Paying off your mortgage early

According to recent research, the current record low mortgage rates have enabled borrowers to pay off an extra £9 billion a year from their outstanding mortgage debt.

With many predicting that interest rates could rise again by next year or 2015 at the latest, it may be worth considering making overpayments on your mortgage now before the rates rise again.

Typically, banks allow borrowers to overpay by 10% of their mortgage each year without incurring any penalties. But do check the small print of your mortgage to check for any penalties.

Even overpaying a small amount each month, such as £50 or £100, can have a considerable effect on paying less overall in interest and reducing the term of your mortgage.

Remember though, that if you overpay on your mortgage you can’t easily get that money back. So ensure that you have an emergency fund set aside first. Alternatively, consider an offset mortgage whereby your savings are set against your mortgage debt and can help reduce the interest you pay on your mortgage. Or if you have outstanding debts, such as credit cards, consider remortgaging now to consolidate your debts and take advantage of the current low rates.

If you'd like to have a chat about mortgages, including re-mortgaging or buy-to-let, please do get in contact with us by email at info@lotusifa.co.uk or by phone on 0845 331 2604.