Mortgages: Expert advises people to speak to a broker
We use your sign-up to provide content in ways you’ve consented to and to improve our understanding of you. This may include adverts from us and 3rd parties based on our understanding. You can unsubscribe at any time. More info
Thanks to mortgage overpayments, many Britons are able to escape the extortionate amounts charged in interest payments from lenders. These amounts of money can be made on top of someone’s existing mortgage payments, either as a one-off lump sum or regular financial settlement. Jinesh Vohra from Watford is one of the many people who have opted for this method in order to regain some financial autonomy.
After getting married, Mr Vohra and his wife knew they wanted to start saving for a mortgage as soon as possible. After six years, they managed to save up just over £100,000 and bought a five-bedroom home near Watford for £440,00. Despite both being on good salaries and paying the deposit up front, the couple had a fairly large mortgage. Mr Vohra explained: “We took an offset mortgage, which was great, it meant we could make overpayments.
“However, when I looked at the statements I could see that for every £1 we paid off 50p went in interest to the lender. I was shocked to see in black and white just how much lenders front-load interest payments, so I sat and worked out exactly how much interest we would end up paying over the next 25 years. It turned out we would pay £160,000, that was more than the very large deposit we had put down.” At this point, Mr Vohra was working 60 to 70 hours a week to make his mortgage payments.
He added: “This meant I barely saw my family, when I left for work in the morning my son would be asleep, when I came back at night my son would be asleep. I enjoy hard work but I want to have my own business.” Knowing he wanted to get back some freedom and spend more time with his family, Mr Vohra explored making mortgage overpayments. He said: “Realising that we would end up paying such a large amount in interest I suggested to my wife that we try and pay the mortgage off sooner.
“I suggested five years. At first she thought I was crazy but we realised we could do it, we had been very disciplined when saving up for our deposit so we were used to being careful.” In order to make this a reality, the family had to make several lifestyle changes. “We used discount vouchers, we always made sure our savings were in the highest paying account, we swapped utility bills,” he explained.
“We also saved as much as we could by using cash back sites and cashback on credit cards. We would make sure we put large necessary purchases on credit cards – such as my commute – so that we could save air miles and get discounts. When we go out for meals we always make sure we try and find a discount. We also swapped our offset mortgage when the deal expired, this was because we would be charged a penalty if we paid off too much.”
The mortgage expert also wants to debunk misconceptions many mortgage holders have about making overpayments. Mr Vohra said: “One of the first things people talk about is early repayment charges. Obviously, no one wants to get charged and those charges can be relatively large. Most lenders, especially the larger lenders, allow you to overpay 10 percent of your outstanding loans. If you have £200,000 left on your mortgage, that’s 20,000 pounds, you can overpay in a single year, which is a huge amount of cash.”
From buying his home in 2012, Mr Vohra has now paid off his mortgage for this family home within less than a decade. Following this, he has since left his previous job and has now set out to help other homeowners pay off their mortgages early. Mr Vohra has launched the UK’s first mortgage overpayment app, Sprive, which links to peoples’ Online Banking accounts and allows them to set up regular mortgage overpayments while providing additional guidance. “When I got a mortgage, I just found it not very transparent in terms of mE being able to pay it off,” he shared. “I didn’t feel that lenders necessarily made it easy. I was making overpayments initially, and my monthly payments were reducing. I thought that’s fantastic, I was paying off my mortgage, paying less each one, that must be good.
“Then I realised that actually I needed to contact my lender and tell them how much the overpayments were and they needed to do some configuration on their site. There wasn’t anywhere that I could explain how to do that. For Mr Vohra, the launch of his new start-up is to help homeowners navigate the tricky waters of mortgage payments which he initially struggled with. He explained: “For me, paying off the mortgage early means we now have the freedom to look at opportunities like being involved in a start-up, a business that can help others find the freedom we have,” he added. Now a mortgage expert, Mr Vohra hopes other people across the UK will enjoy the same financial freedom he now has.
Source: Read Full Article