Chance to reduce your debt (General Comments)

Member Name: sympatic

Product:	General Comments
Date:	11/03/09 (116 review reads)
Rating:

Advantages: Why pay interest for longer

Disadvantages: Money is tied up

We have recently been looking at ways that we can pay off our mortgage more quickly as we want to be debt free as soon as possible, this would then open up opportunities to either make changes to our lives or to look at other investment opportunities like buying a rental property with another mortgage.

Fortunately the most sensible thing that we did was eighteen months ago when we remortgaged our property switching the loan to a different provider and opting for a tracker mortgage, although we had some fees to pay at the time this has meant that as the interest rates have been reduced each month almost by the Bank of England we have seen our mortgage paymments reduce substantially, initially we took the spare money and replaced the money we spent on the remortgage and to be honest the rest we probably wasted however a few months ago we had a re-think.

First we used the spare cash to clear an unsecured loan as this rate was a lot higher than our mortage rate, then with the money we saved on our loan payments plus the amunt our mortgage had fallen by we put the money aside into a monthly interest account and whe the balance reaches £2,000 we paid a lump sum off our mortgage. This also meant our mortgage payments dropped by a little bit more, we have since made another repayment and are half way towards another, this is great as we can see the balance reducing and in effect we will ultimately pay the loan off quicker.

One word of advice though do check that there are no charges for making a repayment on your loan otherwise the mortgage company could charge you. Also do remember that once you put the money into your mortgage the money is tied up in the house.

Summary: Paying your mortgage off