Is it a good idea to pay off your mortgage early?

November 23, 2017 by Brendan

Advice & Tips

Many homeowners question whether to pay off their mortgage before they retire, usually when they are considering their future financial situation. The final decision will be based on a number of factors, and you may want to seek professional advice during this process.

If you have a lump sum of cash and you can afford to pay off the mortgage early, you could save thousands of pounds in interest. Dependent on the remaining period of your mortgage term, repaying early could reduce the total amount you pay by thousands. As you approach retirement you may also want financial freedom, which can be gained by paying off all debts, including the mortgage.

As savings interest rates are so low, it may make financial sense to use any savings you have to repay the debt early, especially as interest rates may rise over the coming years. Although experts predict that the rise in interest rates will be gradual, it could make a huge difference to monthly payments and the total amount repayable over the remainder of the mortgage term.

Before deciding to pay off the mortgage early, make sure that you have paid off all other debt first, especially any debts that have a higher rate of interest like credit cards. You may also want to check that you won’t have any early redemption fees to pay. A CeMAP qualified mortgage advisor will be able to help you make the final decision.