Mortgage borrowers pleased to see the base interest rate drop again have been encouraged to make a change to their payments and potentially save thousands of pounds.
The Bank of England announced last week the base rate would drop from 4.25 percent to 4 percent, meaning repayments for those on a variable rate mortgage will likely drop as well.
Although home owners may want to pocket the savings, experts at mortgage overpayment app Sprive have said you could get huge savings by keeping your payments at the current level.
Sprive CEO Jinesh Vohra explained: “Someone with a £150,000 mortgage at 4.25% over 25 years currently pays around £812 a month. This 0.25% cut means their monthly payment will fall to £791 — a saving of £21 a month, or £252 a year.
“While it might be tempting to enjoy that saving, those who can afford to should consider maintaining their current payment level and using the £21 saving to overpay their mortgage instead.
“Doing so could save them £4,280 in interest and help clear their mortgage a year and one month earlier.”
Mr Vohra said making overpayments on your mortgage is “one of the most powerful ways” to accelerate becoming mortgage-free.
He said: “Even small, regular overpayments can knock years off the term and save thousands in interest — helping mortgage holders reach financial freedom sooner, without stretching their budget.”
The Sprive app allows you to get cashback on your everyday shopping, which can be used towards paying off your mortgage.
The app also has an Auto Save feature, which can look at your spending and set aside affordable amounts each week to be used to pay off your mortgage.
You can use Sprive at major supermarkets such as Asda and Morrisons, and with other big-name retailers such as Greggs and Amazon.
A woman recently shared her story of how she is on track to save 10 years on her mortgage term thanks to using Sprive.
Ellie Boyle, 36, from Solihull, has been used the app for more than a year-and-a-half. She said it’s very simple to use, explaining: “It is nice and easy.
“All the accounts are connected, even when buying any of the gift cards through Sprive, all the bank accounts are connected, so it’s a fairly straightforward process once it’s set up.”
