‘Best way’ to slash 10 years off your mortgage and become mortgage free

Financial advisor discusses how to better pay back your mortgage

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Paying it off early means less interest to pay back, more money for one’s retirement and extra money to give to the children, or just to spend on oneself. In an exclusive interview with Express.co.uk, money expert Emmanuel Asuquo discussed repayment options and how it can help significantly reduce the years left to pay on a person’s mortgage.

He said: “Most people are hopefully on a repayment mortgage so you’re paying it back over a period of time.

“But if people want to pay it back earlier, the best way to do it is to make overpayments.

“Clients that really benefit are ones that do it on a monthly basis.

“I’ve had a client who was paying £100 more, then after six months they went to £150 more, and after another six months they went to £200 more and so on.

“By the time they got down to it they took maybe 10 years off their mortgage because they kept increasing it on a regular basis and making larger payments.”

If people can afford to, this can be a great way to pay a mortgage off quicker, the financial adviser said.

Building up repayments over time with £100 or £200 extra each month can make a big difference – but that’s not the only option.

Mr Asuquo continued: “Also, you could pay lump sums at the end of the year.

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“So, you can save separately and pay it off by the end of the year.

“Normally most mortgages you can only pay 10 percent off as an overpayment in a year, so you have to bear that in mind.”

When it comes to decisions about paying off one’s mortgage, Mr Asuquo discussed with Express.co.uk the importance of knowing why they would want to, or what the end goal is.

He said: “You have to know why.

“It’s great to pay off your mortgage and it would be devastating if you had to pay a mortgage or pay rent in retirement as it’s a big cost.

“But another thing to think about is, I see a lot of people who are asset rich, but cash poor.”

Being asset rich and cash poor refers to having all your wealth tied up in different assets but having no immediate cash to support oneself on a day to day basis.

This means their wealth cannot be used for short term everyday expenses as it is not readily available.

Mr Asuquo said that there are many people’s properties that are worth over £600,000, £700,00 or even £800,000, but they may be receiving very little income.

He continued: “I had a client that her house is worth a million in Brixton because it’s a six-bedroom property, and all her children have left, but she only has a pension of around £600 a month.

“So, she has a million pounds worth of assets, but not a lot of income and she’s struggling to survive.

“So actually, what could have been good when she could have, was to take money out of that property and look at buying other properties.

“So that could provide her an income, so she didn’t have all her assets in one place.”

So, he suggested, what Britons may want to consider when deciding to pay off their mortgage is why, and if it will be of benefit in the future having these assets over readily available cash or steady income.

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