How doing your Christmas shopping with your phone could shave money off your mortgage
Every week when Linda Glass pays for her weekly shop, she is also overpaying on her mortgage – and is on track to save almost £16,000.
Shopping at Morrisons and spending around £200 – “I have twin teenage boys,” the mum from Lincoln said – she is able to earn £7.48 that goes directly towards her mortgage.
She uses Sprive, an online app that works as a mortgage assistant.
One of the app’s main functions is that, by linking to your bank, it analyses how you spend and makes small payments into an online account, with that money used towards your mortgage.
Cost of living calendar – reveal a different story every day
“I want my money to work harder for me, and I am trying to save in any way I can,” she added.
But now, its latest feature – Shop with Sprive – functions a bit like traditional cashback, but instead the money goes towards making homeowners debt-free quicker.
While it might not seem like a lot, earning an extra £25 a month towards your mortgage can have a huge benefit.
Putting this towards a £250,000 mortgage at 4% for 30 years would save you £7,969.
How Linda will pay off her mortgage four years early
Linda was making regular overpayments of between £25 and £125 a month and was on track to save £7,400 and pay off her mortgage three years and four months earlier.
Now she has started using Shop With Sprive, the additional £30 a month will save her an extra £8,400 and see her pay off her mortgage an additional year and one month earlier.
This means her total savings are almost £16,000 – and she will be finished paying her mortgage four years and five months faster.
So far, the brand has partnered with four supermarkets – Morrisons, Waitrose, M&S and Iceland – a number of food and drink outlets – including Costa and Uber Eats – and home, travel and book retailers.
Linda, 51, said she is quite tech-savvy but likes how easy it is to make overpayments.
Linda Glass
For those who think it might be too good to be true, Linda said: “Give it a go. You can always opt out of it. You are not locked into anything if you don’t feel comfortable with it.
“But be open to everything that is there to save you money. Whilst you don’t see it put in your bank account, everyone’s house is their biggest debts hanging around their necks and it will pay off in the long-run.”
Why overpaying your mortgage is a good idea
Interest rates are at their highest in years – so if you can, overpaying on your mortgage should be something you should do. You can save thousands and become debt-free quicker.
You can save such large sums because you aren’t just clearing your debt, but because you pay less in interest.
You can usually pay off up to 10% of your outstanding balance each year without facing an early repayment penalty.
Click to subscribe to the Sky News Daily wherever you get your podcasts
It is almost always better to overpay your mortgage rather than put that money in savings (although an emergency fund is also a good idea before you do this).
For example, according to MoneySavingExpert, £100 extra month would save you £17,082 in interest on a £150,000 mortgage at 4%. If you put that same amount in savings, you’d have £9,585.
The business secretary will next week hold talks with dozens of private sector bosses as the government contends with a significant corporate backlash to Labour’s first fiscal event in nearly 15 years.
Sky News has learnt that executives have been invited to join a conference call on Monday with Jonathan Reynolds, in what will represent his first meaningful engagement with employers since Wednesday’s budget statement.
Rachel Reeves, the chancellor, unsettled financial markets with plans for billions of pounds in extra borrowing, and unnerved business leaders by saying she would raise an additional £25bn annually by hiking their national insurance contributions.
An increase in employer NICs had been trailed by officials in advance of the budget, but the lowering of the threshold to just £5,000 has triggered forecasts of a wave of redundancies and even insolvencies across labour-intensive industries.
Sectors such as retail and hospitality, which employ substantial numbers of part-time workers, have been particularly vocal in their condemnation of the move.
Keep up with all the latest news from the UK and around the world by following Sky News
On Friday, the Financial Times published comments made by the chief executive of Barclays in which he defended Ms Reeves.
“I think they’ve done an admirable job of balancing spending, borrowing and taxation in order to drive the fundamental objective of growth,” CS Venkatakrishnan said.
His was a rare voice among prominent business figures in backing the chancellor, however, with many questioning whether the government had a meaningful plan to grow the economy.
Mr Reynolds held a similar call with business leaders within days of general election victory, and over 100 bosses are understood to have been invited to Monday’s discussion.
A spokesman for the Department for Business and Trade declined to comment ahead of Monday’s call.
First things first: don’t panic.
What you need to know is this. The budget has not gone down well in financial markets. Indeed, it’s gone down about as badly as any budget in recent years, save for Liz Truss’s mini-budget.
The pound is weaker. Government bond yields (essentially, the interest rate the exchequer pays on its debt) have gone up.
That’s precisely the opposite market reaction to the one chancellors like to see after they commend their fiscal statements to the house.
In hindsight, perhaps we shouldn’t be surprised.
After all, the new government just committed itself to considerably more borrowing than its predecessors – about £140bn more borrowing in the coming years. And that money has to be borrowed from someone – namely, financial markets.
But those financial markets are now reassessing how keen they are to lend to the UK.
The upshot is that the pound has fallen quite sharply (the biggest two-day fall in trade-weighted sterling in 18 months) and gilt yields – the interest rate paid by the government – have risen quite sharply.
This was all beginning to crystallise shortly after the budget speech, with yields beginning to rise and the pound beginning to weaken, the moment investors and economists got their hands on the budget documentation.
Please use Chrome browser for a more accessible video player
Chancellor challenged over gilt yield spike
But the falls in the pound and the rises in the bond yields accelerated today.
This is not, to be absolutely clear, the kind of response any chancellor wants to see after a budget – let alone their first budget in office.
Indeed, I can’t remember another budget which saw as hostile a market response as this one in many years – save for one.
That exception is, of course, the Liz Truss/Kwasi Kwarteng mini-budget of 2022. And here is where you’ll find the silver lining for Keir Starmer and Rachel Reeves.
The rises in gilt yields and falls in sterling in recent hours and days are still far shy of what took place in the run up and aftermath of the mini-budget. This does not yet feel like a crisis moment for UK markets.
But nor is it anything like good news for the government. In fact, it’s pretty awful. Because higher borrowing rates for UK debt mean it (well, us) will end up paying considerably more to service our debt in the coming years.
Rachel Reeves leaving 11 Downing Street before the budget. Pic: PA
And that debt is about to balloon dramatically because of the plans laid down by the chancellor this week.
And this is where things get particularly sticky for Ms Reeves.
In that budget documentation, the Office for Budget Responsibility said the chancellor could afford to see those gilt yields rise by about 1.3 percentage points, but then when they exceeded this level, the so-called “headroom” she had against her fiscal rules would evaporate.
Read more:
Chancellor defends £40bn tax rises
Hefty tax and spending plans a huge gamble – analysis
In other words, she’d break those rules – which, recall, are considerably less strict than the ones she inherited from Jeremy Hunt.
Which raises the question: where are those gilt yields right now? How close are they to the danger zone where the chancellor ends up breaking her rules?
Short answer: worryingly close. Because, right now, the yield on five-year government debt (which is the maturity the OBR focuses on most) is more than halfway towards that danger zone – only 56 basis points away from hitting the point where debt interest costs eat up any leeway the chancellor has to avoid breaking her rules.
Now, we are not in crisis territory yet. Nor can every move in currencies and bonds be attributed to this budget.
Keep up with all the latest news from the UK and around the world by following Sky News
Markets are volatile right now. There’s lots going on: a US election next week and a Bank of England decision on interest rates next week.
The chancellor could get lucky. Gilt yields could settle in the coming days. But, right now, the UK, with its high level of public and private debt, with its new government which has just pledged to borrow many billions more in the coming years, is being closely scrutinised by the “bond vigilantes”.
A Halloween nightmare for any chancellor.
-
Sports2 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports7 months agoStory injured on diving stop, exits Red Sox game
-
Sports2 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports1 year agoGame 1 of WS least-watched in recorded history
-
Environment1 year agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Sports3 years ago
Team Europe easily wins 4th straight Laver Cup
-
Environment2 years agoGame-changing Lectric XPedition launched as affordable electric cargo bike
-
Business2 years agoBank of England’s extraordinary response to government policy is almost unthinkable | Ed Conway