you read through your mortgage paperwork carefully.
Sprive also allows you to purchase gift cards with certain retailers to get a percentage cashback, which is then added to your Sprive account and can be used to make mortgage overpayments.
Eleanor mainly uses Sprive to get gift cards for big food shops at Tesco and M&S, with the cashback from these turned into mortgage overpayments.
She said: “At the start of each month, I buy a £200 gift card for my main grocery shop, followed by another mid-month.
“It means I always have one ready and waiting – especially helpful when doing a food shop with two young kids in tow.
“I also used Sprive for my Christmas shopping – food orders from M&S and purchases at B&M and Primark.”
These consistent, manageable habits mean Eleanor is currently on track to cut three years off her mortgage term and save £20,000 in interest.
She added: “Once we’re no longer paying extortionate nursery fees, our goal is to overpay as much as possible and cut even more off the term and interest to get mortgage free even sooner.”
Sprive is free to use and works with lenders such as HSBC, Lloyds, Barclays, Santander, RBS, Virgin Money, Halifax, NatWest, Yorkshire Building Society, Accord Mortgages and TSB Bank. It is regulated by the Financial Conduct Authority (FCA).
Should you overpay your mortgage?
Making overpayments on your mortgage can save you thousands of pounds in the long-run.
Figures from Moneyfactscompare.co.uk shows someone with a mortgage of £250,000 over 25 years and a rate 5% could reduce their term by two years 11 months and save £25,382 in interest if they overpaid £100 a month.
But there are things to consider. If you have other expensive debts, it is generally advised that you clear these first.
You may also want to ensure you have an emergency fund of three to six months’ worth of essential outgoings before prioritising overpayments.
Finally, make sure any overpayment reduces the actual debt you owe, rather than just reducing your monthly payments.
Rachel Springall, finance expert at Moneyfactscompare.co.uk, said: “Borrowers need to be realistic to how much they could comfortably afford to set aside to overpay their mortgage, as it would be unwise to do this if they have no emergency savings to fall back on.
“Those who make a mistake might have to take out some short-term credit to cover costs, which is a more expensive form of borrowing.
“Short-term debts should ideally be paid off before making mortgage overpayments, but it really depends how much is owed and how long it may take to repay.
“There is also no reason why someone shouldn’t prioritise making mortgage overpayments versus a small amount of debt, especially if its credit card debt which could be moved to a 0% balance transfer offer for some breathing space.
“To avoid any nasty surprises, it’s wise to make a budget plan to foresee any rises in costs and adjust any mortgage overpayments accordingly.”
