How to pay off your mortgage 10 years early and save 12 months salary in the process


Buying a new house can be daunting. For many of us, it’s the biggest investment we’ll have made in life so far.

While the thought of owning your own place is brilliant, equally the thought of being tied down to a hefty mortgage for 25 years can easily turn many people away. And with the house prices continually on the rise, there’s little wonder so many people are renting instead of buying.

But in a bid to help buyers – whether first-time or returning to the market – we’ve gathered together a handy guide on how to pay off your mortgage a whole TEN YEARS early.

So how does it work?

Before we go any further, it is worth adding that some lenders will actually give you a penalty for overpaying your mortgage – so it’s worth checking with your provider if that’s the case, or if there’s any limits to how much you can overpay.

If you do face a large penalty for overpaying, it may be worth considering reducing the term of your mortgage for a small fee. This essentially has you paying more monthly – which would be the same as overpaying a longer mortgage.

To give you a generic example, we’ve taken the average house price in Scotland – which as of January 2017 was sitting at £148,512. Now, when it comes to buying a house, you’re average buyer is likely to put down a 10% deposit – in this case leaving a mortgage of £133,660. So, in this case, if you set your overpayment to £290 each month, then you will have paid off your 25 year mortgage exactly ten years early. And not only that, but you’ll have saved £28,984 in interest alone – which is more than the average salary in Scotland in 2017.

Using the same system, but instead replacing it with the average house price in Glasgow , then it becomes even cheaper still. According to the UK House Price Index as of January 2018, the average property in Glasgow costs £127,725. Taking away the 10% deposit, that leaves you with a mortgage of around £115,000. In this case, paying off an extra £250 a month will see your mortgage paid off ten years early – with an interest saving of around £24,961. Paying off your mortgage early with overpayments could see huge savings in interest payments.

What about for a flat?

Naturally, buying a flat will be cheaper than a house. As of February 2018, the average price of a flat in Scotland was £104,335. Again, using a 10% deposit, then you’re faced with a £93,901 mortgage. Using this system, then paying an additional £205 extra will have the mortgage paid off early. You will also save just over £20,000 in interest payments.

Paying it off 5 years early?

So maybe you’re eager to pay off the mortgage early – but aren’t able to pay so much extra every month? Instead, you could look at trying to pay it off five years early – which will still result in interest savings. If we go back to the first example of the average house price in Scotland (£133,660 after deposit), then we can calculate how much to overpay to cut your term down by five years. You can save £14,512 in interest payments alone – just by paying an extra £105 a month, while at the same time reducing your mortgage term to 20 years from 25.

For more handy tips on cutting down your mortgage, speak to your mortgage advisor.


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