While mortgage market volatility continues as anticipation for additional Base Rate hikes grows, considerations have been rising amongst owners about how a lot their month-to-month repayments will enhance.

Recent figures recommend as many as 2.5 million owners face an extra £9billion in interest payments as mounted fee offers come to an finish this yr. Meanwhile, round 10 % of mortgage merchandise are thought to have been faraway from the market as a result of suspected rate of interest will increase.

While there isn’t a lot that owners can do about rate of interest rises, Adam French, private finance professional at NerdWallet UK, stated that overpaying on a mortgage whereas charges are decrease may very well be a “great way to reduce the impact” of a mortgage fee enhance if an individual’s funds allow.

While the figures would differ relying on an individual’s mortgage fee and the quantity they'll afford to overpay, Mr French stated that even paying a “modest” quantity additional can have a big effect.

He stated: “Many people think that in order to make a difference, you need to overpay on your mortgage by hundreds or thousands every year, but that’s simply not the case.

READ MORE: More mortgage misery predicted as interest rates could hit 5.75% by Christmas

“Even a fairly modest amount of money can have a big impact on overall debt. And overpaying when your mortgage rate is low means more of it will be paying off the capital of your house as opposed to the interest.”

Mr French additionally identified the worth that overpaying whereas a fee is decrease can have on an individual’s mortgage to worth (LTV), which can assist folks “unlock lower interest rates” after they remortgage and wish to change to a brand new deal.

He stated: “At the very least, paying a little extra off on your mortgage while you can afford it could help you budget now, for higher rates in the future and chip away at some of what you owe. And if you’re able to maintain modest overpayments when your rate goes up, it can have an even bigger impact.”

Providing an instance, Mr French stated if somebody has a mortgage debt of £200,000 over 25 years, assuming this remained on a two % rate of interest, overpaying by £50 per 30 days will save £4,114 in curiosity over the lifetime of their mortgage. This would then cut back their mortgage time period by one yr and 9 months.

He continued: “Overpay an extra £50 per month off the same mortgage with an interest rate of six percent and you will save £17,664 over the lifetime of your mortgage, and reduce your mortgage term by two years.”

However, he identified: “Everyone’s mortgage term, loan and rate is different, and it’s worth using a mortgage calculator so you can see exactly what difference overpaying on your mortgage will do for you.

“It’s also worth bearing in mind that overpaying on your mortgage probably won't reduce the amount you pay right now.”

Overpaying by making common overpayments on an ordinary mounted fee mortgage usually gives an individual with two choices, and Mr French advised folks converse to their lender to see which is out there to them and what fits them finest.

He defined: “The first is that overpaying will reduce the overall term of the mortgage, meaning your monthly payments will stay the same and you’ll just pay your mortgage off over a shorter period.”

Mr French stated this can assist folks lower your expenses “in the long run” as a result of they’ll be paying much less curiosity general - nevertheless it received’t make any distinction within the brief time period.

The second is that it could possibly cut back an individual’s month-to-month funds over time. Mr French stated: “In the short term, small overpayments may not make a big difference, but as interest rates are often calculated daily, overpaying, even small amounts, can make a difference after a couple of months.”

Before contemplating overpayments, it’s advised that individuals verify if their mortgage settlement permits them to overpay, and in that case, by how a lot.

Mr French stated: “This is usually a percentage of the debt taken out, but does vary. Your initial agreement should contain all the information you need, but if you are in any doubt, it’s always best to check with your mortgage provider directly.

“Be warned that if you overpay by more than the limit, you’ll usually need to pay an early repayment charge, which could negate any savings you might make in the long run.”