One third (34 per cent) of mortgage holders make some form of overpayment, whether monthly or via one-off payments, research from Santander Mortgages has found.
The findings reveal that one in five (19 per cent) of those with a mortgage overpay each month meaning borrowers are collectively making more than £9 billion in mortgage overpayments in a year.
These 2.5 million people each overpay an average of £181 every month, meaning they are collectively paying an additional £455 million on top of their standard mortgage repayments on a monthly basis.
Another 6 per cent tend to make a one-off overpayment on their mortgage once a year and a further 9 per cent don’t regularly overpay but have done so once in the past 12 months. Almost two million people who have made a one-off overpayment in the past year overpaid an average of £1,919.
People are overpaying in order to take advantage of low interest rates. Thirteen per cent of those who overpay every month started doing so in the past six months, 24 per cent within the last year and 54 per cent within the last two years.
Despite the prevalence of overpayments, one in four Brits with a mortgage (23 per cent) have no idea if their mortgage provider allows overpayments at all and a further 14 per cent say their provider allows overpayments but aren’t sure if they charge for them. Another 8 per cent say their mortgage provider definitely charges customers for making overpayments.
Santander, which offers its customers the freedom of overpaying on their mortgage whenever they want to, is suggesting that people should consider doing so to take advantage of low interest rates. Its research reveals that of those people who don’t tend to make mortgage overpayments, over a third (36 per cent) say they could afford to, by an average of 18 per cent extra.
Phil Cliff, director of Santander Mortgages, commented: “If you overpay on your mortgage you will pay less interest over the full term, so it’s a good thing to do if you can afford to.
“Nearly half of those people who have never overpaid on their mortgage still put money into savings each month, and given the average interest rate on these people’s savings accounts is just 1.6 per cent, in the long-term they may be better off using this money to make mortgage overpayments instead.”
Santander allows unlimited overpayments on its tracker and flexible offset mortgage range. It also offers features that give customers the freedom to choose what is most important to them, be it the ability to switch their mortgage, avoid booking fees or get help with upfront costs. The majority of Santander’s fixed mortgage products come with a free valuation and £250 Cashback.
