Mortgage free: How Britons can turn their homeownership dreams into realities

Mortgage free: How Britons can turn their homeownership dreams into realities

Mortgage free status is usually achieved after decades of payments, and Britons are often locked into agreements which can take up a significant chunk of their adult lives. A mortgage is often viewed as one of the most significant commitments anyone can make, due to the expense involved and the consistency of payments. Mortgage loans are secured against the value of a home until it is paid off. 

People who choose to make an overpayment on top of their normal monthly requirement could chip away at the amount of interest they have to pay.

However, it is important to bear in mind that there may be a charge or penalty for choosing to operate in this way.

A large majority of mortgages allow up to 10 percent in overpayments each year, however, exceeding this could end up more costly than simply meeting standard payments each month.

Britons should therefore check with their lender to see the circumstances in which they may be able to overpay.

Shortening the length of a mortgage term can also bring borrowers closer to homeownership. 

Even by knocking a few years off a mortgage term, many people will be able to reevaluate their mortgage situation and pay off the debt at a quicker rate.

Borrowers should, however, think carefully about this, as it is likely to mean higher payments each month,

And unlike overpayment, this option is far less flexible, fixing Britons into higher payments over a more rapid period. 

Finally, remortgaging may help Britons to meet their goal faster.

Remortgaging, or changing mortgage deals, is widely known to reduce mortgage payments as borrowers find better circumstances to suit them.

Remortgaging can be achieved every few years as deals come to an end, and can help people to potentially save thousands. 

It does, however, involve a lot of hard work, especially if switching from one lender to another, so caution should be exercised

Before choosing to become mortgage free, though, there are a few important points to consider.

And the government backed Money Advice Service, which provides free and impartial money advice, has offered its tips. 

The service has weighed up the options to provide further clarity to those who may be considering trying to get mortgage free.

Britons are always advised to pay off any larger, or more urgent, debts first to avoid racking up interest.

In addition, all Britons are urged to put money into a pension scheme to help them out during retirement.

This is because pensions are often viewed as an extremely tax-efficient way to save money, and can be vital when someone departs from the workforce.

Finally, people should always keep at least three months of money in reserve as rainy day savings to ensure they are protected if circumstances change. 

Published at Thu, 23 Jul 2020 09:15:59 +0000