Everyone dreams of the day when they have paid off their mortgage and they are living mortgage free. Not many people know that you can achieve this sooner with a few simple steps and a lot of discipline. Imagine paying less interest, getting rid of your monthly mortgage payments and enjoying the complete peace of mind knowing that your home is your own.
If you dream of living mortgage free before you reach retirement, it’s not completely out of reach. Your mortgage is probably your largest monthly expense, so the prospect of paying it off early is likely to be an attractive prospect. Short of moving into a shipping container or swapping your three bedroom semi for a canal boat, there are a few tips you can try to help pay off your mortgage debt faster.
In this blog, we’ll share some of the most popular ways Brits can get rid of their mortgage payments sooner.
You’ll never pay off your mortgage early without some serious planning. If your aim is to pay off your mortgage in 10 years time, think about how much extra you will need to pay every month. Then calculate if this is even feasible with your current earnings and outgoings. If it isn’t possible, either extend your target, find a way to boost your income, or cut back on your expenses. For example, if you get rid of your car and use public transport, you could put the money you save towards paying off your mortgage early.
By switching to bi-monthly payments instead of monthly payments, you can actually increase the amount you pay back. There are 52 weeks in the year, so if you switch to making payments every 2 weeks instead of monthly, at the end of the year you will have made 13 full payments instead of just 12. This is a great way to chip away at your mortgage payment without realising you are paying more.
This hardly deserves its own point on the list given that it is so obvious. The simplest way to pay off your mortgage sooner is to increase your principal payments or make more payments. When you make principal payments, these go towards bringing down the principal amount, rather than going towards the principal and interest. Many lenders will offer principal only products.
Once you have your finances in order, you may find that you have spare money left over at the end of the month. Any extra cash should always go straight towards paying off your mortgage. If you get a pay rise at work, for example, put the extra money every month towards your mortgage. You won’t even notice that you don’t have the extra money, but it could have a huge impact on how quickly you pay off your mortgage.
Remortgaging is simply paying off your existing mortgage with a new mortgage and using your property as security. Most of the time, people remortgage to be able to secure a better deal and reduce their monthly payments. However, if you choose to remortgage and pay the same monthly payments, this could help to pay off your mortgage far quicker. Don’t forget to check the fees associated with remortgaging to ensure it is the right move for you.
Saving the money to build your own home could save you a lot of money in the long run. A short term self-build mortgage can help you to get the materials and labour you need. In theory, you could build two adjoining houses and then sell the neighbouring property when it is complete. If you are smart with your expenses, this could be enough to pay off the entire self build mortgage. Then you would be living mortgage free in a house you built yourself.
Taking in a lodger or putting a room in your home up for rent on a home sharing website could help to boost your monthly income from your property. It might not be the ideal situation for everyone, but if you don’t mind opening your home to strangers, the extra income could go a long way to helping you pay off your mortgage early.