Martin Lewis fan explains how they will clear mortgage 10 years early

A savvy saver has shared their success story on Martin Lewis‘ MoneySavingExpert.com, revealing how they managed to save a whopping £35,000 in mortgage interest and are set to become mortgage-free a whole decade earlier than expected.

MoneySavingExpert.com reader Paul detailed his strategy for slashing the time and cost of his mortgage. He said: “We moved jobs seven years ago, and had to buy a small property to use for work purposes. We managed to get a 100% mortgage, although it was expensive.”

“We’ve always listened to you and I set up a small regular overpayment, throw all my overtime money at it, and every day check my bank balance. If there is an odd amount, say I have £1,525.36, that’s either £5.36 or £25.36 put towards the mortgage, budget depending. We’ve saved £35,000 in interest and knocked 10 years off our mortgage (originally 27 years). We’re continuing to plan to get rid of the mortgage altogether ASAP! “.

Read more: Martin Lewis warns ‘don’t ignore it’

However, Martin Lewis himself cautions that making mortgage overpayments isn’t the best course of action for everyone. Generally, he advises that it’s a smart move if your mortgage rate is higher than what you could earn from savings, using the example of someone with an extra £10,000.

If this sum was deposited into a savings account with a 4% interest rate, it would generate £400, or £320 after deducting a 20% tax on savings. However, if the same amount was used to overpay a mortgage with a 6% interest rate, it would result in a saving of £600 in interest, reports the Mirror.

The Mortgage Overpay Calculator on MSE could assist you in determining the best option. Before deciding to overpay your mortgage, ensure that you won’t be hit with overpayment penalties. Many lenders, as explained by MSE, allow you to overpay up to 10% of your mortgage annually before charging a fee.

It’s also crucial to maintain an emergency fund in savings. If you choose to overpay, make sure the money is being used to reduce the term, not just your monthly repayments.