"It’s tempting to spend that extra cash, but for those able to put even a small proportion of it aside, starting a habit of overpaying on your mortgage could reap huge benefits in the long run."
- Graham Sellar, head of intermediary channel at Santander
With many choosing to ditch alcohol this January, research from Santander shows how putting some - or all - of the money usually spent on alcohol each month towards mortgage overpayments could save homeowners thousands over the life of their mortgage.
According to statistics from ONS, the average cost of a pint of lager is £4.81 – a figure which is only set to increase. Calculations from Santander show that a homeowner putting the monthly price of twelve pints (£57) towards overpaying a 25-year mortgage of £200,000 at 4.5% over the life of the mortgage, would save £12,983 in interest and be mortgage-free two years and one month earlier than planned.
For heavier drinkers, the potential savings are even greater. Overpaying £144, the average price of thirty monthly pints, towards the same mortgage would save £28,373 in interest and reduce the term by four years and eight months.
Even committing just part of the savings could make a difference, with Santander accepting overpayments from as little as £10 per month, which, on a £200,000 mortgage, would save more than £2,490 in interest and shave four months off a customer’s mortgage term.
Graham Sellar, head of intermediary channel at Santander, said: “Whatever the reason for doing Dry January, there’s an indisputable benefit to your bank account. It’s tempting to spend that extra cash, but for those able to put even a small proportion of it aside, starting a habit of overpaying on your mortgage could reap huge benefits in the long run.”
