15 tips to pay off your mortgage faster | WIS Mortgages
15 tips to pay off your mortgage faster image

21st July 2023

With average two-year interest rates now over 6 percent borrowers need to seriously consider paying off their mortgage faster. Interest is a cost and it effectively loses money. Planning wisely can help you pay less interest and settle your mortgage faster.

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Here are our top tips:

  1. Choose the right mortgage

    Get the best deal in the market to pay less interest. The lowest interest rate is not always the best deal. You need to work out the best deal including product fees and other associated costs added to it.

  2. Do not borrow extra funds when your deal is coming to an end

    Borrowing extra funds will increase the interest you pay over the term of the mortgage. You may end up extending your mortgage by doing that.

  3. Opt for shorter-term mortgages

    A longer-term is not recommended as it adds more interest over the term and delays mortgage settlement. Reduce the term as much as possible. You wouldn't want to pay a mortgage when you are old if you can avoid it.

  4. An offset mortgage can help you settle your mortgage faster

    An offset mortgage connects your mortgage to a savings account, allowing you to reduce interest by offsetting savings against the mortgage balance. By using an offset, your idle funds can be used to settle your mortgage.

  5. Use your savings wisely

    Consider using your savings to settle your mortgage, reducing the interest you pay. There is no point in having low-interest earning accounts and paying high interest on a mortgage. However, you may want to hold some rainy-day funds.

  6. Use your bonuses wisely

    Use annual bonuses to make extra mortgage payments and decrease the amount of interest paid.

  7. It is advisable to overpay your mortgage

    Yes, take advantage of the 10 per cent allowance provided by banks each year to overpay your mortgage and reduce interest.

  8. Reduce expenses and pay the mortgage instead

    Cut down on expenses, avoid duplicating expenses, and save money for mortgage payments. Entertainment costs can always add up!

  9. Reduce mortgage term when remortgaging

    Consider reducing your mortgage term by at least one year each time you remortgage. A 30-year mortgage could be reduced to 20 years if you do this each time you remortgage (assuming you remortgage every two years).

  10. Use your pay rises to pay off my mortgage

    Use pay rises wisely by directing the additional income towards mortgage payments. Obviously, you are used to a lifestyle with the pay before the rise. Don't start spending the extra earnings. Directing it towards the mortgage will help.

  11. It is advisable to switch from standard variable rate (SVR) in most cases

    Yes, avoid paying SVR and switch to a new mortgage deal to save money and pay off the mortgage faster. Any extra interest you pay is lost money!!

  12. Avoid interest-only mortgages

    Interest-only mortgages result in lost money. Paying off the mortgage reduces overall interest payments. Interest-only mortgage also carries a risk that you will have a big debt to settle at the end of the term without any means of settling. Who knows what can happen 30 years from now?

  13. Mixing and matching mortgage deals save money

    This is for people who own more than one property. By transferring equity between properties and strategically selecting mortgage deals, you can save on interest and pay off the mortgage faster.

  14. Avoid longer-term mortgage deals

    Generally, longer-term deals tend to cost more in terms of interest. Settling the mortgage instead is a better option. However, recently longer-term deals for example 5 year deals have appeared to be cheaper than 2-year deals. But this is not the norm.

  15. Seeking advice

    Seek the best advice to gain insights on paying off the mortgage faster, implementing the discussed points, and receiving personalised guidance. The advisor can be a bank or a mortgage adviser or another financial adviser. Some guidance from someone who is trained is always helpful!

As a mortgage is secured against your home or property, it could be repossessed if you do not keep up the mortgage repayments.

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