A new app has been launched to help borrowers make regular overpayments on their mortgage and save money over the longer term.
‘Sprive’ enables users to add extra money – whatever they can afford – towards their mortgage repayment each month to help them reduce the overall payment and term.
Making overpayments on their mortgage can help borrowers make significant savings over time.
Indeed, a recent study by comparethemarket.com found first-time buyers could save thousands of pounds in interest and knock as much as six years of their term by overpaying £100 a month.
Now, Sprive has launched in a bid to help homeowners make these overpayments more easily.
Sets money aside
The free app uses open banking to work out how much you can afford each month based on your spending and automatically sets that money aside for you.
With one tap you can then send the money to your lender, while leaving you able to adjust the figure each month if you want to.
Most lenders allow their customers to overpay 10% of their outstanding mortgage without penalty, Sprive explained.
So, on a mortgage of £250,000 this equates to £25,000 which is plenty of allowance for most people.
Jinesh Vohra, founder and CEO of Sprive, said he was inspired by the fintechs which used Artificial Intelligence (AI) technology to help people save and invest each month.
“The savings achieved can be huge, with quite life changing results,” he said. “I managed to become mortgage free earlier than most, and the savings and freedom it gave me were quite transformative.
“Sprive’s mission is to make it super easy for everybody to use their spare income more wisely to get mortgage free as fast as they can, while staying in total control of their money.”
Major lenders
Sprive has the capability to make mortgage overpayment with 11 major lenders which represent nearly 70% of the mortgage market.
Providers include HSBC, Lloyds, Barclays, Santander, RBS, Virgin Money, Halifax, Natwest, Yorkshire Building Society, Accord Mortgages and TSB Bank.
Only a small amount per day needs to be put aside in order to make the overpayment. Indeed, the team behind Sprive said, based on a £250,000 mortgage at 2% interest for 40 years the total interest paid would be £113,487.
However just an overpayment of £3 per day or £90 per month would cut the term by six year and one month and save £19,210 in interest.
You can see the full comparison below, and also how it would work out for a borrower with a shorter term.
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Overpayments: Examples of savings
£250,000 mortgage at 2% interest for 40 years. Total interest paid = £113,487
Overpay: Mortgage cut by: Saving:
£3 per day (£90 per month) 6 years and 1 month £19,210
£5 per day (£150 per month) 9 years and 2 months £28,433
£10 per day (£300 per month) 14 years and 11 months £45,311
Same mortgage with 25 year term. Total interest paid = £67,947
Overpay: Mortgage cut by: Saving:
£3 per day (£90 per month) 2 years and 5 months £7,170
£5 per day (£150 per month) 3 years and 10 months £11,155
£10 per day (£300 per month) 6 years and 8 months £19,133
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