Jinesh Vohra, CEO at Sprive, has warned that part-and-part mortgage borrowers could face large debts at the end of their term if they do not make regular overpayments.
Vohra explained that part-and-part mortgages, such as the one Gen H launched, can make it easier to afford monthly payments, but buyers need to be aware of the risks.
With a portion of the loan on an interest-only basis, the original debt does not decrease, which could leave borrowers with a large amount left to pay off at the end of the term.
He said making overpayments is essential, as even small, regular contributions can reduce what is owed, save thousands in interest, and help avoid carrying this debt into later life.
Vohra said: “The challenge, of course, is that many people choose this type of mortgage precisely because money is tight. That’s where Sprive comes in.
“Our free app makes it possible to overpay without needing spare cash – by earning cashback on your everyday shopping at retailers like Tesco, Sainsbury’s and M&S, and paying it straight off your mortgage in one tap.
“It means that even if you can’t afford to set aside extra money each month, you can still reduce your mortgage balance and work towards being debt-free sooner.”
Sprive research found that by doing their grocery shopping through the app, households could earn over £260 in cashback, which could save £9,700 in interest over the term of the average mortgage.
Vohra added: “Compound interest usually works against you. But with Sprive, we are flipping it on its head and making it work for you.
“Every pound you overpay reduces your balance immediately, meaning less interest from that day forward.
“If your usual grocery shop spend earns cashback and you overpay that amount on a typical mortgage, that spend could multiply into thousands of pounds in savings over the life of the loan. It’s a powerful way to make your spending work for you.”
According to the Office for National Statistics, the average UK household spent around £3,666 on groceries, £1,622 on food at restaurants and takeaways, £910 on clothing and £2,371 on non-essentials each year.
Sprive found that by doing this shopping through its app, families could earn £268.11 cashback over a year, which could save £9,700 in mortgage interest during the term of the mortgage, with the potential for more savings if non-essentials were also purchased using the app.
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 helps people become mortgage-free faster, without changing their lifestyle.”
