If you’ve had a recent windfall, be it from a bonus at work, an inheritance or even a lottery win, you might be considering paying off your mortgage or at least paying off a sizeable chunk of it. Ask a reputable mortgage advisor whether doing so is a prudent move or not and you might be surprised to learn that the answer isn’t always going to be yes.
That’s because whilst paying off what is most probably the biggest debt you’re likely to ever have in your life is generally a good move, the wisdom of paying off your mortgage depends largely on your own particular circumstances. In this article, we offer some useful mortgage advice relating to when paying off your mortgage is a good idea and when it isn’t.
Are You Tied in?
Whether it’s for your first home or your 10th, having little or no mortgage can be extremely financially liberating, but you have to consider other factors that can affect how good an idea paying off your mortgage is. If you have an incentivised or discounted mortgage deal, you could find that there are some pretty hefty penalties to ending that agreement early, so if you don’t remember what your mortgage advisor or mortgage broker told you when took out the mortgage, we’d recommend looking through the fine print and finding out exactly what you’re tied into.
Sure, paying off your mortgage early could save you a lot in interest payments, but it doesn’t make sense if that saving is outweighed by what you have to pay in early repayment charges.
Do You Have Other Debts?
Mortgage interest rates are very favourable when compared to other types of borrowing, so if you have other bank loans or credit cards as well, it might be a much better idea for your overall financial health to pay those debts off first. For example, an impartial mortgage advisor will tell you that there’s no point paying off £50k at 1.5% on a mortgage if you’ve still got bank loans or credit cards at significantly higher rates of interest. In this scenario, you need to be paying down your high-cost borrowing before you consider paying off your mortgage.
It Needs to Make Financial Sense
In an ideal world, of course, a mortgage advisor is going to tell you to pay off your mortgage as soon as you can, as you can save thousands in the long run, but it really needs to make overall financial sense. It’s really a simple matter of mathematics i.e. if you stand to lose a significant amount of money by paying off your mortgage, then it’s clearly not a good idea, regardless of how good it might sound to say that you’re mortgage-free.
At Yes Mortgage Services, we provide honest, impartial mortgage advice to help guide our customers through the various pitfalls involved in obtaining a mortgage, remortgaging and even paying your mortgage off. We charge no broker fee and we are committed to finding you the best, most suitable mortgage deals for your specific personal circumstances. Needless to say, as FCA regulated mortgage advisors, we would never recommend an unsuitable mortgage product to turn a quick profit.
If you would like to know more about what we do, you can find lots of information on our website www.yesmortgageservices.co.uk or you can check us out on social media http://bit.ly/2URtfua. However, if you’d like to book your free no-obligation consultation to see how we can help you, call us now free on 0800 612 5596.
We even offer evening appointments for the many professionals out there that have busy lives, so if you have anything mortgage-related you’d like help with, we’d love to hear from you.
A whole of market Mortgage Broker, who doesn’t charge you a Broker fee.
Irrespective of whether you are looking to buy a new home, re-mortgage an existing property, or looking to protect your family from the unpredictability that life throws at it or protect your income if you are unable to work due to accident or ill health.
Yes Mortgage Services are committed to offering you the highest possible standards of service. We can undertake the whole process from answering the initial questions through to handling multiple product applications. Ensuring that everyone gets treated with the same urgency and maintaining your best interests are our main goals irrespective of the value of the mortgage.
We recognise that both we and our customers have everything to gain if we look after your best interests and treat you fairly in all aspect of our dealings with you.