New year Resolution - Settle your mortgage quicker. Be debt-free

We all love a small mortgage repayment each month. But are you sure you want to pay a mortgage when you are 69 years? 

Given below are a few tips that will help you settle your mortgage quicker and save stress later closer to your retirement. 

1. Avoid interest-only mortgages 

 These can be dangerous if you do not have a creditable settlement plan or your settlement option is not going to plan. Why take a chance if you can avoid it. Think of repayment mortgage instead. 

2. Avoid Capital raising / Further advances unnecessarily 

Think twice before capital raising or a further advance. This can unnecessarily add to your debt burden and delay paying off the mortgage.

3. Cut back on expenditure

Go through your Bank statements and credit card statements to see which expenses you can cut down. Cutting down these will help you with more disposable income which could be used to pay off the mortgage. If you regularly do this exercise you will soon start to see the difference. Fintech has come a long way. There are enough expense tracker apps that can help you which can make this a more enjoyable experience than a tedious exercise. Talk to your Mortgage advisor about these if you are unsure. 

4. Overpay each month

Most banks allow you to overpay your mortgage by 10% each year without an Early repayment Fee. Small overpayments may still keep you within the brackets and also reduce your mortgage balance as you go. 

5. Avoid paying broker fees

For most borrowers with none adverse credit, they are likely to be able to avoid broker fees. Broker fees can be around ￡800 on average or 1.5% of the loan value. Assuming ￡800 every two years you will save ￡12,000 over a period of 30 years which can be used towards paying off your mortgage. 

6. Reduce the term each time you remortgage by at least a year

A large proportion of first-time buyers takes out mortgages for around 30 years. If you reduce by at least one year each time you remortgage you can reduce the term by 10 years. This assumes you take out two-year deals each time. With pay rises and inflation, your monthly payment will feel cheaper in the latter years and your affordability should work out much better. 

7. Pay fees upfront 

?Product fees are generally around ￡1,000 each time you remortgage. If you pay fees upfront assuming you take a 2-year deal each time you can save around ￡15,000 being added to the mortgage as you go assuming it a 30-year mortgage. 

8. Use an Offset Account

Check with your mortgage adviser if they have an offset mortgage calculator tool they can offer. Offset accounts are fantastic for borrowers with spare cash. Most banks pay next to nothing on current accounts and some savings accounts at present. Moving this money to the offset can reduce your loan as you go. If you have an offset account, changing your repayment dates to match your income cycle helps you to take advantage of the money sitting in your account for as long as possible.

9. Use your Bonuses wisely

Pay off your mortgage with additional bonuses you receive through your employment. 

?10. Align your repayments with your income 

Make it a habit to align your mortgage to your pay as you receive pay rises. This way you will not feel the increase in mortgage repayment increase. 

11. Don’t reduce the monthly Repayment if the interest rate falls

With interest rates dropping and if you are used to repaying a certain amount best continue to pay or increase the amount if you can afford it. This will automatically reduce the years. 

12. Use mortgage tracking tools

With Technology today most advisers have tracking tools that track your mortgage as you go. These tools will tell you if it’s a good idea to break your mortgage and get a new deal that saves you money. Talk to your adviser he may be able to help. Techie savvy advisors have tools to use.  

13. Request an Annual review with your broker.

Don’t fall for a No broker fee deal and no support thereafter. You don’t have to wait until the end of the term before you can get a new deal. Talk to the mortgage advisor every year. Some brokers offer this as a part of the service. Then follow up with 6 months before your deal ends. This helps you plan your deals better which could save you money.

14.  Move funds from a cheaper mortgage to the more expensive mortgages.

If you have more than one mortgage move the funds from the cheapest mortgage to the other. You need to be cautious here. You need to look at the true cost in doing that taking into account the tax implications (if any). Talk to an adviser who knows about tax. 

15. Pay your mortgage in advance and not in arrears 

Some banks give you the option to settle your mortgage at the beginning of the month instead of the end. This is a better option as you have less interest to pay. It will save you interest over the years.

The above point may or may not be applicable to all borrowers. Please talk to an adviser.

WIS Mortgages and Insurance Services is a trading style of WIS Contractor Mortgages Limited, which is authorised and regulated by the Financial Conduct Authority, our FCA registration number is 824411. WIS Contractor Mortgages Limited is registered at Companies House, our company number is 11496588, our registered office address is 4, Imperial Place, Borehamwood, WD6 1JN. The Financial Conduct Authority does not regulate some investment mortgage contracts.

Your property may be repossessed if you do not keep up repayments on your mortgage.