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Can Your Mortgage Be Paid Off Sooner? |
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Tuesday, 28 August 2007 |
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To pay off a mortgage sooner can potentially save thousands of pounds in interest payments. The sooner a mortgage is paid up the more money there is to be saved. Many people believe this is unrealistic and impractical. However with careful planning and sensible financial discipline this is within most mortgage owners possibilities.
Some mortgage products have current accounts that run along with the mortgage. Any monies within the account will have the effect of reducing the interest total paid, for example if an account has £10,000 in it and the mortgage outstanding is £50,000 that will have the effect for the amount of time the money stays within the account of reducing the mortgage owed to only £40,000. That is a 20% reduction in the total mortgage, if the money stays within the account for the term. But even if the money is totally or partially withdrawn it will have a reducing effect on the mortgage for every day it stays within the account. As interest is normally calculated daily. The mortgage debt may also be reduced with regular over payments to the monthly standard mortgage payments. Saving within a standard bank account will earn a low interest rate and incur tax at the customer's tax rate. But saving within a mortgage will in effect be equivalent to the current mortgage rate and not be subject to tax as a tax payer cannot be taxed on a debt. Wealth can be created by increasing what money is coming in or reducing overheads, most peoples largest over head is their mortgage. |
