- Personal Finance
How to pay off your mortgage early.
How to pay off a Mortgage early
Having a mortgage is a very big commitment that each of us have to take on in life to be able to have a roof over our head. Paying it off early rather than paying it until the term finishes can save a lot of money.
We were lucky to have been given a mortgage loan by one of the high street banks to buy our studio flat which we liked. It was a newly refurbished studio flat which we bought through a mortgage loan. After 8 months of renting, we moved into our new home. The amount we were paying the rent was like the same amount as our mortgage, that is why we thought of getting a mortgage rather than spend money on rent which we never get back. At least with a mortgage, we know that after a few years we will have a home that we can call our own home and paid for early.
How we paid off our first mortgage early
After we moved in to our own flat, we were really focused and made a decision to pay off our mortgage early. We did not want to be paying our mortgage when we are retired so we had to do something then.
Here are the steps we took to pay off our first mortgage early.
- We did not go on holiday abroad for a while. We just went on a weeks holiday here and there in England when using our annual leave or holidays. Or sometimes we will just have picnic on the beach as we live near the seafront during our days off to save money.
- I did some extra cleaning jobs and overtime to earn extra money to save for the mortgage.
- My husband did some temping jobs for an agency to supplement his full time income, too.
- We opened a separate joint bank account just for our mortgage bills and every month we put money into it to pay the mortgage.
- We lived within our means and saved as much as we could to be able to pay off our mortgage early.
- At some point, we had to change our jobs to get better income so we could pay off our mortgage early.
- After 10 years of working hard, we sold our flat and made a small profit to buy another place for us. We did not have to finish the 25 years which was the term for our mortgage. We were lucky to have sold our flat when the housing prices were going up.
It was important to us to be able to have our own home. From the sale of our studio flat, we bought another place which we knew we could afford a mortgage on. This time, it was a dilapidated detached bungalow which was the cheapest home we could find then. We said at the time, we could make it nice for us. My husband is a very good DIY man. He is good at doing things up like painting and decorating our home and I am good at cleaning up the mess. We bought a freehold home this time instead of a leasehold home. We learnt from our previous mortgage that the flat we bought was leasehold and that it was part of 22 flats in the building and when your property is leasehold, you will pay maintenance for all 22 flats as well which was another reason why we sold it. The maintenance and ground rent was going up every year and it can be costly.
How we paid off our second mortgage early.
We learnt from our first mortgage that we could also pay off our second mortgage if we work harder like we did in the past. So this is what we did. It was slightly different from last time. We thought we could do something different by working together as a couple.
1. Changed our jobs, we bought a newly opened newsagent shop(was opened 5 months by previous owner). We wanted to try being self-employed for a change. We both run the newsagent shop for a year but we found that it only brings income for one person. So I decided to find myself another job, and was lucky enough to get one as a supermarket checkout operator. The pay wasn't great but I enjoyed the job. I was only part-time but topped-up my wages in overtime, I also helped my husband in the shop when I was not working in the supermarket.
2. After 5 years, the shop's takings started to go down as one of the Post Office near us was moved to another location and most of our customers come from the Post Office. So we decided to sell the shop before we go bust. We haven't made a lot of profit but we made enough to keep us going while my husband had to find a job which he did find in no time.
3. We had taken an endowment policy with our first mortgage which we carried over with our new mortgage but because they wrote to us and said that it will not be enough to pay off our mortgage when it matures, we cashed it and used it to pay off some of the capital of our new mortgage.
4. We have two bedrooms in our home so we rented one of the rooms to get more income for our mortgage. It is not ideal sharing our home with strangers but we made sure we get reference for our tenants. We were lucky to have had good tenants except for one who did not pay his rent for three months but these are risks we had to take when having tenants.
5. Then after 10 years of hard work again we paid off our mortgage early. I must say, it was not easy trying to be economical in everything like food, clothes, shoes, holidays but it is pure joy when we paid off early our mortgage and enjoy the home we got now.