This week on The Vault, a listener opened with a confession. She’s been overpaying her mortgage by £300 a month for two years – that’s £7,200 straight off the loan, thousands saved in interest, and years knocked off the term. It sounds like she’s smashing it.
Then her boiler needed a £400 repair and it went on a credit card. Because after her bills and the overpayment, there was nothing left – she had no savings and no emergency fund to fall back on. She ended her dilemma with: “Am I completely backwards?”
Why overpaying your mortgage feels so good
Let’s start by saying we get it. In the early years of a mortgage, most of your monthly payment is interest and only a small slice comes off the capital (the actual loan). Watching that can be properly demoralising. An overpayment is different – because you’ve already covered your contractual interest, every penny of it chips away at what you owe. Play with an amortisation calculator (horrible name, useful graph) and you can see years falling off your term. It’s definitely a dopamine hit.
Laura’s been there herself. In her pre-Financielle days she was throwing extra money at her mortgage while sitting in her overdraft with no emergency savings. As she put it on the pod, money is like snakes and ladders – sometimes you’re moving forwards, sometimes you’re sliding back. And the most effective way to keep moving forwards is having a boring safety net underneath you.
Why the emergency fund comes first
Here’s what struck us about this dilemma: she’d already lived the consequence before she wrote in. She’s spent two years working hard to owe less, and one broken boiler put her straight into consumer debt – the expensive kind, on a credit card.
That’s the gap in her plan. In the Financielle Playbook (the step-by-step plan we built for exactly this), the order matters: know your numbers, build a mini emergency fund of £1000 or one month’s expenses, ditch the debt – and only then move on to the bigger goals. Overpaying a mortgage sits much further down the list. Without an emergency fund, technically she’s still in the Survive stage. We know that stings when you feel like you’re winning, but the strong financial foundations have to come first.
What we’d do
Our take on the pod was unanimous: pause the overpayments. Clear the credit card, then redirect that £300 a month into an emergency fund until it would cover a proper run of bad luck – boiler, car, all of it. As our community keeps telling us, saving an emergency fund feels annoying right up until the moment you need it, and then the relief is unmatched.
Once that’s sorted, the overpayments can come back (with balance this time). If every spare pound goes into your home, all your excess is riding on one asset class. Keep the pension going, think about investing, and let the mortgage be one goal among several rather than the whole plan.
And if you miss the feeling of chipping away at the mortgage in the meantime, Sprive is a clever halfway house – it’s a cashback app that turns the shopping you’re doing anyway into small mortgage overpayments in the background. Use code FINANC and you’ll get an extra £5 towards yours. We don’t get any commission by the way, we just like it!
One more important thing: she’s single, earning £34k, and she’s paid £7,200 off her mortgage in two years. That is not to be sniffed at. The work ethic is clearly there, the only thing that needs to change is the order.
So over to you – would you pause the overpayments, or have you found a way to do both? Come and tell us in the app community, and catch the full episode for the £20k pay cut dilemma too.
This content is for general information only and does not constitute financial advice. If you need advice tailored to your personal circumstances, please speak to an authorised financial adviser.