Cashback on everyday shopping can be worth nearly five times as much when used to overpay your mortgage, according to mortgage app Sprive.
The app partnered with more than 85 UK brands including Tesco, Sainsbury’s, Asda, Morrisons, M&S Food, Waitrose and Iceland.
Users earn cashback by shopping through the app, which can then be used to overpay their mortgage, making long-term savings thanks to the way mortgage interest works.
Jinesh Vohra, CEO at Sprive, said: “Compound interest usually works against you—adding tens of thousands in extra cost over the life of a mortgage.
“But with Sprive, we are flipping it on its head and making it work for you.
“Every pound you overpay reduces your balance, which means less interest from that day forward. It’s incredibly powerful.”
Vohra added: “For example, if you do a £125 shop through Sprive at M&S you will earn £5 cashback (4%).
“If you were to spend that £5, it is worth £5. But if instead of spending it, you were to overpay £5 on a typical mortgage – £250,000 at 5% interest over 30 years – that £5 reduces your loan balance immediately, so you avoid future interest on that £5.
“Over 30 years, this could add up to around £17.50 in saved interest, on top of the £5 you already paid off.”
He said: “That £5 turns into £22.50! That’s over four times the return—just for shopping as normal.”
Sprive’s analysis showed a one off £5 cashback payment could reduce a mortgage balance by £17.50 in interest over the term of a £250,000 mortgage at 5% over 30 years.
Using cashback for regular overpayments could lead to even bigger savings.
Someone spending £500 on groceries a month through the app could save £6,487 and pay off their mortgage seven months early.
Vohra said: “Mortgages are one of the biggest financial commitments people ever make.
“Sprive’s cashback feature doesn’t require users to shop differently or spend more.
“It simply redirects rewards to where they’ll have the greatest impact.
“This means we can help people become mortgage-free faster, without changing their lifestyle.”
