Should I pay off my mortgage early?

At Enable Independent, IFAs in Bishop's Stortford this is one of the most common questions we are asked by customers. The answer to this is complicated and in most cases we would suggest that our customers come and have a chat with Richard our Independent Mortgage Advisor.

One of the main arguments against paying off a mortgage is the fact that mortgage rates are so historically low, that would it benefit you and your family by paying it off early? However others would say that it would be best to pay off a mortgage in these uncertain economic times. 

So in order to work out whether you need to pay off your mortgage early, you probably need to think about these questions:

Do you have any other debts such as store cards, car loans or credit card debts that need to be paid?
These normally charge a much higher rate of interest, so it might be worth paying these back first.

Would your family be able to cope financially if you died?
If you have dependants they the cost of putting in place a life assurance is relatively low, so if you haven’t got one already then you will need to make sure you have one in place. Making sure you can comfortably afford these payments is a necessity.

Can you get a better savings rate than your mortgage rate interest?
If you already have a pension then it might be worth paying extra money into a high rate savings scheme such as an ISA, which will give you higher returns on your money than probably the interest on your mortgage.

Will I get penalised by my mortgage company for paying it back early?
You will need to check with your mortgage company, most allow you to pay back 10% per year without being penalised.

If you pay back your mortgage will you have at least 3 months money left in reserve?
It is always best to think about whether you will be able to afford to live for a few months once you have paid back a mortgage.

Is it worth overpaying your mortgage?
By overpaying your mortgage it might not only mean that you have less to pay back in the future, it might also mean that you will be able to pay it back sooner.

If you would like some help and advice on your personal situation then why not give our team of Independent financial advisor a call and we will be able to access your financial situation.


Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE.