It doesn’t always happen, but a life change like a promotion or pay rise can mean you have some extra funds to play with on a month by month basis. It’s a question we’re being asked more frequently at the office: is it worth overpaying a mortgage, or should I add to my savings?

Or, in fact, should I allow myself a few more treats, or perhaps enjoy a holiday abroad?

Sure a holiday or an extra bottle of wine may be tempting, or maybe you think you need to top up your savings, but a couple of benefits to overpaying a mortgage are really worth considering.

If you clear some capital quickly – ie before the full term of the mortgage – you’ll pay less interest. This also means you’ll pay back more of your capital repayments so, depending on how much you overpay and how often, your term will go down. So, by making regular payments so you’re overpaying a mortgage, you will be mortgage free more quickly.

On a 25-year mortgage (4% interest) you can wipe almost 5 years off by over paying to the tune of £150 per month. This will save about £25,000 interest.

Most lenders allow customers to make changes to any over payment arrangements at any time, so you can often increase the amount you pay, or revert back to the original payment agreement.

You will need to check your small print about how much you can pay if you’re overpaying a mortgage, as most lenders set a limit. This means if you over pay by too much you will have to pay some early repayment fees.

Speak to your mortgage adviser if you would like some guidance to manage your mortgage repayments. We can help you make a decision that the over payment benefits are worth your while.

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