The No-App Way to Pay Off Your Mortgage Faster

Round-up apps promise to chip away at your mortgage for you. You can do the same thing yourself, with less fuss.

There's an app for everything now. That includes, apparently, paying off your mortgage.

Round-up apps, savings bots and cashback platforms all promise the same thing. They squirrel away your spare change while you get on with life.

I've spent some time looking at them. My conclusion? They can work. But you need to be fairly switched on to make them work.

You have to link accounts, check the transfers and move the money across. Then you still have to remember to make the overpayment. So here's a simple question. If you need that much discipline anyway, do you need the app at all?

The starting point

Let's use a typical example. You have a £200,000 repayment mortgage at 6% over 40 years. It's fixed for the first five years.

Your monthly payment comes to around £1,100.

Here's the number that should make you sit up. Over the full 40 years, you'd pay roughly £328,000 in interest. That's on top of the £200,000 you borrowed.

Every pound you knock off early stops costing you 6% for the rest of the term. That's why small amounts matter so much.

Idea one: round up the weekly shop

Say your weekly food shop comes to £95. Round it up to £100 in your head, and set the extra £5 aside.

You won't notice £5 a week. But across a year, it adds up to around £22 a month. That's £22 you can chip off your mortgage.

No app required. Just a quick transfer to a separate pot after each shop.

Idea two: let a cashback card do some work

Some credit cards pay cashback on everything you buy. A rate of 0.25% is fairly common.

Spend £600 a month on the card, and you earn about £1.50 a month back. It's small, but it's free money.

The golden rule: treat the card exactly like a debit card. Only spend what you'd spend anyway. Set up a direct debit to clear the full balance every month.

Carry a balance, and the interest wipes out your cashback many times over.

Small numbers, big difference

Together, the round-up and cashback give you about £23 a month. It doesn't sound like much. So what does it actually do?

On our £200,000 example, it makes you mortgage-free three years sooner. It also cuts your interest bill by around £31,000. You'd put in about £10,300 to get there.

Now imagine you stretch a little further. With a bit of discipline, you could find £25, £50 or even £100 a month without feeling the pinch.

At £100 a month, you'd clear the mortgage over ten years early. You'd also save nearly £100,000 in interest.

How to do it without an app

This is the part the apps don't tell you. The habit does the heavy lifting, not the technology.

1. Open a separate pot. Use an easy-access savings account or a labelled space in your banking app.
2. Move the round-up after each shop. It takes ten seconds on your phone.
3. Sweep in your cashback. When it lands, move it straight across.
4. Overpay regularly. Once a month or once a quarter, send the pot to your lender.
5. Or keep it even simpler. Set up a standing order for a fixed £25 a month. Then forget about it.

That last option is my favourite. A standing order is discipline you only have to find once.

Check before you overpay

• Know your limits. Most lenders let you overpay up to 10% of the balance each year during a fixed rate. Go beyond that and you may face early repayment charges.
• Shorten the term, not the payment. Some lenders lower your monthly payment instead. Ask them to reduce the term.
• Clear expensive debt first. Credit cards and loans usually cost far more than your mortgage.
• Keep a rainy-day fund. Money you overpay is hard to get back if the boiler breaks.
• Compare with savings rates. If your savings earn more after tax than your mortgage costs, it's worth weighing up.
• Rates won't stay fixed forever. Your deal ends after five years, so treat these figures as a guide.

Try it with your own numbers

Pop your own figures into the calculator below. See what your spare change could do.