- The app calculates how much users can pay and sends it to their bank
- It is the brainchild of former Goldman Sachs banker Jinesh Vohra
- He came up with the idea because he had difficulty navigating the process
- Paying more helps homeowners pay off their mortgage faster and deduct interest
- The algorithm is based on banking data that is sent to the users by Spriv. have to share with
A new app says it will make it easier for people to make regular more payments on their mortgages, potentially saving them thousands in interest and making them increasingly mortgage-free.
Sprue was founded by former Goldman Sachs banker Jinesh Vohra, who was driven by struggles while trying to pay more on his own mortgage.
He said he found the process confusing, and spent hours calculating how much each time he overpaid he was reducing his total balance and saving himself in interest costs.
The Sprive app allows users to pay more for mortgages based on their expenses
“When I bought my first house with my wife, we borrowed £33,000, and I decided we would pay 50p in interest for that £1,” he explains.
‘It makes sense to pay more, especially since I won’t earn much interest on any money I save if I keep it in a bank account with such low interest rates.
“But in six months, I realized that paying more was not giving me the expected returns. Instead of reducing my total debt, the payments were being used to reduce my monthly payments – keeping the mortgage term and interest the same.’
Spree claims to have encapsulated this process, by calculating overpayments each month by a user and paying them to their bank.
If their bank has a minimum limit for overpayments, Spreeve can put money in a holding account until this figure is reached and payments can be made.
The app also provides them with a running total of the percentage of their household that they have, their total loan amount and the time frame in which they can expect to repay it.
As they keep paying more, they’ll see both of these figures decrease over time – meaning they can become mortgage-free more quickly.
Spive has provided the following example of how the app might work:
Of interest? Homeowners can cut their interest payments by overpaying their mortgages.
The app works similar to money-saving apps like Moneybox and Plum, which monitor a user’s spending and set aside a set amount each month they can afford.
But instead of rolling the money around for a rainy day, Sprue will divert it to pay more on the user’s mortgage.
To do so, customers need to link their bank account to the app and agree to share their mortgage account details along with their spending data. Spree is currently free to use.
Customers can choose a minimum and maximum limit each month, and the app will use artificial intelligence technology to determine how much to pay. This amount can be adjusted if the user wishes.
It says that it ‘never stores or accesses bank login details.’
The Spreeve app lets users see how long they have to pay off their mortgage, as well as how much interest they can potentially save by paying early
Vohra explains, “The algorithm looks at the expenditure of the individual. ‘If they are separated that month it will take something close to the minimum amount, but if they are sane and have saved more it will take the maximum.’
While users can elect money to automatically leave their account, the default setting is for them to manually approve the first payment.
It is the first app of its kind that is free rather than provided by a mortgage lender.
Although it’s regulated by the FCA, Vohra says it’s not providing financial advice — rather, it’s giving borrowers the tools to better understand their mortgages and make informed decisions about paying more.
The app currently works with HSBC, Lloyds, Barclays, Santander, RBS, Virgin Money, Halifax, NatWest, Yorkshire Building Society, Accord Mortgage and TSB Bank.
I anticipate reducing my mortgage term from 20 years to 12
Indy Rae is using the Spryve app to reduce the time it takes to pay off his mortgage on his home in Bedfordshire
Indy Rae, 34, a marketing executive from Bedfordshire, has been using the pilot version of the Spryve app to make mortgage overpayments on the house he shared with his wife for almost a year, after hearing about it on social media.
He says: ‘I’ve thought about doing a mortgage overpayment for a while, but it was always difficult to get information from my bank on how I could do it.
‘I never went to pick up the phone and talk to anyone.
‘The Sprue app was super easy to set up, and I love that my payments go right into my mortgage account, so there’s no waiting for it to happen.
‘Before using Sprive I had a hard time figuring out what impact any overpayment would have when it came to shortening my mortgage term – but now it’s easy to see how much time I can knock .
‘I think I would have paid off my mortgage in about 12 years, rather than the 20-30 that I expected when I took it out.’
However, users should be clear about any restrictions on how much they can pay.
While their lender’s standard variable rate may normally pay more without penalty, people on fixed rate or tracker deals may be subject to annual limits set by their bank or building society.
This is usually around 10 percent of the mortgage balance on a certain product. Some trackers often have a limit of 25 percent, but others allow penalty-free repayment.
Is It Right for You to Overpay Your Mortgage?
While it may be tempting to overpay a home loan in order to try to become ‘mortgage free’ as soon as possible, there are likely to be many other financial…