"For those able to, using this extra money each month to overpay on their mortgage could reap huge benefits in the long run"
- Graham Sellar, head of business development for mortgages at Santander
With many workers benefitting from a pay-packet boost this month as a result of National Insurance cuts, data from Santander shows that putting this extra cash towards mortgage overpayments could save homeowners thousands over the life of their mortgage.
Its calculations show that a worker earning £30,000 a year will see an extra £29 a month in their January 2024 payslip. If they repurposed all £29 towards overpaying a 25-year mortgage of £200,000 at 4.7% they would save £7,405 in interest and be mortgage free more than a year earlier than planned.
Even committing just part of the NI saving could make a difference, as overpaying £10 a month on the same mortgage would save more than £2,500 in interest and shave four months off a customer’s mortgage term.
Those earning between £60,000 and £100,000 a year will see an NI saving of £63 a month, which if put towards a £200,000 mortgage would save £15,093 in interest and take over two years off the term.
Graham Sellar, head of business development for mortgages at Santander, said: “Many people will shortly see the first benefits of the National Insurance cut in their pay-packet. For those able to, using this extra money each month to overpay on their mortgage could reap huge benefits in the long run, saving thousands and helping them achieve the mortgage-free dream sooner than expected.”
