I’m saving £7,000 with a ‘money for nothing’ move that takes seconds AND will be mortgage-free sooner
A FAMILY are on track to shave more than £7,000 off their borrowing costs with an easy move that other homeowners can do too.
Cerris, 33, and his wife Charlotte, 32, are also set to become mortgage-free 11 months earlier thanks to the adjustment.
The Sheffield-based parents use the free app Sprive to get cashback each month.
The money then automatically links to their mortgage account to pay off their debt, on top of their usual monthly repayments.
Cerris, a military worker, told The Sun: “It’s just really easy to do – it’s money for nothing and takes seconds.”
Through cashback, Cerris and Charlotte usually put at least an extra £50 towards their mortgage each month on top of their £1,187 repayment.
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The exact amount can vary depending on how much they've spent.
The couple do their shopping at Morrisons earning 3% cashback each time they spend – including petrol.
Cerris says: “I do a lot of driving for work and spend £150 a week on fuel.
“We also get cashback when booking holidays through AirBnB or spending at Screwfix – which is handy as we’re doing a lot of home renovations.”
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Since they started using Sprive last July, they have paid an extra £500 off their mortgage so far.
The pair took out a £233,000 mortgage on their four-bedroom house in 2021, where they live with two-year-old daughter Rowan.
Cerris says that using Sprive helps bring to life how the cashback is making a difference to their debt.
He adds: “When you see the time you’re taking off your mortgage, it’s tangible.”
Using the app, you can also repay extra on your mortgage if you have, for example, surplus cash at the end of the month.
Bear in mind, unlike the cashback, this is your own money that you'll need to have free to put towards the debt.
You can set a certain amount for the app to take out of your bank account to put towards your mortgage - this can be a regular amount or you can change the sum each month.
There are big benefits of overpaying your mortgage in the long run as long as you have the cash free to do so.
How to overpay your mortgage
Most borrowers on fixed rate mortgages can make overpayments of up to 10% of the outstanding mortgage balance each year.
If you repay more than 10% you’ll usually trigger costly fees, thought the amount can vary between lenders, so before overpaying check the details of your agreement first.
The extra cash goes towards repaying the debt which means that over the years that follow you won’t have to pay interest on that amount which has been repaid.
Due to the size and length of a mortgage, overpaying even small amounts can save thousands of pounds in the long term, especially if done in the earlier years of a mortgage.
For example, on a £100,000 mortgage on a 25-year term paying an extra £90 a month would save over £4,800 of interest and see the loan repaid nearly three years early, according to calculations by Halifax.
And even paying an extra £25 each month on a £250,000 mortgage fixed at a rate of 5% would save £23,986 over a 40-year term, according to Sprive.
Chief executive Jinesh Vohra said: “At the beginning of your mortgage you’re paying mostly interest, and the higher the rate, the more interest you’re paying compared to the debt you’re clearing.
"So the earlier and the more often you make mortgage overpayments the more you save in the long run."
You don’t have to commit to regular overpayments either. If you find yourself with a lump sum or a little extra cash one month, you can put it towards the debt.
But you should always make sure you can afford to repay and do it after you have built up savings should you need cash in an emergency.
Overpaying can make a real difference when it comes to remortgaging too, as it can shift into a lower loan to value (LTV) bracket, which typically means lower loan rates.
LTV is the ratio of the mortgage compared to the value of the property.
For instance a home worth £100,000 with a mortgage of £75,000 has a 75% LTV. Lenders often offer lower rates when it falls below certain thresholds like 60% and 45%.
You can make overpayments directly to your lender but an app such as Sprive can motivate you to make the extra payments.
For example, Sprive shows users how close they are to meeting the next loan to value threshold.
Sprive has partnered with brands including M&S, Primark, Costa and Uber so that spending through the app will automatically generate cash towards the mortgage.
In this case, you won’t miss the money at all.
However, in some cases earning cashback may mean you are not able to earn loyalty points as usual with retailers.
Accelerate My Mortgage is another free website that works on a similar model, and makes an automatic mortgage payment when you’ve built up a certain amount of cashback.
We also spoke to a mum who will be mortgage free three years early thanks to overpayments.
And a pensions officer paying an extra £250 towards her mortgage each month.
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It comes as first-time buyers have been warned to check the small print on mortgages with incentives that could cost you in the long run.