Many people think of buying a home as them signing their life away. And when you think about what age you’ll be when you’ve paid it off — in 25, 30 years’ time — you can start to see why.

But a mortgage really doesn’t have to be a life sentence, especially if you adopt our Huddersfield-based mortgage broker’s advice for paying it off early.

There are lots of benefits to building up the equity in your home, such as smaller monthly repayments, higher financial security and more freedom.

So how do you know when to pay it off?

If you have lumps of money in a savings account, it could be worth thinking about using this cash to chip away at your mortgage. Mortgage rates are higher than savings rates, so you’ll usually save more than you would earn in interest.

And when shouldn’t you pay it off?

Everyone has different circumstances and your own financial situation will often dictate whether you should or shouldn’t pay off your mortgage.

Here are some circumstances when it doesn’t make sense:

1. If you like to have a safety net

You might like to leave yourself with a financial ‘cushion’ in case of unexpected circumstances, such as the event of losing your job — in which case, you need to think about income insurance — or you might want to treat yourself to the luxury of a holiday or new car.

Therefore, you should consider if paying off your mortgage leaves you with a contingency in case of emergencies or spending urges.


2. If you want to invest it

Alternatively, you might choose to invest the money, which may give you a better return than you would save in mortgage payments. For example, you could put this money into a business venture or buying a rental property.


3. If you have other debts

You may even have other, more expensive debts such as credit or store cards, which charge a high rate of interest, so it may make more sense to pay these off before your mortgage.

If you’ve studied the above points, and think you’re in a position to pay your mortgage off, then read on — but remember to save enough cash to keep you going for at least three months….


How to pay off your mortgage early:


1. Overpay

Many lenders will let you pay up to 10% of the outstanding balance at the start of the year without any penalties. If you pay more than that, you may find yourself with an Early Repayment Charge. However, don’t let this put you off — if you can afford it, then it may be worth it in the longer run as it will shorten how long it takes you to pay off your mortgage, resulting in less interest to pay overall.


2. Offset mortgage

Another way to pay off your mortgage earlier is via an offset mortgage. This means that you put money into a savings account with your existing lender, which can be used to reduce the amount of interest you’re charged on your mortgage. This is a flexible option as it means that you can withdraw the cash without penalties, so there’s less worry about putting all your cash in one basket.


If you’re still left scratching your head about how, when and why to overpay your mortgage, get in touch with our Huddersfield-based mortgage broker, for a free consultation:

[email protected]
07834 818805

Your home may be repossessed if you do not keep up repayments on your mortgage.

Fees may be payable at a later stage

Approval number: Sol6594