As interest rates have been at a record low for some time, some home owners have found that they have spare cash and may be able to pay off their mortgage debt early. It isn’t easy to decide whether this is the best option, as some people believe that it isn’t an option while interest rates are so low, while others want to pay off possibly their largest debt.

If you have spare cash, consider paying off the debts with the highest rate of interest first. Unsecured loans, credit cards and store cards generally have a higher rate of interest than current mortgage products.

If you don’t have a pension, perhaps you could consider paying into one, especially as the contributions attract tax relief. A savings account may be another option if you can find an account with a higher rate of interest than your mortgage.

Before making the decision to pay off your mortgage early, make sure you have sufficient funds to be able to cope for three months. Some lenders will charge penalties if you make overpayments, so check with your lender first.

Making higher repayments can significantly reduce the amount of interest you will pay over the years and could reduce the term. Make sure you check when your interest is calculated as this could make a difference to any extra payments.

If this is something you are considering, it is worth consulting a mortgage adviser, who is trained to know about all aspects of a mortgage thanks to taking a CeMAP training course.

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