Paying off your mortgage early can also mean that you’ll pay less interest overall, but perhaps most reassuringly, it will mean people have the security of knowing they own their home outright. With 2022 approaching, many people may start to make new year’s resolutions surrounding their mortgage payments and paying it off as quickly and efficiently as possible.

“Make sure to check what your current deal is and if you could reduce your mortgage payments by switching.”

Britons can speak with a whole of market mortgage broker for specific individual advice. They can help people browse the market for the best deal possible for them. Mr Murphy did warn that people should look out for any fees and charges that may come from switching from someone’s current deal early.

The second thing he suggested was that people should avoid falling onto a lender’s SVR.

He said: “If your mortgage deal is about to come to an end, or indeed has ended, you will end up reverting onto your lender’s Standard Variable Rate (SVR).


“More often than not, these mortgage rates are more expensive than fixed or variable benefit period mortgage deals, which means you could pay hundreds of extra pounds per month compared to other deals on the market. Make sure to check your mortgage deal and switch your mortgage to avoid falling onto an SVR.”

Additionally, people can make overpayments to help assist on their journey.

He continued: “If you’ve just moved home or remortgaged, you probably won’t be looking for a new mortgage deal. You could, however, consider making mortgage overpayments.

“This is an additional payment you make on top of your usual monthly mortgage payments and can be paid as a one-off lump sum or by paying a regular amount each month. They can tend to save the total amount of interest you pay, which means you can potentially pay off your mortgage quicker too.”

Another option people can consider is offsetting their savings.

If people have savings and prefer not to overpay their mortgage with them, they could still help on their journey to mortgage freedom.

He explained that with offset mortgages, your savings and mortgage are linked, meaning people can use their savings to ‘offset’, or reduce, the amount of interest they are charged on their mortgage.

He said: “For example, if you have a mortgage with an outstanding balance of £150,000 and £50,000 in your savings account, you’ll only pay interest on the difference – in this case, £100,000.

“This means you could save on the amount of interest paid and use this to help pay off your mortgage sooner.

“It’s important to note though, during this time you won’t earn interest on your savings and interest rates on these mortgages can be higher.”

People can also consider renting out a spare room and getting a lodger to make more money.

Mr Murphy mentioned the Government’s Rent a Room scheme which allows homeowners who rent out rooms to earn up to £7,500 per year before having to pay any tax on the income.

If people share income from the property with another person, they can only claim up to £3,750 each.

To qualify for this scheme, people must offer fully furnished accommodation in their main home and remember to always get permission from their mortgage provider before starting. They will also need to obtain permission from their home insurance provider.

Lastly, people should consider their priorities, he suggested.

Mr Murphy said: “When it comes to your finances, it’s important to have a plan. If your goal is to become mortgage free as quickly as possible, you may choose to cut out all luxuries like holidays and meals out, putting every spare penny you save into paying off your mortgage. Someone else may want to keep their luxuries but decide against getting a new car.

“The key is to get the balance right for you. The best thing to do is sit down, make a budget, and plan what you want to achieve and spend your money on.”

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *