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May 13

How to Pay Off Your Mortgage in 5 Years

Reading Time: 3 mins

What date will you become mortgage free? It’s a date etched in many a diary, the one day when you can say you truly own your home! But it’s usually many years away, and that’s the problem. You may have taken out a 25- or 30-year mortgage, but do you really have to wait that long? In most cases the answer is yes, as you have taken into account your earning potential. Yet there are ways in which you can speed up the process if you really want to.

If you’re looking for a creative financial trick to cut down your mortgage lifetime then this article shares more about a certain method. We’ve also put together some info on practical factors you might want to consider, so let’s have a look at those.

 

Think About Overpaying

It’s a good idea to keep up with news about mortgages as that can be a good way of getting to know about better deals – more on those later – but what about the option of overpaying? Many mortgage companies will allow you to pay back more per month than your agreement requires – it is, after all, a minimum payment – which can greatly reduce the amount you owe over time. This is certainly an option should you find you are in a better paid job than you were when you took out the mortgage. Careers do progress and you may be lucky enough to find you are moving up the ladder quickly, and if so, now is the time to consider reducing that mortgage debt.

You could also consider downsizing your car, for example, and putting the saving into the mortgage which can make sense if you are looking to get out of debt earlier than planned. Perhaps you now have a working partner who lives with you, and they can help make contributions, or if they have recently moved in with you perhaps they have a property to sell?  Any way of paying more will shorten the length of the debt and help you on the way to mortgage freedom.

 

Re-mortgage for a Better Deal

We mentioned keeping an eye on the mortgage news before, as this will keep you informed as to the state of the market. Mortgage rates change, and there are often deals that come about that will be better in terms of affordability than the mortgage you have. It’s surprisingly easy to change, and there are even people who will do it for you. Re-mortgaging can mean great savings if you find an appropriate deal, just as you would switch credit cards for better rates.

This is something that you might do more than once as the mortgage market becomes more competitive and better deals are on the table, so keep in touch with a financial adviser who will be on the ball in regards to this possibility. Also, check with an adviser as to the type of mortgage you have: is the interest rate pegged to the national base rate, or is it a fixed rate product? They will be able to help you find the best deal to replace one that may not be in your best interests right now.

 

Use Savings or Inheritance

While the property market undergoes considerable change over time, it remains the case that money in bricks and mortar is difficult to beat. This is why if you come into an inheritance or rack up decent savings you should consider reducing the level of your mortgage by using these funds. This can lead to quite impressive savings and a much faster journey to your mortgage free day.

Think about using savings when the time is right and an inheritance as a direct reduction in mortgage debt, and you have a potential release that you can use when you are able. Reducing mortgage debt is a good way of increasing your financial standing as once you have paid it off you have a property to use as leverage.

 

Conclusion

Paying off your mortgage in 5 years is not something that you can do with ease, as it will take some work, dedication and consideration. Yet it can be done and by way of a touch of luck and some hard work you may find you can achieve what you did not believe possible. By planning ahead and using the ideas and resources we have mentioned above you can reduce your level of debt on an ongoing basis and be debt free within a few years, but bear in mind you may have to make some sacrifices in order to do so in the short term, yet you will probably reap the rewards of having no mortgage in the long term.

 

*This is not financial or investment advice. Remember to do your own research and speak to a professional advisor before parting with any money.

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