If you are a first time buyer in Lincoln and have some money to spare every month then maybe you could consider making overpayments to your mortgage. Looking to make additional payments on your mortgage can make a significant difference overall to the amount of interest you will be paying back over the term of the mortgage.
The sooner you begin overpaying the better, as the extra payments have a longer period of time to have an effect.
Some homeowners cannot afford to make extra payments. We feel that the reason is that for many, life simply gets in the way. We know overpaying is the “right” thing to do but let’s face it, there’s always something else you can be spending your money on and plenty of those things are more exciting!
The best approach is probably not to make ad-hoc additional payments. (You will likely not get round to it or miss months of additional payment). Take action today and plan ahead. I would suggest setting up a standing order, payable to your mortgage lender each month. Set up the standing order to go out on the same day as your regular mortgage payment. E.g. your mortgage payment is, say £500pm and is collected on the 1st of the month. You can afford to pay an extra £75pm, so set up a standing order for £75pm to go out of your bank also on the 1st.
The reason for the above is that very quickly you will start to “feel” that your mortgage is actually £575pm and you will get used to that within a matter of months.
The beauty of doing a standing order is that unlike a direct debit, a standing order is controlled by the payer, not the receiver. That means that if you have a financial emergency you can quickly log into your online banking and cancel the standing order so that it doesn’t go out next month.
Whilst it would be regrettable to have to stop overpaying, at least you would have benefited from the overpayments made up until that point. Some mortgages will even let you make reduced payments or take a payment holiday if you have been overpaying for a while. Before taking a payment break though it’s important to check with your lender. Make sure that you are eligible to do so to avoid a negative mark on your credit report.
Overpaying your mortgage is a great habit to get into. You don’t need to go hell for leather at it unless you feel so obliged. Even shaving a year or two off will be very welcome when you near the end of the term.