UK homeowners could unlock massive savings and pay off their mortgage years earlier with a simple change to how they make payments.
New research reveals that switching from monthly to bi-weekly mortgage payments could save homeowners up to £92,000 in interest over the life of their loan.
These statistics have been uncovered by mortgage broker Mojo Mortgages, who have calculated that by switching to bi-weekly payments, mortgage borrowers end up paying 26 half-payments, equivalent to 13 months.
On average, the switch delivers savings of £49,118 across the UK and could shorten the mortgage term by nearly five years.
London homeowners stand to benefit the most, potentially reducing their interest payments by an eye-watering £92,200. But the savings aren’t just limited to the capital.
Even in areas with lower property values, such as Northern Ireland, homeowners could still save £30,440— enough to cover 10 family holidays.
On average, the switch delivers savings of £49,118 across the UK and could shorten the mortgage term by nearly five years
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The West Midlands also sees substantial savings, with homeowners in the region potentially saving £68,150.
With such big potential savings, making the switch to bi-weekly payments could be a game-changer for many UK homeowners looking to reduce their mortgage burden.
South East homeowners follow closely behind, with possible savings of £61,230 through bi-weekly payments.
These regional variations reflect the differences in average house prices, with London’s typical property value of £511,279 contributing to its substantial potential savings.
Despite having the lowest average house price at £168,791, Northern Ireland still demonstrates significant savings potential. The national pattern shows that regardless of property values, the bi-weekly payment strategy offers substantial benefits across all regions.
Making the switch to bi-weekly payments could be a game-changer for many UK homeowners looking to reduce their mortgage burden. This approach leads to a national average reduction in mortgage terms of four years and nine months.
The increased payment frequency means homeowners are consistently reducing their principal balance more quickly than with traditional monthly payments.
The impact is particularly noticeable in regions like the East of England and Yorkshire & The Humber, where annual overpayments of £1,742 can reduce mortgage terms by five years and three months.
London homeowners can trim five full years off their mortgage duration by overpaying £2,623 annually through this bi-weekly system.
Regional variations in mortgage term reductions show significant differences across the UK.
The East of England and Yorkshire & The Humber lead the way, with homeowners able to reduce their mortgage terms by five years and three months through annual overpayments.
Scotland demonstrates strong potential for mortgage term reduction, with homeowners able to cut approximately four years from their loan terms.
These reductions are achieved through consistent overpayments throughout the year.
The impact varies based on individual circumstances, including initial loan size and interest rates.
Regular overpayments, even in moderate amounts, can lead to substantial reductions in mortgage terms across all UK regions.
The effectiveness of this strategy depends on individual mortgage terms and lender policies.
John Fraser-Tucker, Head of Mortgages at Mojo Mortgages said: “Many lenders allow you to overpay up to 10 per cent of your outstanding mortgage balance each year without penalties, but exceeding this can trigger early repayment charges.
“Some lenders may require overpayments to be made through direct debit, and if their systems are set up to process payments only on a monthly basis, they might not be able to accommodate more flexible arrangements.”
He advises homeowners to always speak with their lender first to understand what’s possible and avoid surprises.