A mortgage can be a really big amount of money and take a long time to repay. This means that you could be repaying it every month for thirty years. It can feel like a huge debt and something that you would like to repay early so that you can save money and no longer have to worry about it. However, there are advantages and disadvantages to paying a mortgage off early and it is worth giving it some hard thought before doing so.
If you have other loans, they may be more expensive than your mortgage. Compare the interest rates and you will find that your overdraft and credit card as well as store cards will be more expensive with regards to the interest payments than a mortgage and so it could be a lot more sensible to pay these off before worrying about the mortgage.
Before you start to make some overpayments, make sure that you work out whether this is allowed by your mortgage company. Talk to customer services and find out as there may be a mortgage overpayment fee. This means that you could end up paying a significant sum of money as a penalty before you even start to make any repayments and you will need to calculate whether you think that this will be worthwhile or not. It will depend on how much the fee is, how long you have left on your mortgage term and how much extra you plan on paying off and what a difference that will make to the interest that you pay over the remaining term.
It is worth making sure that you will be able to manage in the future as well. If you start paying off lots of the mortgage and then find that you are short of money and need to borrow some, then this could possibly end up being more expensive in the long run. It is therefore worth thinking about how well off you expect to be in the future and whether you think you will be pleased or regret paying extra money off the mortgage.
Of course, usually if you pay a mortgage off significantly early you will save all of the money that you would have been paying in interest over the remaining term. This could add up to a huge amount of money, but it all depends on the interest rates. While interest rates are low the amount that you pay in total is a lot smaller than when interest rates are high. Although you save less when interest rates are low, it is easier to pay it off more quickly as you are not paying out so much in interest so there is more money available to pay off chunks of the mortgage.
If you do want to pay extra off each month, you will need to work out where that money will come from. It might be that you normally manage to save some money each month and you could put that towards paying extra off the mortgage instead. However, if you do not normally have extra money you will need to think about where you might get that extra money from. You may have to consider how you can earn more money or spend less so that you have extra to do it.
Whether you consider paying off your mortgage early is a good thing will depend very much on you and your personal circumstance. It makes sense that it will be cheaper if you do pay it off early as you will be paying less out in interest and it could help you to feel more relaxed that you do not have this debt and that you own your own home. However, if you have other debts it could be better to pay those off before. You also need to think about how you will manage to pay extra off and whether you are happy with doing this. You may need to spend less on luxury items or even on all items or work more hours to earn more money and you will have to decide whether this is something that you really want to do or not.