Thousands rush to 'pull lever' that can cut £40,000 off your mortgage - 'It's so popular right now!'

Temie Laleye
Fri, 01 May 2026 16:18:51 +0000

Homebuyers could pocket more than £40,000 in savings through one straightforward habit that requires no deal switching or salary increase.

With mortgage rates remaining volatile and lending products constantly shifting, this approach is gaining traction as a reliable way for borrowers to take back control of their finances.

George Abouzolof, Senior Mortgage Advisor at Clifton Private Finance, says making regular overpayments on your home loan can deliver remarkable results over time.

According to Mr Abouzolof, this strategy represents one of the few financial decisions that sits entirely in the hands of the homeowner.

"You can't control the market, but you can control how you respond to it," he explains. "Rates change, lenders adjust their products, and the wider environment is always shifting.

"But choosing whether to overpay your mortgage, and by how much, is entirely within your control. It’s one of the few levers homeowners can pull to improve their long-term financial position."

He points to a practical example that illustrates the potential gains from this approach.

"For example, on a typical £250,000 mortgage over 25 years at around five per cent, overpaying by just £150 a month could cut roughly four years off the term and save more than £40,000 in interest," Mr Abouzolof says.

The mortgage expert notes that even modest additional payments can produce noticeable benefits, particularly for those at the beginning of their borrowing journey.

This timing factor matters because newer mortgages typically allocate a larger proportion of each payment to interest rather than reducing the principal balance. The appeal of putting extra money towards a mortgage extends beyond pure financial gain for many borrowers.

Mr Abouzolof explained that "overpaying is so popular right now" because it cuts the mortgage term and interest costs, while also providing peace of mind.

He said: "For many, it’s not just about the financial savings, but also peace of mind. Lowering your balance can make you feel more secure, particularly when interest rates are unpredictable."

As many as 67 per cent of first-time buyers are overpaying their mortgages, with many aiming to be mortgage-free by the age of 40, according to analysis by TSB.

The research suggests paying off a mortgage is now a bigger priority than saving for retirement, with 68 per cent focused on clearing their home loan compared to 25 per cent prioritising their pension.

A survey of more than 1,000 recent first-time buyers found 57 per cent hope to cut years off their mortgage term. Among those making overpayments, 43 per cent do so monthly, typically contributing between £200 and £399 each time.

Around nine per cent are also making larger lump sum payments of between £1,000 and £2,499 to reduce their balance more quickly.

Most lenders permit customers to overpay up to roughly 10 per cent of their outstanding balance annually without incurring penalties, making this an accessible option for those with spare cash each month.

However, Mr Abouzolof cautions that this strategy works best once higher-interest borrowing has been cleared.

"Overpaying your mortgage works best when it's not competing with more expensive borrowing," he says, referring to credit cards and personal loans that typically carry steeper rates.

Despite the potential savings, overpaying a mortgage is not always the best option.

Fixed-rate deals often include early repayment charges, which can be a significant percentage of the outstanding balance and may outweigh any benefit from making extra payments.

"Before making any extra payments, it’s essential to understand exactly what your lender allows and what charges may apply," Mr Abouzolof warns.

Borrowers with high-interest debt, such as credit cards, overdrafts or personal loans, are usually better off clearing these first, as interest builds up more quickly.

Money paid into a mortgage is also typically difficult to access unless the loan includes flexible features like an offset or drawdown facility.

"That’s why maintaining a healthy emergency fund should always come before voluntary overpayments," he adds.

He said the right approach depends on individual circumstances, with overpaying more suitable for some borrowers than others.

"Ultimately, this decision comes down to balance," Mr Abouzolof says. "Overpaying can save you thousands and help you become mortgage-free sooner, but it's not a one-size-fits-all solution."

For many homeowners, a combined strategy proves most effective.

Mr Abouzolof said: "In many cases, a blended approach works best, making modest overpayments while continuing to build savings alongside it. There's no single 'correct' answer, but taking the time to review your options can make a significant difference in the long run."