Now that I have raised £15,000 and reduced my mortgage, I just want to quickly jot down the impact of what paying off a huge chunk has financially made. The results are pretty eye-opening; I hope it encourages some of you to start thinking about paying off your mortgage early.
Here’s some calculations displaying how much real money I saved by reducing my mortgage by £15,000.
|Before reducing mortgage by £15,000|
|Monthly mortgage payments||£965.13|
|Calculations|| 965 x 12 (months in a year) = 11,580|
11,580 x 25 (length of mortgage) = 289,500
|Total amount payable after 25 years (length of mortgage)||£290k approximately|
|After reducing mortgage by £15,000|
|Monthly mortgage payments||£871.12|
|Calculations|| 871 x 12 (months in a year) = 10,452|
10,452 x 25 (length of mortgage) = 261,300
|Total amount payable after 25 years (length of mortgage)||£260k approximately|
The figures are all approximates, and don’t take into consideration interest rate changes that may occur in the future, so I probably ended up saving myself more money (assuming that interest rates increase later on). However, by sticking to my current rate, I saved myself a minimum of 30k over a 25yr duration by reducing my mortgage by 15k. Not bad, aye?
You can also find out how much you could save by reducing your mortgage with the use of my Mortgage Calculator. If you are also thinking about reducing your mortgage earlier than planned, make sure you find out if there are penalities or extra charges for doing so. Some mortgage policies have extra charges for early lump sum payments (fortunately, mine didn’t).
Overall, I’m extremely happy with the outcome of this project. You can get a breakdown on how I raised the money here: I Raised £15,000 To Help Reduce My Mortgage