​How to Pay Off Your Mortgage Faster

While getting a mortgage helps you purchase a property with ease, making mortgage repayments for too long can add to your overall debt pressure. If you can, it is always advisable to try repaying your mortgage faster to get rid of the burden and enjoy hassle-free ownership of your property.

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If you are wondering how to pay off your mortgage faster, you can always take the help of an experienced mortgage broker in your town. For example, if you have purchased a property in Hounslow, get in touch with the best mortgage broker Hounslow has to offer to help you navigate through the process and provide you with tips for paying off your mortgage faster.

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Here are some important ways in which you can pay off your mortgage at a faster rate:

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Get a better deal by remortgaging your property

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It may be a case that you are currently not on the best mortgage deal for your property. This may be due to various issues you may have faced while getting your current mortgage or simply not being aware of a better deal while purchasing the property.

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During such circumstances, it is advisable to remortgage your property and switch to a better deal to pay off your mortgage early. This would help you pay off your existing mortgage and move on to a deal that makes repayment easier for you.

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However, remortgaging is advisable only for mortgage holders who are past the term of their fixed-rate deals. If you are still making fixed-rate mortgage payments, switching to a new deal is not always the best option. Moreover, you may be asked to pay early repayment charges for ending your existing mortgage.

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There are more chances of paying off your mortgage faster if you choose to remortgage after the introductory period and the fixed-rate term of your existing mortgage deal end.

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Try overpaying whenever possible

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Instead of saving money in your bank account and waiting to earn interest from the same, it is better to overpay your mortgage and get rid of the ongoing debt. Whenever it is possible to do so, consider overpaying the mortgage as it would bring an early end to your deal.

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However, it is important to note that overpaying is not advisable for everyone. Firstly, do not overpay your mortgage by exerting financial pressure on yourself. Do it only if you would still have enough funds saved for the future. Putting yourself in a financially difficult position to overpay your mortgage is never a good decision.

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Secondly, make sure you are aware of the limits to overpaying (if any) imposed by your lender. In most cases, borrowers are allowed to pay up to 10% of the balance as an overpayment every year. Also, many lenders charge fees for overpaying their mortgages, thereby nullifying the benefits of paying off your mortgage faster.

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Offset your savings

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If you have saved enough and have good financial cushioning, you can always choose to offset your savings against your mortgage to pay it off faster. When you opt for an offset mortgage, it will be linked to your savings accounts, facilitating overpayments with ease.

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Here, the interest is calculated by considering the amount borrowed and deducting the amount saved using your account from it. This way, you can use your savings for overpaying your mortgage and settling your debts at a faster rate.

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Offsetting your savings is one of the best ways to pay off your mortgage faster. Let us understand this with the help of an example. If you have taken a mortgage of £200,000 and have £5,000 in a linked savings bank account, you would only be required to pay interest on £195,000. If you are required to pay an interest of 3% on your mortgage over 25 years, you can pay off your mortgage a year earlier while saving a good amount of money.

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However, before you offset your savings, make sure you know that you would not be able to earn interest on your savings if you choose to go down this path. Also, there are considerably lesser offset deals in the market, making these mortgages more expensive than others.

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Try reducing your mortgage term

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Another popular way of paying off your mortgage faster is to reduce the term of your mortgage. Essentially, reducing the term of your mortgage has the same effect as overpaying your mortgage as it all leads to faster termination of your deal. When you officially reduce your mortgage term, the value of your repayments will automatically increase.

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This would require you to have a formal agreement with your lender agreeing to this arrangement. Usually at the time of remortgage you can ask your mortgage broker about reducing the term.   If your mortgage lender feel that you can afford the higher monthly payments, then you could reduce the term. Always remember reducing the term will increase the monthly outgoing.

 

Pay your mortgage fees upfront

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Getting a mortgage requires you to pay a number of different fees and lenders often add these to the overall mortgage. If you want to pay off your mortgage by reducing the amount you owe, it is advisable to pay your mortgage fees upfront instead of including them in your mortgage. This would eliminate a big chunk of mortgage that would have otherwise added to your debt.

 

Gather Additional Income

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You earn additional income from a range of different sources throughout the year, such as bonuses, tax refunds, and more. Instead of spending this income away, you can save it up until the end of the year and use it to pay off a big chunk of your mortgage. This is a way of overpaying your mortgage by saving the money you earn apart from your regular income.

 

It is very difficult this days to have any saving left specially  interest rate is going up, utilities are skyrocketed but this tips are worth remembering.

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These were some of the most efficient ways of paying off your mortgage faster and taking the burden of debt off your shoulders. Irrespective of the alternative you choose, especially if you want to remortgage your property, make sure you take help from a skilled mortgage broker in your town.