From finding a property which feels like home to getting the deposit together in order to make the purchase, there’s a lot to think about for homeowners-to-be. But, once the sale has gone ahead, some buyers will go on to look into ways in which they can reduce their mortgage term.
- Mortgage free: Key factor to consider which may see you cut years off
According to The Money Advice Service, the average mortgage runs for 25 years, however this term may be longer or shorter.
Reducing the amount of time it took to pay off their mortgage is something which one homeowner has done twice now, and they have shared their experience online.
Writing on a Reddit thread a year ago, the user “Toffeemade” explained they had made overpayments during this time.
“With a reasonably conducive deal I found overpaying very motivating,” they told Reddit users.
“Having paid off two mortgages early (five years and eight years) what was common to both was the tremendous inertia at the beginning.
“You have to put large overpayments in and the impact on your monthly payment amount is minimal to start.”
Nevertheless, this homeowner did later go on to see signficant reductions in the amount they had to pay monthly.
And, with this decreasing, they were left with more disposable income each month.
Rather than spending the spare cash or storing it in savings, this homeowner made the decision to continue making overpayments.
“However after a certain point you reach the down hill when overpayments start having a discernable effect in reducing your monthly payment amounts, increasing your disposable income and allowing you to overpay ever larger amount each month,” they explained.
“The initial period where you pile money in against the mortgage and repayments creep down is tough.
“Once you see the repayments start to drop and you can increase the overpayments it is a good feeling.”
- Mortgage free: Homeowner reveals mortgage paid off by 27
While this homeowner opted to make overpayments, there are a number of other things to think about if a person is looking to pay off their mortgage sooner rather than later.
This is something which has been addressed by Richard Hayes is the CEO and co-founder of digital broker Mojo Mortgages.
Speaking to Express.co.uk, he shared a number of tips, and stated: “Overall, let your budget lead your term choice not the other way around.
“Thirty-five or even 40 year mortgage terms are becoming the default as they give consumers the lowest possible monthly premium.
“But you’ll pay back much more in the long run, so try to pay what you can afford, and you’ll become mortgage free sooner rather than later.”
“Another way to become mortgage free sooner is to shorten your mortgage term,” Mr Hayes also shared. “However, this will mean that your payments will be spread over a shorter period of time.
“This will result in your monthly payments increasing, so make sure you are in a financial position to meet these higher costs.”
Have you paid off your mortgage? If you’re mortgage free and interested in sharing your story, please email [email protected]
Source: Read Full Article