A frugal mother has shared how she plans to reduce her mortgage by £1,500 using a clever strategy.
Neesha Craig, a 36-year-old resident of Swansea, Wales, along with her husband and son, recently received £300 for her old Samsung Galaxy S23 Ultra. She decided to use this money to make an additional payment towards her mortgage.
According to a recent survey conducted by musicMagpie involving 2,000 adults, it was found that approximately 38% of Brits have at least one unused smartphone lying around, with an average value of £250.
Neesha, who operates TheFunMoneyClub website, emphasized the significance of making overpayments on mortgages, highlighting that even a modest overpayment can yield substantial benefits.
Detailing her experience, Neesha stated, “I traded in my previous Samsung Galaxy S23 Ultra for £300. I promptly directed this amount to my mortgage provider, resulting in a reduction of two months from my mortgage term and savings of £1,510 in interest.”
Overpaying on a mortgage involves making extra payments beyond the regular monthly installment. This approach helps in paying off the mortgage faster, thereby reducing the overall interest accrued, potentially leading to significant savings and a shorter mortgage duration.
It is important to note that not all mortgage agreements permit overpayments without incurring additional charges. For individuals on fixed-rate deals, most lenders typically allow up to a 10% overpayment annually.
In situations where fees are applicable, they usually range from 1% to 5% of the excess amount paid. For those on standard variable rate deals, overpayments are often unrestricted, but it is advisable to confirm with the lender.
Before deciding to make an overpayment, it is advisable to assess if there are any priority debts that need to be settled first and ensure the presence of an emergency fund.
In related news, musicMagpie has announced a new collaboration with retailer Timpson, enabling customers to trade in their old smartphones at Timpson stores nationwide. AO World, the parent company of Music Magpie, mentioned that this partnership would offer a more efficient and convenient method for phone trade-ins.
This initiative follows a successful four-month trial, where the service was available in over 1,300 Timpson stores. It will complement Timpson’s existing services, which include shoe repairs, key cutting, and dry cleaning.
Customers can visit a Timpson store, hand in their phone for assessment, and receive funds transferred within minutes.