The pros and cons of paying off your mortgage early.
Does the idea of paying off your mortgage early appeal to you? The faster you clear your loan with overpayments the sooner you can think about things like early retirement or financial independence. And you’ll also save thousands of pounds, if not tens of thousands of pounds, by reducing how long you pay interest for. No brainer right?
Well, it’s always not that simple and there are pros and cons to overpaying on your mortgage. In this video I’ve looked into more detail on these and other benefits, but I’ve also shared when it might not be the best thing to do.
Then I’ve shared how to actually do it here in the UK – including the important step you need to take to make sure you don’t actually get hit with penalties for doing it.
Thanks Andy, really helpful video!
don’t forget about an early repayment charge…
I took out my mortgage in 2010 and saw after 2 years I hadn’t paid back much money. So I asked if I could reduce my term to pay it all back sooner. So I changed from 23 years to 10 years. Yes, in 2012, I took out a 5 year fixed deal. I began overpaying it in 2013. I got encouraged to pay even more. My mortgage let me pay up to £500 a month more per month that my direct debit. I wished to owe around £25,000 in January 2016 and £10,000 in January 2017. So by using a regular saving account I managed to pay off my mortgage in June 2017. Now I pay into a pension for my future. I go on better holidays and treat my children to more. Like I paid for my daughter to go on a school ski trip.
Fantastic! So glad that worked for you. One of the dangers of reducing the term rather than just overpaying is you lose flexibility. I’ve explained more in the video