How do I pay off my mortgage fast?
July 23rd, 2007 | by admin |If you wish to pay off your mortgage quickly there are various options that you can take. It is worth remembering that paying off your mortgage early can save you a significant amount of money in lower interest payments. However, it requires a commitment to increase repayments in the early years of your mortgages. For some first time buyers in the UK, this may be difficult to achieve. However, for those who are determined to pay off their mortgage early these are some of the most popular methods.
1. Flexible Mortgage.
Firstly to pay off a mortgage early, it is necessary to have a mortgage which enables you to make early repayments. Flexible mortgages are increasingly being offered in the highly competitive mortgage market. Note: it is usually possible to combine a flexible mortgage with different types of mortgages, for example, it is possible to have a flexible fixed mortgage, or a flexible tracker mortgage. The important thing is to make sure you choose a mortgage where you are not penalised for making early repayments.
2. Discipline to save.
The most difficult part of paying off a mortgage early is finding the cash to pay the extra payments. It requires some kind of discipline or sacrifice. For example, each month you could have a target of paying £100 to the mortgage. This could be done by reducing monthly outgoings, or reducing other types of investments. The important thing is that if you can give these extra payments a high priority then it is possible to make a real difference in reducing your mortgage.
3. Lump Sum payment at the end of the year.
The other alternative to making extra monthly payments is to invest the money over the course of the year and then use what you have saved to make a one off yearly payment. The advantage of this approach is that you can have a target of trying to raise a certain amount. There is also the potential of investing it in a high interest account to gain interest throughout the year.
4. Offset mortgage
An offset mortgage enables you to combine a mortgage balance and your current account. Thus savings in your current account are automatically used to reduce your mortgage balance. This makes it easier to pay off a mortgage early; all you have to do is add to your current account.