Pay your mortgage off early in 5 steps

Most people with a mortgage would like to pay this off sooner rather than later. Standard repayment mortgages usually come with a term of 25-years, however there are now lenders offering longer terms of 30 years or more. This means that after 25 years or the duration of your mortgage term, your mortgage will be repaid to the bank or building society and you will own your home outright.
You can pay off your mortgage early by either overpaying on your mortgage or reducing your mortgage term. Over-paying during the earlier parts of your mortgage term will have a greater effect on reducing your overall mortgage costs. This is because the sooner you make payments, the sooner your mortgage balance reduces and the less in interest that accrues.

When you overpay your mortgage, this can reduce your mortgage term potentially by months and even years. Remember to check if your mortgage allows you to make overpayments, in some cases your lender may limit how much you can overpay in any 12-month period. If you exceed this limit, they make you pay an early repayment charge.

You can choose to reduce your mortgage term at the time you are due to remortgage. If you try to do this part the way through a mortgage deal you may find you will incur a penalty for changing the terms of your mortgage and will need to complete a new mortgage affordability assessment.

Our video below outlines the simple steps you can take to pay off your mortgage early. We've also provided more information below in our five steps to get mortgage free.

You could be paying out more than double in interest each month than you can earn from your savings accounts. If your savings earns less interest than the amount you pay on your mortgage, then you will save more money by using these to pay-off your mortgage balance. However, you should make sure that you keep the equivalent of at least three month’s salary as an emergency fund. 

Read more: Should I pay off my mortgage or save?

You could reduce your mortgage interest costs by remortgaging. If your mortgage does not have an early repayment charge and your new remortgage does not include a fee, then all you need to check is that your interest rate is lower to know that you will save money. If there is a fee then you will need to look at the total cost of borrowing including this fee. Our mortgage charts include this for you so you can compare easily. Alternatively, if you have an early repayment charge, then you should calculate the cost of this compared to how much you could save when taking a remortgage at a lower rate of interest. You may also find that your mortgage balance has reduced and that you can now remortgage to a lower LTV, for example, usually you can get much better remortgage rates at 75% LTV compared to 80%.

When you remortgage you can see the impact of changing the term on your monthly repayments. You should aim to make these affordable but also at the shortest term you can manage.

An offset mortgage has a savings account linked to your mortgage, the money held in your savings account is used to reduce your mortgage balance and thereby the total mortgage interest charged.
Usually you can choose whether to have this saving reflected in lower mortgage payments or a shorter term. If you wanted, you could also overpay and save even more money.

You can reduce your mortgage costs by paying fees up front then these and avoiding having interest added to these.