What are the Pros and Cons of Paying off Your Mortgage Early?

FREE cash offer within minutes
What are the Pros and Cons of Paying off Your Mortgage Early?
  • Free cash offer within minutes. Receive funds within 7 days.

Mortgage repayments are one of the most stressful financial responsibilities in a person’s life. It causes headaches for any property owner – and when the opportunity arises to get this stress out of your life, many people go for it.

However, paying off your mortgage early is not always the best idea. Whether you should consider doing so depends on a number of different factors – and in the blog below, we have outlined what these might be.

So, read on for an in-depth look at the pros and cons of paying off your mortgage early.

What does it mean to pay off your mortgage early?

When someone pays off their mortgage early, it means that they have provided all the money required to pay back the loan, before they were required to do so.

It is likely that paying back your mortgage early will divert money away from other parts of your finances. This is because it will require significant sums of cash, even for the most inexpensive properties.

Advantages of paying off your mortgage early

There are several advantages to paying off your mortgage early, which is why many people aim to do it.

Firstly, paying off your mortgage early can provide significant peace of mind. Repaying a mortgage is one of the biggest stresses in any person’s life – and therefore, if you can get it paid off early, it relieves a huge amount of stress.

Paying off your mortgage early also provides long-term financial advantages, because you can save money on future interest payments. Depending on how early you are able to pay off your mortgage, it could potentially save you thousands of pounds.

Thirdly, you will own the property outright if you pay off your mortgage early. This means that there is no chance of your losing the house – and when the time comes to sell (if you choose to do so in the near future) more of the money raised from the sale will be going straight into your pocket.

Disadvantages of paying off your mortgage early

Unfortunately, there are drawbacks to paying off your mortgage early, too.

Firstly, you can sometimes be charged for overpaying your mortgage. If the repayment goes over your agreed monthly limit, then there can be a penalty. You should check your mortgage deal to find out if this will be the case – but as a general rule, lenders will let you overpay up to 10% a year without penalties.

If you have other debts, then sometimes using your finances to pay off your mortgage early may not be the smart decision. This is because some smaller debts could be at a higher level of interest, meaning that you are better off focusing on repaying those debts.

Finally, when you dedicate a significant sum of money to paying off your mortgage early, it typically means that you have less funds to put aside for other things, such as early retirement, or an emergency fund.

Methods for paying off your mortgage early

There is more than one way to pay off your mortgage early. Three of the most common methods of achieving this include:

  1. Increasing your monthly repayments
  2. Paying a lump sum
  3. Reducing your mortgage term

Each of these is relatively self-explanatory. For the first option, mortgage lenders often allow you to overpay by up to 10% of the remaining balance a year without incurring a penalty.

For the second option, paying a lump sum can be a quick way of getting your mortgage repayments ‘out of your hair’. However, gathering enough funds to make this possible is extremely difficult for most people.

Thirdly, reducing your mortgage terms means that your monthly mortgage repayments would increase, but it could sometimes work out cheaper than paying the early repayment penalty.

Keep in mind that there are additional ways to pay off your mortgage early, such as switching to an offset mortgage. You should conduct thorough research on all the possibilities before deciding on the best route, and should also speak to independent experts who can guide you.

Sell your property with We Buy Any Home

WeBuyAnyHome are chain-free cash house buyers who can purchase your property up-front and quickly, without hassle or stress. You are in the perfect place to sell your house fast.

Using our own funds, we will purchase your property at a set price, by a date of your choosing, fully managed from beginning to end.

Any location, any condition, we buy any house. We can provide you with an offer for your UK property – Cardiff to Clyde, Durham to Dover. Our specialist team have helped assist thousands of people to a quick and stress-free house sale.

Fill in our enquiry form below if you are interested in getting a cash offer for your house.

Free cash offer within minutes, any condition, any location.

Posts Related To Cash House Buyers

View Cash House Buyers articles
How Much do Cash Buyers Pay for Houses?
Buying a House with Cash: The Process Explained
How to Find Cash Buyers for Houses
Completion Times for UK Cash Buyers with No Chain
Find the Owner of Any Property in the UK
7 Reasons Why You Might Struggle to Get a Mortgage on Your House
We Buy Any Home vs Property Auction
A Complete Guide to the Government’s Home Buying Schemes
What Are the Three Main Searches When Someone Is Buying a House?

Get a free cash offer today
Enter your details below

"*" indicates required fields

This field is for validation purposes and should be left unchanged.