Bonus could cut six years from mortgage

Using Christmas and new year bonuses to pay off your mortgage every year could cut a mortgage term by six years, new research reveals.

That is based on this year's average bonus of £1,550.95 being used to make a mortgage overpayment on a current account mortgage.

However, the research by The One Account shows just two per cent of workers say they will use their bonus to make an overpayment on their mortgage.

"This year, it certainly seems that what an increasing number of people want for Christmas is less debt. Compared to a survey conducted last year, where 18 per cent had used their Christmas bonus to pay off debt, this year 26 per cent of people surveyed who received a bonus intended to use their bonus to reduce the amount they owe," explained The One Account.

"With the desire to be debt-free high on many people’s Christmas lists, it's therefore surprising to find that only two per cent of consumers intend to use their bonus to reduce their mortgage, often people's biggest financial burden, when doing so could save them thousands of pounds.

"Simply paying the average annual bonus into a current account mortgage each year could pay off your mortgage more than six years early, saving thousands of pounds in interest in the process."

Another top use for a Christmas and new year bonus was to put it aside as for savings, nearly a fifth (17 per cent) of workers choosing this option.