Paying off your mortgage early can also mean you’ll pay less interest overall, but perhaps most reassuringly, it will mean that people will have the security of knowing that they are full owners of the mortgage. their house. As 2022 approaches, many people could start making New Year’s resolutions about their mortgage payments and paying them off as quickly and efficiently as possible.
Brits can speak to a mortgage broker across the market for specific personalized advice. They can help people browse the market to find the best possible deal for them. Mr Murphy warned people should watch out for any fees and charges that may arise from early change in someone’s current agreement.
The second thing he suggested was that people should avoid stumbling upon a lender’s SVR.
He said, âIf your mortgage deal is about to end, or has even ended, you will eventually revert to your lender’s Standard Variable Rate (SVR).
DO NOT MISS
âMore often than not, these mortgage rates are more expensive than fixed or variable benefit period mortgage agreements, which means you could be paying hundreds of extra pounds per month compared to other agreements on the market. Make sure you check your mortgage agreement and change your mortgage to avoid hitting an SVR.
Plus, people can overpay to help them on their journey.
He continued, âIf you’ve just moved or re-mortgaged, you probably won’t be looking for a new mortgage deal. However, you may want to consider making excess mortgage payments.
âThis is an additional payment you make on top of your regular monthly mortgage payments and can be paid as a one-time lump sum or by paying a regular amount each month. They can tend to save the full amount of interest you pay, which means you can pay off your mortgage faster as well. “
Another option that people can consider is to offset their savings.
If people have savings and would rather not pay too much for their mortgage with them, they could still help them on their journey to mortgage freedom.
He explained that with compensatory mortgages, your savings and your mortgage are linked, which means people can use their savings to “offset” or reduce the amount of interest they are charged on their mortgage.
He said: âFor example, if you have a mortgage with an outstanding balance of Â£ 150,000 and Â£ 50,000 in your savings account, you will only pay interest on the difference – in this case Â£ 100,000.
âThat means you could save on the amount of interest paid and use it to pay off your mortgage sooner.
âIt is important to note, however, that during this period, you will not earn interest on your savings and the interest rates on these mortgages may be higher. “
People may also consider renting a spare bedroom and bringing in a tenant to earn more money.
Mr Murphy mentioned the government Rent a Room program which allows landlords who rent out rooms to earn up to Â£ 7,500 a year before having to pay income tax.
If people share the income from the property with another person, they can only claim Â£ 3,750 each.
To benefit from this program, people must offer fully furnished accommodation in their primary residence, and always remember to get permission from their mortgage lender before starting. They will also need to obtain authorization from their home insurer.
Finally, people should consider their priorities, he suggested.
Mr. Murphy said, âWhen it comes to your finances, it’s important to have a plan. If your goal is to get off your mortgage as quickly as possible, you may choose to cut all luxuries like vacations and meals, putting every penny you save into paying off your mortgage. Someone else may want to keep their luxury but decide not to buy a new car.
âThe key is to find the right balance for you. The best thing to do is sit down, budget, plan what you want to accomplish, and spend your money. “