Paying as little as an extra €50 a month on top of your normal mortgage repayment can make all the difference to how much interest you pay and how quickly you’re rid of your mortgage.
For example, if you owe €130,000 and have 20 years left on a 2.5% repayment mortgage, by paying an extra €50 a month, you’ll pay off your mortgage 1 year and 8 months earlier, saving €3,235 in interest. If you overpay by €100 a month, it would be reduced by 3 years and 1 month and you’d save €5,920 in interest.
Before changing anything, check that there aren’t any penalties for overpaying.
Most mortgages now allow some level of overpayment – typically up to 10% of the total mortgage balance each year on fixed rate deals (variable rates, where your mortgage rate can go up or down, often don’t have penalties). Be careful not to go over any limits, as the penalties can run into hundreds or even thousands of pounds.
If you can’t afford to pay any extra, check to see if you could switch to a better mortgage rate.