![]() Okay, you probably already know that every dollar you add to your mortgage payment puts a bigger dent in your principal balance. We’ll show you how to pay off your mortgage faster so you can finally join the ranks of debt-free homeowners. How can you pay off your mortgage early?ĭon’t worry. And paying off your mortgage early lets you supercharge your retirement savings.īut the problem is you’re currently stuck dragging around that ball and chain called a mortgage-just like most homeowners. ![]() When the bank doesn’t own your house and you step onto your lawn, the grass feels different under your feet. Want expert help finding your new mortgage? Use our new online tool to search 1000s of deals from more than 80 lenders with the Guardian Mortgage Service, powered by L&C.So you’re eager to pay off your mortgage early and join the nearly 40% of American homeowners who actually own their home outright. So to find a lender that can offer the two-year term you require as well as the relatively small amount you want to borrow, you could consider getting help from a whole-of-market mortgage adviser.Īnd in case you were wondering, the main reason a short-term mortgage is better than a personal loan is because the interest rates on personal loans tend to be higher - in some cases as much as 10 times higher - than mortgage interest rates. Some put this at £25,000, while others are prepared to lend as little as £5,000. Lenders also vary in the minimum amount they are prepared to lend. Lenders have their own minimum terms, which vary from no minimum to a 15-year minimum.” Short-term mortgages are available says Mugleston, and they “can be for as little as six months to two to five years. But according to Pete Mugleston of .uk, it can be done. Given that the minimum term with most residential mortgages is five years, this won’t be easy. The thing to do is to remortgage with a lender willing to grant you a £13,700 mortgage with a term of two years. But the way to clear your mortgage in full next month is not by taking out a personal loan, and certainly not by paying the mortgage off before the fixed-rate period has come to an end and so incurring an early repayment fee of about £600. If you are otherwise debt-free and have a reasonable financial cushion in place, it makes perfect sense to clear £35,000 of your mortgage. But it wouldn’t if your savings would be better used to pay off outstanding credit card debts or an unsecured personal loan, for example. Using some of your savings to pay off some of your mortgage – while leaving a big enough emergency fund – could make sense. If using all your savings would mean that you had no financial cushion to fall back on in an emergency, using them partly to repay your mortgage is not a good idea. But first you should look at whether using your £35,000 in savings to pay off part of your mortgage is the best course of action (as should the person who has asked me whether he should use his £40,000 in savings to pay off his buy-to-let mortgage). Is there any reason why we should renegotiate our mortgage instead of getting the loan?Ī Yes, there are several reasons why you should remortgage rather than take out a personal loan. This would mean, however, that we would have to pay about £600 to get out of our mortgage early. We think the best thing to do is get a two-year personal loan and pay the whole mortgage off next month, leaving us with the personal loan of £13,700 to pay off over two years.
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