Pay off your mortgage faster – 3 top tips
Imagine how good it would feel to be mortgage free? Pretty awesome right?
We’ve put all of our heads together to come up with our three top tips to help you pay off your mortgage quicker… Aside from winning big on the lottery or a scratch card.
Overpay each month
By overpaying on your mortgage each month you’ll be eating into the amount you owe and could knock years off your mortgage term.
Most lenders allow you to pay up to 10% of your mortgage balance as an overpayment each year, however it’s best to check with your lender as some can charge early repayment fees to do this.
To show you how overpaying works, we’ve worked out an example below:
Current mortgage debt: £200,000
Remaining mortgage term: 35 years
Annual interest rate: 3.59% (repayment mortgage)
By overpaying £80 a month, you would save £27,112 in interest alone and pay off your mortgage 5 years and 6 months earlier.
Use your bonuses and tax refunds
Rather than committing to pay extra each month, why not squirrel away any extra money into a savings account and pay off a chunk of your mortgage at the end of the year. Use bonuses, tax refunds and any other unexpected money to make this payment.
Reduce your mortgage term
Reducing your mortgage term means decreasing the amount of years you have to pay off your mortgage. As you’ll be committing to pay off your mortgage in less time, your monthly payments are likely to increase, however you will pay less interest in the long run.
You can opt to reduce your mortgage term when you’re due to remortgage and our advisers will be able to help with this.