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Tips to pay off your mortgage faster
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Whether to avoid the trap of negative equity or just be rid of the mortgage burden, most people want to pay off their mortgage faster. Find out how you can be mortgage-free sooner
It makes sense that most people want to pay off their mortgage as soon as possible, with the Royal Bank of Scotland reporting that nine out of 10 people would like to.
We’re just not sure what the other 10% find so appealing about needing to pay large sums of money each month, combined with the uncertainty over where the mortgage market – and rates – are heading.
For people who have bought a home in the last few years, or those who haven’t reduced the size of their mortgage over time, the risk of negative equity has become very real, according to Katie Tucker from mortgage company John Charcol.
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This is especially so for borrowers who need to remortgage soon, with house prices dropping by 2.5% during March alone and expected to fall over the next year or two, according to Halifax.
Those likely to suffer are the 1.4 million people who are coming to the end of fixed-rate deals this year, as the deals available now are nowhere near as competitive as a few years ago.
Beware remortgaging restrictions
Very few lenders are currently offering mortgages above 90%, so borrowers who took loans for 90% or more of their property’s value over the last few years may suddenly be at risk of higher mortgage rates or being unable to find a new loan, if their property hasn’t increased in value as much as they expected.
Even if the value of your home hasn’t dropped, the best deals are being offered to borrowers who need less than 90% of the property’s value.
This is making it increasingly important that homeowners reprioritise their spending for this year and pay off capital wherever possible, to ensure they qualify for a better remortgaging deal when the time comes.
As a starting point, if you can somehow afford an overpayment of £100 a month an extra £1,200 can be knocked off your debt over the year.
But what else can you do to pay off your mortgage faster? We asked mortgage and property experts to reveal their five basic tips.
