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Get rid of your mortgage early

Debt levels rise – but at a slower rate than before.  A new report from Credit Action shows that every single adult in the country owes £30,840 including what is owed on their mortgage and the average mortgage is now £110,480.

However with interest rates remaining at the lowest they have ever been since the Bank of England was formed in 1694, it presents a huge opportunity to lower that debt mountain.

Most of us took out our mortgages while interest rates were considerably higher than they are now, so were actually used to paying much more each month. Purely by making the same mortgage payments that you were making a year ago, or even stretching yourself to pay off just a little more each month will make a huge difference to the amount you pay back to your bank over the period of your mortgage.

Say for example you were paying £600 before the interest rate drops and, because you have a variable rate mortgage, you now only need to pay £300.  By keeping your payments at your original amount, you will reduce the amount of time you have to pay your mortgage off by years saving yourself thousands of pounds worth of interest payments –and let’s face it, most of us would prefer our hard earned money to stay with us rather than giving excessive amounts to the banks.

Not all mortgages allow overpayments so if your bank doesn’t let you pay off a bit more when you want to, talk to your mortgage adviser about the types of mortgages that do. Most people on standard variable rate mortgages will find that they can alter the amount that they pay, but your mortgage adviser will be able to advise you on how to either increase your monthly payments, or make a one-off lump sum payment if this is better for you.

It’s not often that you can take advantage of the banks, and no-one knows for how much longer interest rates will stay low, so take advantage while you still can. 

10th July 09

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