If you are interested in understanding how to pay off your mortgage quickly then we are here to help!
There are many ways to do this – have a look below to see our top 5 tips
How to pay your mortgage faster
Overpay each month
Overpaying on your mortgage each month is one of the quickest ways to pay off your mortgage. 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: 2.15% (repayment mortgage) By overpaying £80 a month, you would save £13,735 in interest alone and pay off your mortgage 5 years and 2 months earlier – in turn saving you over £42,000 in mortgage payments
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. You should always make sure that increased payments will continue to be affordable.
Use your bonuses and tax refunds
Rather than committing to pay extra each month, why not put 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.
Remortgaging your current property and changing your loan to either a new product with your current lender or to a completely new lender could save you a fair sum of money each money, particularly with interest rates as low as they currently are. You could then overpay on your new mortgage to pay off your mortgage faster.
Win the lottery!
That would be nice wouldn’t it?! We can all keep on dreaming…
Our advice on the best way to pay off your mortgage in 5 years
This is of course completely dependent on how much left you owe on your mortgage and how much you can afford to pay, but the fastest way to pay off your mortgage no matter what amount of time you have is through a combination of reducing your term and making overpayments.
If you would like to get further information on the best way to pay off your mortgage or for help with remortgaging to save money please get in touch. We would love to help you.