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What do UK mortgage holders do that we Aussies don't?

I read an article out of the UK recently which said that 'half of homeowners overpay their loans'. Really? Half? Seems a lot considering the current world climate so I thought it should be either a really quick skim and dump or a good read; it was the latter.

'Which? Research' in the United Kingdom surveyed 3500 mortgage holders in June 2018 and 46% had made mortgage over-payments. For definition, a mortgage over-payment could be defined as any extra payment/s made into a home loan that is more than is required at that time by the bank.

Obviously the article goes on to quote UK examples which are not relevant here (and we don't suggest that you follow it!) but in Australia lenders do offer redraw facilities so that you can add additional money into your loan, reducing the interest part of any required repayments for the amount of time that it's sitting there in the loan. You can generally withdraw it at leisure so it's a great place to stash some savings.

The article suggests the most likely reason that this is working so well in the UK is that savings rates are so low right now so that it makes sense to save interest (ie lower the interest part of your loan repayments) if you can't earn any interest on your savings in a savings account.

This works here just as well and we generally support adding savings into your loan/s to reduce your interest. Of course everyone's situation is different and as such we'd love to chat to you to make sure that this plan would work for your situation.

But as always spending less than you earn and saving money is always the goal. :)

Read the article here.