Most people would like to redeem their mortgage as soon as possible. It’s a long-term financial burden so being free of it can make a huge difference to your bank balance and your frame of mind.
Here are 5 things you can do to help redeem your mortgage quicker than planned.
Reduce your outgoings
Reducing your outgoings will allow you to save additional money each month and potentially pay off a large proportion of your outstanding mortgage debt. Many people decide to switch to a minimalistic lifestyle to achieve their mortgage-free goal. Decide what you can do without and over what period and you might be surprised at how quickly the savings build. Cutting back on holidays, entertainment and luxury household items can make a huge difference to your annual spend.
Increase your income
This doesn’t need to mean getting a second job. More and more people are selling unwanted items from around their homes to increase their income and just as many are buying second-hand items. Not only are they cheaper but it helps the environment too. You may have furniture that you don’t need or gadgets that you no longer want. Decide what you can get rid of and use the various online platforms available to sell it. Putting the extra money towards discharging part of your mortgage will be worth it.
Make a capital repayment
If you have savings you may decide to use these, in whole or in part, to make a capital repayment towards your mortgage. This will reduce your monthly payments and take you one step closer to being mortgage-free.
If you don’t have savings but have surplus monies each month, consider increasing your monthly payments. Even if you are tied into a fixed rate or other type of mortgage, many lenders will allow a certain percentage of the loan amount to be overpaid each year. Check with your lender to find out the early repayment amounts permitted for the mortgage product that you have.
Remortgaging can mean better rates. If new rates become more affordable consider reducing the term of your mortgage. This will increase your monthly payments but will result in your mortgage being paid off quicker potentially saving you thousands in interest each year. There are many different products to suit a range of needs so use a mortgage calculator to check what best suits your situation. Many products will come with an arrangement fee payable. Make sure you take that into account when calculating the best deal. A mortgage broker can offer a wealth of information if you are unsure what to do and would like some guidance.
Consider an offset mortgage
Offset mortgages are another consideration. Your savings are offset against the amount of your borrowing so you only pay interest on the mortgage balance less the amount of savings you hold. Unlike a capital repayment, your savings will remain available to you should you need to use them.