Stub it out and pay the mortgage off 8 years earlier

With National No Smoking Day on Wednesday 14th March, UK mortgage broker, charcolonline.co.uk, has revealed that people who are considering giving up smoking could use the money to save thousands on their mortgage.

Someone with a 25 year repayment mortgage could save over £27,000 in interest and shave over 8 years from the term of their loan if they used the money to overpay on their mortgage.

Katie Tucker of charcolonline.co.uk comments: “When smokers look at what quitting can do to their finances it may provide that added incentive to finally stub out the habit. A 20-a-day smoker can save around £1,825 a year by giving up which, in itself, is incentive enough. Yet when you look at what overpaying by this amount can do to a mortgage, it is even more of an enticement. Even someone with a relatively small mortgage of £100,000 will pay £27,417 less in interest.

“There is clearly a lot to be saved if potential quitters take this approach. Coupled with savings on life assurance premiums and even some home contents insurance policies, there really is a great financial argument for not lighting-up, as well as the obvious benefit to your health. Life cover of £100,000 for a twenty five year term would cost a 35 year old male smoker £17 a month, whereas for a non-smoker it would be around £9.”

For the money that you now won’t be sending up in smoke, the market leading 2 year fixed rate from Halifax at 4.99% with a £1,499 fee allows 10% overpayment a year, and many of the standard mortgages in today’s market allow some degree of overpayment.

A no smoking ban in all enclosed public places will come into force across the whole of the UK between April and July 2007. (Wales – 2 April, Northern Ireland – 30 April, England – 1 July. The ban came in for Scotland in March 2006)