How to become mortgage free

Are you dreaming of becoming mortgage free? Here are our top tips to help you pay off your mortgage early and enjoy financial freedom.

Achieving mortgage freedom is a goal many homeowners strive for—who wouldn’t want to live without the burden of monthly mortgage payments? The idea of being mortgage free opens up a world of possibilities, from early retirement to financial flexibility.

So, how exactly can you become mortgage free? In this article, we’ll outline simple, actionable steps to help you turn that dream into reality.

What are the benefits of being mortgage free?

While being mortgage free sounds appealing, what are the actual advantages?

First and foremost, you’ll have more disposable income. Without monthly mortgage payments, your financial flexibility increases, which could allow you to retire early, save more, or provide additional support for your family. Being mortgage free means more money in your pocket for the things that matter most.

Paying off your mortgage early also reduces the overall interest you’ll pay, potentially saving you thousands, or even tens of thousands of pounds in the long run. Finally, you gain the peace of mind that comes with owning your home outright. There’s no better feeling than knowing your home is 100% yours.

How do I get started on becoming mortgage free?

Ready to start your journey toward being mortgage free? Here’s a handy checklist to guide you:

Review your current mortgage deal

The first step to becoming mortgage free is ensuring you’re on the best possible mortgage deal. Overpaying each month could mean you’re losing out on money that could otherwise go toward paying off your mortgage faster. Here’s what to do:

• Avoid the standard variable rate (SVR): If your current deal has ended, you might have shifted to your lender’s SVR, which can be significantly more expensive. Review your mortgage to ensure you’re not paying more than necessary.
• Check your loan-to-value (LTV) ratio: As your home increases in value or you pay down your mortgage, your LTV decreases. A lower LTV can give you access to better mortgage deals with more favourable rates.
• Search for better deals: Compare available mortgage deals to make sure you’re getting the right one.

Need help? Our expert advisers are here to help you find the right mortgage deal for you. Reach out to us for personalised advice.

Make overpayments

If remortgaging isn’t necessary right now, consider making mortgage overpayments. Whether it’s a one-time lump sum or a regular extra payment each month, overpaying can reduce the total interest you owe and shorten your mortgage term. For example, if you have a £150,000 mortgage with 25 years left and an interest rate of 2.5%, overpaying just £100 per month could shave off over four years and save you nearly £9,500 in interest.

Always make sure to check with your lender how much you can overpay before making any overpayments. Your mortgage adviser will be able to help you with this.

Offset your savings

Another way to become mortgage free sooner is through an offset mortgage. By linking your savings to your mortgage, you reduce the amount of interest charged on the outstanding balance.

For example, if you have a £150,000 mortgage and £50,000 in savings, you’ll only pay interest on £100,000. This can significantly reduce your mortgage term while still allowing access to your savings when needed.

However, remember that you won’t earn interest on your savings, and offset mortgages may come with higher rates.

Rent out a room

Boost your income by renting out a spare room in your home. The UK Government’s Rent a Room scheme allows you to earn up to £7,500 tax-free each year. If you put this additional income toward paying off your mortgage, it could make a substantial difference. Just ensure you have permission from your mortgage lender and home insurance before renting out a room.

Set priorities and plan

Becoming mortgage free requires a clear financial plan. Some people choose to cut out luxuries like holidays or dining out to focus all their resources on paying off their mortgage. Others prefer a more balanced approach.

The key is to create a budget that aligns with your goals. Decide what sacrifices you’re willing to make and adjust your spending habits accordingly.

We’re Here to Help

Achieving mortgage freedom might feel like a distant dream, but with the right steps, it’s entirely possible. Our team of expert advisers are here to guide you every step of the way.

If you have any questions about how to become mortgage free, or if you’d like to explore your options, book an appointment with us online. We’re always happy to help!