Most people make overpayments in order to pay off their mortgage early – but there is another possible reason.
Many modern mortgages allow you to take “payment holidays” – periods when you can temporarily stop making your normal monthly payments – perhaps if you are taking a period of unpaid leave from your job, for example.
Overpaying before taking a payment holiday can enable you to stop your payments for a while without falling behind on your mortgage’s repayment schedule at all – for example:
1. Overpay three months’ payments
2. Take a three month payment holiday
3. Result – your overall payments remain on schedule
Obviously the details of such an arrangement vary from mortgage to mortgage, but it is useful to remember the possibility and ask your broker or lender about it when choosing a new mortgage.