I’m buying my Christmas presents this year via a free app to help pay off my mortgage
MUM-of-one Holly Smith is set to knock two years off her mortgage and save on her Christmas shopping by using a free app at the checkout.
The 32-year-old, who lives in Colchester, Essex, is on track to become mortgage-free early by making extra payments.
Holly, who works in marketing, and her husband, Ben, 32, who works in revenue Operations for a tech company, usually pay an extra £150 a month, bringing their overall mortgage bill to around £1,450.
The couple overpays with the help of a free app called Sprive, which they have been using for just over a year.
The app links to their bank account and makes sure payments go directly to their lender, giving them an easy way to put extra cash towards overpaying their mortgage.
The amount they pay can change each month, depending on what they can afford.
In months where there is more surplus cash, the free app takes extra from their account.
And when money is a little tighter, Sprive leaves more.
The couple decided on the minimum and maximum monthly payments at the outset, and the app then works within those boundaries to take money each month.
Holly said they have experimented by overpaying up to £300 and shrinking payments right down when Holly was on maternity leave before settling on £150.
‘It’s so quick and easy’
There’s also a feature on the app that means you can get cashback when shopping to put towards paying off mortgage.
Users of the app can also cashback from supermarkets like Asda, Tesco and Morrisons, as well as Primark, Halfords, IKEA and M&S, and even on their Deliveroo or UberEats takeaways.
To do this, you have select the retailer on the app and purchase a digital shopping card to pay for your goods, either online or in-store.
The money earned can then be used to put towards the mortgage.
Holly likes to buy vouchers for the exact amount she is spending so there is no awkward amount left over.
She does her big shop at Sainsbury’s a couple of times a month and when she’s meeting her friends at coffee shops like Costa.
She estimates that this generates an extra £10 in cashback a month, which goes straight to overpaying her mortgage.
Holly said that using the app’s cashback element alone has helped to shave X months off her mortgage.
She said: “I use Sprive for everything from purchasing new shoes from Clarks, treating ourselves to theatre tickets and doing the weekly shop.
“Recently we boarded and insulated the loft and wegot all of the items from B&Q and got cashback on that which was great.”
Plus, the savvy shopper has been using Sprive to do her Christmas shopping too, particuarly for her two-year-old son.
She told The Sun: “We have bought him a Gruffalo puzzle from Argos and a doctors set from Sainsbury’s to go in his stocking using Sprive.
“I’ve also used it to buy gifts from John Lewis, M&S and Not On The High Street too.”
As the family are going on holiday for Christmas this year, Holly has been buying things over the course of a few months.
She estimates that she’s generated up to £20 in cashback from her festive shopping.
Holly said: “With Sprive, I love that you can buy vouchers as small as £1 and usually you can buy the specific amount that you need and not have random amounts left over on a voucher is a bonus.
“The low minimum spend means you can still save money on your mortgage even if you’re treating yourself to something small like a coffee.
“The reward then shows in your account really quickly.”
How to get the best deal on your mortgage
IF you're looking for a traditional type of mortgage, getting the best rates depends entirely on what's available at any given time.
There are several ways to land the best deal.
Usually the larger the deposit you have the lower the rate you can get.
If you’re remortgaging and your loan-to-value ratio (LTV) has changed, you’ll get access to better rates than before.
Your LTV will go down if your outstanding mortgage is lower and/or your home’s value is higher.
A change to your credit score or a better salary could also help you access better rates.
And if you’re nearing the end of a fixed deal soon it’s worth looking for new deals now.
You can lock in current deals sometimes up to six months before your current deal ends.
Leaving a fixed deal early will usually come with an early exit fee, so you want to avoid this extra cost.
But depending on the cost and how much you could save by switching versus sticking, it could be worth paying to leave the deal – but compare the costs first.
To find the best deal use a mortgage comparison tool to see what’s available.
You can also go to a mortgage broker who can compare a much larger range of deals for you.
Some will charge an extra fee but there are plenty who give advice for free and get paid only on commission from the lender.
You’ll also need to factor in fees for the mortgage, though some have no fees at all.
You can add the fee – sometimes more than £1,000 – to the cost of the mortgage, but be aware that means you’ll pay interest on it and so will cost more in the long term.
You can use a mortgage calculator to see how much you could borrow.
Remember you’ll have to pass the lender’s strict eligibility criteria too, which will include affordability checks and looking at your credit file.
You may also need to provide documents such as utility bills, proof of benefits, your last three month’s payslips, passports and bank statements.
‘We’ll save £51,000 in interest’
Holly and Ben took out a mortgage of around £255,999 with a 35-year term to buy their home in 2018.
The couple has so far paid more than £4,500 extra off their mortgage debt and could be mortgage-free by 2046.
They are also on track to save a whopping £51,000 in interest.
Holly said she’d recommend Sprive to anyone who is in the position to overpay their mortgage, particuarly for its voucher feature.
She told The Sun: “It’s quick to purchase your vouchers, and there’s a good variety of retailers on there too.
“Sprive also links to your bank account and sets asides money based on your spending, you can set limits and can then choose to pay your lender, or, if you need the money, you can withdraw it again easily.”
Before you think about making extra payments, check with your lender if you can actually do this.
Some lenders might not let you make overpayments at all, so make sure you get all the information you need about whether you can set up a regular or one-off payment.
You should also be aware that you might be slapped with a fee if you overpay too much on your mortgage.
This is usually between 1% and 5% of the amount overpaid, according to MoneySavingExpert.
Holly is able to track how much of her annual overpayment limit she’s used via the app, so she doesn’t breach her terms.
She is able to overpay by 10% of her outstanding loan per year without a financial penalty.
How does Sprive work?
Sprive shows users their current loan-to-value (LTV) and how close they are to the next threshold to help spur them on.
It also searches the market daily for new mortgage deals so users can see the best rates available for their circumstances.
The app will link borrowers up with a preferred broker if they decide to swap to help them through the process.
How much could it save you?
There are huge long-term benefits for homeowners who have enough spare cash to make regular overpayments.
For example, 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 calculations by Sprive.
In this scenario, a borrower would become mortgage-free two years and five months earlier.
Putting extra cash towards a mortgage also helps borrowers move into a lower LTV faster – which usually means lower rates when you are ready to fix into a new deal.
How overpaying your mortgage works
Most lenders allow customers on fixed rates to make overpayments of up to 10% of the outstanding mortgage balance in a year.
It’s important to not pay more than 10% because this can trigger hefty early repayment charges.
On a £100,000 mortgage over 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 smaller overpayments can still have a big impact.
For example, 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.
Payments can also be ad-hoc, so if you find yourself with a lump sum or a little extra cash one month, you could consider putting it towards your loan.
Paying extra on your mortgage while you are locked into a low rate can be a great benefit when you next come to remortgage – especially if it helps you shift into a lower LTV bracket, which typically means lower loan costs.
You don’t need an app to overpay your mortgage and can simply pay directly to your lender.
However, a dedicated tool may help motivate you to make those extra payments.
Sprive shows users how close they are to meet the next LTV threshold, for example.
Earning cashback that goes directly to your mortgage is another way to chisel away the debt.
Sprive has partnered with brands including M&S, Primark, Cost and Uber so that spending through the app will automatically generate cash towards the mortgage.
The downside is that in some cases earning cashback through these sites may mean you are not able to earn loyalty points as usual with retailers.
With rising interest rates, it’s also worth comparing whether you could earn more interest by putting cash in a savings account and then use the proceeds to pay off your mortgage.
What are the risks?
If your mortgage rate is higher than your savings interest rates, then it could be worth considering overpaying on your mortgage.
For example, £10,000 in savings at 2% earns £200 for the year.
But if you use it to overpay a 3% mortgage, it reduces costs by £300 for the year.
Overpaying in certain cases pays off in the long term as it reduces what you owe and lowers the total interest you’ll pay.
For example, if a household on a £150,000 mortgage at 5% (25-year term) overpay £100 monthly – you’d reduce interest by £23,000 and repay four years and six months earlier.
But before you plough money into your mortgage, make sure you pay off more expensive debts, such as credit cards, and have enough money set aside to pay three to six months’ worth of essential bills.
Once you’ve used cash to overpay on the mortgage, you can’t get it back.
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