Benefits Of Paying Your Mortgage Off Early

01 Oct 2007

A mortgage is probably the biggest financial expenditure for the average person. A mortgage can be a lifetime commitment. That’s a real bitter pill to swallow- knowing you’ll be paying off a single debt for the majority of your life.

Have you ever thought what life would be like without having to make that monthly mortgage payment? Sounds nice, right? More importantly, ever stop to think about how much money you could be saving if you cleared your mortgage debt earlier than due?

The problem with a mortgage is the interest you pay on it. For example, imagine you purchased a property for 100k with a 100% mortgage on a 6% interest rate basis over a 25yr period. Do you know how much you’ll eventually end up paying for that property? £195,564. That’s almost double what the property is worth.

Interest rates, man, they’re a killer.

So, what’s the main benefit of paying off your mortgage early? Essentially, you can reduce the overall amount of interest you pay on your mortgage, consequently saving thousands of pounds.

Here’s a table showing how much money you could save if you pay off your mortgage early. The figures are taken from the same scenario used above- 100k mortgage on a 6% interest rate basis.

Period of Mortgage (years)	5	10	15	20	25
Monthly Payments (£)	1978.30	1132.23	858.02	726.53	651.88
Total Payment (£)	118,698	135,867	154,443	174,367	196,564

It’s more than likely that paying off a mortgage within 5 years isn’t realistic for the majority of people, but 15 years should be a realistic target we should all be striving for. Paying your mortgage off in 15yrs, as opposed to 25yrs will save you a staggering £42,121. Put it this way, pay an extra £200 a month, you’ll save yourself £42k. Now that’s got to be food for thought…

If you want to calculate how much you could save on your specific mortgage, you can use my Mortgage Calculator.

Now what do you guys think about that?

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