Published On: Wed, May 20th, 2020

Mortgage free: What not to do if you want to cut years off your mortgage term | Personal Finance | Finance


Getting a mortgage is quite often the key which enables buyers to get on the property ladder, or to perhaps go on to purchase a more expensive home. However, for some borrowers, becoming mortgage free will be a priority.

Be it for the knowledge of the property in which one lives being paid for, or to save money in the long term, the reasons for reducing the amount of time it takes to pay off a mortgage may vary.

It’s something which has been highlighted by The Money Advice Service.

Most of these loans will run for 25 years, the website states, but the term can be longer or shorter.

So, how could borrowers potentially go about reducing their mortgage term?

READ MORE: Mortgage enquiries drop as coronavirus hits the property market

Zarah Gulfraz, mortgage expert at online broker Mojo Mortgages, has shared some expertise with Express.co.uk.

So, what tips does the mortgage expert have to say on the matter?

Aiming to reduce the term at every review is one suggestion.

At this review, Ms Gulfraz also suggested that there may be a financial move which borrowers may want to avoid doing.

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“What not to do is to keep the term the same at review, simply because the payments have reduced,” she said.

“If you have been comfortably being paying a figure for your current fixed rate, try to keep the payment similar or higher (if you can afford to) and reduce the term and not the mortgage payments.”

Ms Gulfraz added that borrowers may wish to “think of it as short term gain, long term loss”.

Another tip is to look out for better deals where possible, and to consider opting for them.

“Always speak to a broker and get them to search for the best deal on the market for you – some people stay with the same lender for ease, but this could cost more in the long run,” she suggested.

“Make sure you have a set budget in mind that you want to put towards your monthly mortgage payment – this will allow the mortgage adviser to work out the shortest term within which the mortgage cam be cleared.”

Another option is to make overpayments, should the borrower be able to afford to.

This is something which can be done even if a homeowner is on a fixed rate mortgage deal.

However, limits may apply, which borrowers should be aware of as they may otherwise face Early Repayment Charges (ERCs).

“Overpay (within limits) as often as you can, even when you’re on a fixed rate – most people set up a standing order or make one off payments and most lenders allow up to 10 percent of the outstanding amount a year to be overpaid,” Ms Gulfraz said.

“Doing this this will reduce your monthly payments but still allow you to overpay more the next month, and therefore reduce the term.”



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