Wednesday, 14 March is No-Smoking Day. Here's how quitting the weed could knock years off your home loan.
Wednesday, 14 March is the 24th No-Smoking Day -- an annual event organised by a charity which aims to reduce tobacco-related illnesses and deaths.
The first No-Smoking Day was on Ash Wednesday in 1984 ("Ash" Wednesday, see?) and it now takes place on the second Wednesday in March. Last year, 1.5 million UK smokers made an attempt to quit on the Day. In total, the charity has helped more than 1.2 million people to break the habit, helping to reduce the number of smokers by a tenth (10%).
There are many sources of help available to the three-quarters of smokers who would like to 'packet in' (ho ho). For example, national helplines (0800 169 0 169), local stop-smoking services, drop-in centres, pharmacists and GPs offer help and advice to smokers who want to kick tobacco into touch.
Around one in four Brits (twelve million adults) smokes cigarettes. Nevertheless, it may surprise you to learn that there are eleven million ex-smokers in the UK. Indeed, the older you are, the less likely you are to smoke. The same applies to your financial status -- again, the higher your socio-economic group, the less likely you are to smoke.
Of course, giving up the wicked weed doesn't just provide health - there are financial benefits too. With cigarettes costing about 26p each, or £5.20 for a pack of twenty, giving up can produce substantial savings, as the following table shows:
Cigarettes | Annual |
|---|---|
10 | 949 |
20 | 1,898 |
30 | 2,847 |
40 | 3,796 |
50 | 4,745 |
So, for a twenty-a-day smoker, quitting could mean a saving of almost £160 a month. In addition, after twelve months as an ex-smoker, you will qualify for non-smoker rates for life insurance and health policies, including critical illness cover, income protection insurance and private medical insurance. Indeed, premiums for non-smokers can be half those paid by smokers, as the following table shows:
Cheapest premiums for £100,000 of level term assurance over thirty years
Age | Gender | Smoker (£pm) | Non-smoker (£pm) | Lifetime saving (£) |
|---|---|---|---|---|
30 | Male | 14.15 | 8.54 | 2,020 |
30 | Female | 11.52 | 7.05 | 1,609 |
40 | Male | 35.25 | 17.45 | 6,408 |
40 | Female | 26.57 | 13.85 | 4,579 |
Source: lifesearch.co.uk
So, giving up smoking could yield a saving of thousands of pounds a year. You could use this extra money to pay off expensive debts, save for a rainy day, or treat yourself and your family -- the choice is yours.
Another option is to use this monthly saving to repay your mortgage faster. If your mortgage lender allows you to make repeated overpayments without penalties, you can throw this spare cash at your home loan. Doing this could bring forward your mortgage-free date by several years -- and help to eliminate any shortfall created by an underperforming mortgage endowment policy.
Here's an example: let's say that you have a £150,000 repayment mortgage over 25 years at an interest rate of 6% a year. By saying no to nicotine, you might release an extra £150 a month to add to your normal monthly mortgage repayments. Thus, instead of paying the usual repayment of £966.45 a month, you pay £1,116.45. This absolutely hammers your home loan, reducing its lifespan by seven years and five months, and saving you a whopping £35,141 in interest.
So, by giving up smoking this year, you'll not only benefit from a lengthier lifespan, but you'll enjoy more mortgage-free years, too. It's a win-win situation in anyone's book, so stop sending your money up in smoke today!
More: Try our award-winning mortgage service | The Lowdown On Annuities | Mortgage With A Mate
Disclosure: Cliff owns shares in Legal & General.