How to pay off your mortgage

how to pay off your mortgage

Have you ever wondered how to pay off your mortgage?

Have you ever thought about what life might be like without that payment dragging you down. Being mortgage free sounds like a dream to most people, but it can happen with hard work and a goal.

If you really put your mind to it, you can pay off your mortgage in a fraction of the time you’d expect, freeing up your money to work for you in other ways. Not to forget adding a huge layer of security to your life. Not only will your home truly be your own, but you’ll save literally thousands of £’s in interest, often running into hundred’s of thousand’s of £’s.

how to pay off your mortgage

How to pay off your mortgage

There are a number of ways in which you can pay off your mortgage. The type of mortgage you have, and your terms will dictate how much you’re able to over pay each month or year and always, ALWAYS check this with your lender. Not checking this could lead you to pay more in penalty fee’s than you’ve overpaid by and that’s not smart in anyones book.

So in no particular order, here are the most common ways people rid themselves of their mortgage debt.

Monthly mortgage overpayments

This is the most popular way to start off, if you’ve decided that you want to lose the mortgage (but not the house!). If you’ve paid off more costly debt (credit cards etc…)

As mentioned earlier, the mortgage overpayment calculator I used is here and was the catalyst for our decision to clear the mortgage. I couldn’t believe the amount of money we’d save if we could make some sacrifices now and clear the debt.

On a £200,000 mortgage, overpaying by just £200 a month saves you £26,000 in interest. Overpay by £250 and you’ll save a whopping £30,000, and that’s before you’ve taken into account the HUGE factor of you being mortgage free SEVEN years early.

No one really explains this to you. The banks certainly won’t, and why would they. But have a play around with the calculator and see how much you could save on your mortgage by overpaying each month. Look at the ways we make extra money each month and see if you can make it happen.

If you can afford a monthly sum to commit to overpayments, this is an easy way to do it.

how to pay off your mortgage

Mortgage payment matching

This is really an extension of the above, just slightly more elaborate and quicker for sure.

In fact, it more than halves the length of the original mortgage.

On a £200,000 mortgage over 25 years, you’ll save a colossal £63,000 in interest and shave 15 years off your mortgage.

Do the calculations and see for yourself. Since most of us don’t have a second mortgage payment spare each month, this needs a serious commitment to cutting back quite dramatically, depending on your mortgage size.

Take advantage of the ways you could bring in extra income and if you’re free of pricier debts (credit cards etc..) then throw the extra money into another mortgage payment each month.

This is my goal here at Debt Free Family and what I’m going to be doing each month.

Pay in any pay rises, bonuses or windfalls

Check with your current lender what their overpayment policy is, but a great way to chip away at your mortgage debt is to pay any pay rises, bonuses or windfalls you get straight to the mortgage.

Lifestyle coach Tony Robbins has good advice for anyone looking to find money to pay off debt. Pay yourself first. And if you can’t afford to throw say, 10% of your take home pay into your debt, then build it up slowly.

Every time you get a pay increase, pretend you didn’t and put the extra into paying off the debt.

Make a point of putting annual bonuses into paying of debt, likewise any unexpected money you get that you weren’t expecting. Every £ you put into the pot, save you way more in the long run.

how to pay off your mortgage

Shorten your overall mortgage length

The shorter the length of your mortgage, the less interest you pay overall.

This might be a good idea if you’re about to remortgage to another lender, or if your lender will allow you to do this penalty free.

Of course a shorter overall length means higher monthly repayments and it’s important to be realistic with what you can afford each month. The new payment is legally binding so unlike an overpayment, you’ll be obliged to make the new payment as your monthly minimum.

This is great if you’ve got the money but not the discipline to make the overpayment each month.

Make a list of your ‘Why’s’ – how to pay off your mortgage

Keep a list of why your doing this close by. Put a chart or a print out of the calculator in constant view to remind yourself of the bigger picture.

If you think there is no way that you could ever manage to put away more money to clear your debts, , watch Tony tell Charlie Rose the story of a man who never earned more than $14,000 and yet managed to retire with over $70 million.

It’s pretty inspiring stuff.

Ultimately, it comes down to the choices we all make about the little things. Here at Debt Free Family, we’ve made the choice to sacrifice the small insignificant things, so we can secure the rest of our lives.

We always love a debt free story here, so if you’ve got story that would inspire other, please do get in touch. We’d love to chat to you and tell your story!

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