While for many of us, owning our home is a dream come true, the same can’t be said for owing the mortgage that comes with it.
According to 2017 statistics from Nationwide, a third of properties in the UK are mortgage-free, while 30.4 pc are occupied by homeowners who are paying off a mortgage. If you’d like the join the ranks of those who own their homes outright and no longer have the burden of mortgage debt (and the idea of endless hours spent playing with a mortgage calculator doesn’t appeal), here are a couple of other ways to speed up the process…
The standard mortgage rate is 25 years, but there’s every possibility your financial needs and situation will change even in the early years of this tenure. It pays to occasionally look into doing some mortgage comparison, especially around times of new budget announcements, to see if you are still paying off your mortgage in the most effective way. If interest rates drop substantially, it may be time to consider a switch, for example.
Up your mortgage payments
The higher the repayment amount, the faster your debt will decrease. If you have a variable rate on your mortgage, paying back more while rates are low is a great way to make your money go further. If you’re in a fixed rate product, you may still be able to pay more depending on the terms and conditions of your mortgage.
Pay off a lump sum
You may encounter a financial windfall at some point; for example, you could come into money left to you in a will, cash in some investments, receive money as a wedding gift or sell another property and make a profit. Again, depending on the terms of your mortgage, you may be able to pay in a ‘windfall’ sum that will knock off several thousands of pounds in one go.
Shorten the mortgage term
As stated earlier, 25 years may be the industry standard repayment term, but if you have the means to pay more each month over a shorter term, it could make sense to do so. You’ll be paying interest on your mortgage of course, so paying it off sooner could reduce the total interest payable – not only will you pay off your mortgage sooner, but you could also do so while enjoying substantial savings.
It’s often said that becoming mortgage-free is akin to reaching a real-life milestone, and is often a turning point for those homeowners. As the capital once tied up in repayments is suddenly disposable income, many find themselves enjoying a much higher quality of life, enjoying things such as hobbies and travel. By keeping an eye out on mortgage deals as well utilising some smart budgeting moves, you too might be able to make the move to a mortgage-free lifestyle sooner than later.