HOW TO PAY OFF MORTGAGE EARLY UK


Hi Everyone – Welcome back to my channel
my name is Jennifer from Mamafurfur You know it’s the home of smart saving, smarter
spending, smart living strategies – Today I want to talk to you about how to pay off
your mortgage early particularly if in the UK – if you’ve done a Google and
our youtube search recently there’s a lot of videos for the US and I’ll
explain why that they are not so good if you live in the UK a couple of
differences but if you’re interesting paying it more be sure to stay tuned and
if you do not currently have a mortgage do not worry – these same principles can
be applied to any lone whether it be student debt or whether
paying credit cards it’s the same philosophy but obviously this is
particularly if your interest in paying off your mortgage early it’s one of the
steps to being financially free. If you’re interested and this channel is
all about giving you financial and tame freedom I’m doing it for my own family
we’re creating a life that we love and want to help inspire others to so if
that is saying something that you want to be involved in hit subscribe so you
never miss any of my videos. So let’s talk about how to pay off your mortgage
annually and this is particularly key in the UK if you’re watching from somewhere
else in the world like the US or Australia you have a couple more choices
available to you which is actually quite exciting then the UK we do and have as
much flexibility so I’ll talk you through the options particularly for the
UK so let me tell you just a bit how a mortgage on a large loan is structured
from the bank you obviously borrow a set amount let’s say for our mortgage it
could be one hundred fifty thousand pounds they also charge you an interest
rate for borrowing that money so for example they are charging you a fee for
lending you that money upfront of course and that’s usually percentage rate and
it’s given as an average percentage over the lifespan of that Loan. so with the
loan as well you will find as there’s one word that describes most loans and it’s
called Amortization so let me just go over what is Amortization and I’ve got
my whiteboard because you know I love my white board. So Amortization is basically
three three parts to every can a big loan that you take from the bank it is
you have the principal which is basically the physical loan amount so if
it’s a hundred and fifty days you borrow from the bank the principle
is that hundred and fifty think those are things that you’re paying back to
the bank then you have that interest component which is obviously our huge
amount of money that they are charging as a percentage normally for having that
money all right a certain time fee to tame being the actual third component
here so in the UK of course we can have mortgages I believe up to 13 years
perhaps even 35 and you can have it as short as you like so this is per margin
potato same principles applying for a loan of course but those are the three
components and of course a tame you can actually fix when you take out the
lonely ticker at that mortgage you agree to say number of years to pay off now
the reason we brought her amortization was because people when they’re buying
properties are buying investments what they would do is the bank would only
lend them that money for a small amount of time like five years like 10 years at
the most and what happened was your monthly payment to repay the bank with
that interest was a huge amount people could not pay and what happens when
people can’t pay a mortgage our Lord it defaults which basically means that you
have no way to pay that back you refuse to pay you go bankrupt and the bank
loses our way to get that money back so they decided they wanted a way for
people to get these loans over a longer period of time but with the bank’s also
making sure they got that interest before you default it tends to be that a
longer you have a loan there’s two things that usually happen
Gavin long let’s say for 30 years which is probably about the average in the UK
25 30 years now a lot of people will pay off a loan or mortgage early because
towards your maybe 50 60 year old they will be able to cry a little bit more
savings and they tend to throw and clear off the mortgage so the buyer wants a
way to make sure they got all that interest all that value back from you as
quickly as possible and this is where amortization comes in so you may not
actually realize this everyone sometimes things that are long as you pay a fixed
amount see it’s gonna be a fixpoint every month
for the next 10 years 20 years whatever they think that they’re paying the set
amount of interest as a little part every month it doesn’t happen that we
because the banks are smart they know that you may actually pay off that loan
early or you may even start the default so this is what happens it’s actually
something like this graph where the ratio of the amount of interest European
to the actual amount European off the principal at the moment you’re actually
physically pink dome of the amount of money that you borrowed from the bank so
you don’t realize on what people don’t realize that roughly 90 percent of your
payments at the start are purely interest covering for the bank 10
percent usually goes to the principal and what happens is over the lifetime of
your mortgage or lauren that starts to sweat rain so it goes from paying with
the principle off and the lace of the entries so eventually of course you’ll
be paying pretty much all the principal down and just a lot of like moment trees
if you’ve ever actually gone up to your mortgage account perhaps it’s at the
bank you can go and actually see the interest payment getting smaller and
smaller every single month that is why they sent up this me so that they get
all their money all the profit there you want to rate at the start and then you
start to actually pay off the lawn so it’s a frightening thing to think that
happens without you realizing it but we can use this to our advantage what you
really want to do and if you want to pay off your mortgage early is really attack
this principle more than the bank wants you to so that actually means safety out
regular over payments so we’re going to talk to you today about actually how to
do that and how to pay off your mortgage early so the first way to actually pay
off that mortgage early or that one is to use my 10% rule on this channel with
mentioned a prepayment before I personally our family had 22,000 pounds
worth of dates just a couple years ago and my husband brought it from a
previous relationship and we attacked at date and this is the principle that I
use we’ve basically every month committed to paying 10% more than the
minimum and that’s where you actually eat into that principle because you’re
not just getting the bank what they want you’re beating them at their own game
and the great thing is that 10% so let’s see your mortgage payment could be six
hundred pounds a month if you I actually added another 10% on to meet it 660
pounds you’d over the course of a year actually be giving them over one extra
payment a year that little bit extra which hopefully would entreat the bank
for you and your personally with the excuse the pun that little bit extra
then can take a twenty five year mortgage down to twenty two years
without one simple action paying 10 percent more or if you can even stretch
it further and further but without limits in life that is a great place to
start so that 10 percent real is super super
easy to say top if you have a mortgage with your bank of course you can just go
to speak to them set up a 10% extra over payment every month let’s it go an
autopilot knowing that you are overpaying on that principle and if you
go to a particular website money-saving expert you will actually find in the UK
there’s a great calculator there I’ll leave the link in the description bar
where you can see the difference that paying that extra money consistently
will make on your mortgage or Lord it is truly inspiring so the second way that
you can make sure you can pay off your mortgage early is to use those
fixed-rate mortgages wherever you can in the UK when we take care of 25 30 year
loan or mortgage we also have the option to tie down parts of it for a fixed rate
so if you do not have a fixed-rate mortgage what will happen is your
mortgage will be subject to the standard interest rate at that particular month
now in a bank that could actually go up everyone consistently it could go down
which means your payment changes according to the entry
the Bank of England now it’s not very green if you’re budgeting and you’re
trying to stick to a strict lifestyle of knowing exactly what’s coming in what’s
going out and where you like to put all you’d ever Dean’s of money when you’d
see to the bank I’d like to fix my terms for let’s see two years for three years
they trying to get you the best deal and normally you can maybe even lock it down
at the moment probably 2.1 percent 2.5 percent for two years the longer the
length of time that you want to walk down your payments for for a set period
of time the interest rate will go up and the
moment you can even get 10 years I hope your mortgage is locked down I think for
our around with 3 or 4 percent interest I’m particularly light when I can get a
fixed-rate because I know how much my payments are you’re also not subjected
to the standard rate which camellia any point go up down whichever way the Bank
of England state but also allows you to make those Albrecht payments so the bank
do want you to take out those fixed rates so that they guarantee their money
but they also know that you’re locked in for a certain period of time so just be
aware that sometimes they will have restrictions like you can only meet 10%
extra all repayments in a year so if your lawn has 150,000 left you’re only
allowed to make 15,000 extra and overpayments be sure that you know the
terms and conditions when you sign up for the fixed period of time the fix
tree so that you do not make any extra overpayments and get penalized for it so
their third way to pay off your mortgage early of course is similar to the 10%
rule when you receive perhaps a bonus from work or perhaps your say business
is generating a little bit of money consider if it’s worth putting that
extra money into your mortgage it will after all be eating down with principle
the physical horn that you took from the bank which is great because you’re not
thinking or entrance you’re going to save yourself interest payments but
really consider if it’s worth throwing it into the mortgage I like to use the
money saving expert calculator that I’ve talked both as well in a stable
principle but I can’t see how much interest I’ll save by putting the 10%
rule onto my mortgage when I see it if I maybe had a bonus mat month I like to
see how much I could actually save off my interest payment and shorten my
mortgage if I threw it in there so it’s really quite inspiring every time
you seem a little lump sum making sure that you’re putting it in the right
place for your needs if your goal is to be mortgage free make sure you’re
focusing on any spare money going into that mortgage if you want in basement
perhaps use it there my next tip of course is to shop around whenever you’re
not in a fixed rate and tank period of your mortgage and the yuki i’ve talked
about that we can save up although we have a 30-year mortgage
we’ve saved up maybe four to three five years to put into effect stream when you
get close to coming out of that fixed-rate time periods maybe two or
three months towards the end the world is your oyster you can actually shop
around and it’s not that difficult to switch your mortgage to another bank
usually they’ll be maybe small fees to switch but if the interest rate is a
huge difference and it can make such a difference on your mortgage payment and
a total and mainly you actually pay back take time to shop around use
money-saving expert use any comparison sites you can because you never know you
could save yourself money make sure of course that you are very good looking at
your budget if you’re struggling make notes and make up that 10% of our
payment or to put extra money into your mortgage to eat down that principle I
have devised the 7d autopilot money challenge it’s a free challenge that’s
on my blog I’ll leave the link below and it basically teaches you to look for
ideas and your current spending habits well you could use money a bit smarter
it means looking at what actually you’re spending every single month are you
really getting value from what you’re spending as you maybe leads to generate
more money in your life have you thought that embracing have you thought about
creating a little safe business if you’re interested in seeing how I could
help you meet your budget smarter I never ask you to scream conceive I
only ask you to use your hard-earned money as best as you can go to mama for
AFRICOM and take that challenge my final tip on how to pay off your mortgage
jelly’s of course starting all your numbers don’t be frightened of the maths
and bolt it’s very easy to actually go onto your lien vent banking and see your
mortgage see actually break it down into what you’re actually paying every month
how much interest your pink where it’s all going
don’t be scared to know exactly how much you could see by making over payments
and particularly to go and see how much mortgages dropped by every month the
interest rate and how much our interest payment has dropped by and then I like
to use that comparison tool money-saving expert but if I get inspired and thinks
you know what I might even try to put C&H or 10 pounds consistently every
month what would that do for a mortgage every time that you play around with the
numbers get a bit more money olestra you will absolutely have the power of back
in your court rather than in the banks so unless a nice little section I want
to teach you our principle that if you’re able to get a large amount of
money saved up – throughout your mortgage how you can pay off your
mortgage super quickly perhaps even five six seven years now if you were to do a
Google search on youtube search right now for the fees going to pay off your
mortgage early it will be filled with a lot of us-based videos that the
information does not really apply to the UK reason being when I was doing my
research for this video and in my own life the US are able to use a credit
card to pay off their mortgage if they wish in the UK we do not have that
option as far as I’m aware I formed a couple of banks but one body would not
take a credit card payment and a couple the other ones that I’ve tried the
reason behind that is if you think about it you’ve probably got that card from
them already so they have land lent you a certain amount of money let’s say
10,000 pounds credit limit they do not want you to use that money against them
to pay off that bigger day they’re gonna lose interest payments from you so they
will not allow it so as it really you know within their terms well in their
knives it’s their money that they have given you that created nought for that
template upon credit card so they can do what they want in the u.s. they do not
have those restrictions they can use a credit card so this is why this
particular version using amortization and throwing ones that your mortgage
works for them to get rid of they’re more of you super quickly
if you have developed strategies that allowing you to have saved businesses
and that you have a good solid large amount of cash flow in your house think
about using this strategy and you’ll get rid of your mortgage super quickly as
well managing your amortization when we talked about it was the basic fact that
you at the start of a mortgage will be paying off a huge amount of interest 90
percent of your payment all the interest 10% will be the
physical principle the actual Borden part that switches as we get longer into
the mortgage in the u.s. what they often seem to actually pay off their mortgage
early is to use that credit card that Lane up credit to credit and funds to
you that you don’t already have in your purse right now use it to advantage and
pay off your mortgage F for example every time you maxed out your credit
card against your mortgage so you fund the bank
you said right put down a thousand pounds or name and a half those and
prints at my team phase and creat limit against my mortgage and then what you do
is you may then use your what monthly wage to pay off the credit card now I
know what you’re thinking credit cards are usually 20% interest rate charges
this only has a 2% Jennifer yes but the total physical amount of money you
actually give the bank back on that 20% is far smaller than you pay them for the
mortgage so that’s why people say to use it that because of physical all of the
interest rates are vastly different it’s the physical money that could be
different that card may only have a minimum payment of 90 pounds whereas you
are paying 600 pounds or 500 pounds an interest on that every single month so
well they will see it as as soon as you can through a money a big lump sum and
what will happen is this will start to go down then use the next let’s see if
you need 6 wages to click on that card take that time meet your normal minimum
payments in your mortgage and your credit cards and through your money in
the credit card to clean it then as soon as you get that limit down to 0 again do
the same again through a money otter and do the same and basically that’s how
within such a short period of time because you’re throwing money and you
must make sure that the bank knew that you want off the principal not the end
trace when you say it not up because you’re reducing the physical amount of
law and that’s why in theory let’s see if you were able to do 10,000 panes and
150,000 lon even every six months or so you would quickly see that in under
maybe seven years you could have paid off that mortgage mortgage completely
which is incredible and fortunately it doesn’t work in the UK with credit cards
so we actually physically need to have that 10,000 paints saved up so that
could be a goal for you you know you could make a commitment that you’re
gonna every time you work towards savings in your bank that is sent only
be committing on investments or putting it towards a family quality you’re going
to like for the next five years through all money at your mortgage then it is
totally possible to use the bank against themselves and through an anthem I
personally I would rather do a couple of different methods I’ve talked about here
and it’s just a shame that the u.s. they aren’t always like the different methods
that we can get there a little bit quicker but it’s the only method that
works by throwing junk songs out it use money saving expect to find out how much
you could save but always remember there might be some
penalties involved in paying off unborn early thanks so much for watching today
of course all the principles I talked about the 10% overpayment show up in
your road you know even see if you can throw money out as best you can using
the tools online to see how much money you would actually seem interest rate
you receive bipinnate rewards of cash after make sure you apply all of this
when you’re dealing with the mortgage are actually any loan at all whether it
be a student loan credit card day anything of that really take time to see
if you could apply these in your own life and I say I absolutely apply the
10% rule to our own date which is our mortgage at the moment it works for us
anytime we get a lump sum I came to st. if I’m based or put into the mortgage I
based it on the current situation on that time take that time to get as much
financial knowledge as you can it truly will change your life when you are
smarter than the bank be sure to hit subscribe leave me a comment are you
gonna use some of these tips and tricks in your own life are you maybe saving
out for your first home and no you know I’ll wait to pay off that mortgage early
let me know in the comments I’d love to hear from you and I’ll see you very soon

100 thoughts on “HOW TO PAY OFF MORTGAGE EARLY UK

  • I usually save up in an isa & release it towards my mortgage before remortgaging with another lender (a bit like the American model)

    Just wanted your views on whether I should consider the 10% instead?

    Thank you for the video xx

  • Good tips if you make the decision to make overpayments, but also consider a side pocket strategy where you direct overpayments into an investment account which should yield an annualised return of 7-8% with compound interest rather than overpayments which is the equivalent of simple or straight interest. This is really an opportunity cost decision between the two and a personal choice. With rates at such low levels I personally don’t think overpayments make sense (at least mathematically speaking) as the returns from investments should be significantly better, but people can obviously take great comfort talking their mortgage

  • What would your advice be with overpayment each month versus putting that overpayment amount in a savings account and then after you have 10k or 20k paying off a big chunk in one go? I'm currently toying with which is the best method for me as I'm on a five year fixed mortgage with four more years to go. So I'm unsure whether to overpay (not going over the 10% restriction of course) or saving that money and paying off a big amount after the fixed term ends. So glad I found your channel BTW! I too found so many US related videos but very few UK ones x

  • Thanks for this, great advice. I have just finished my first 2yr on my fixed rate mortgage and now have a new deal with the same lender at £140 per month cheaper. Now on another 2 year fixed rate. The only catch was that there was a fee of £900 which was added to my mortgage.
    How can i avoid this in the future or is this normal.
    Any advice would be appreciated.

  • Another great video! Could you do a video on paying off debts from cards if you have any advice for us. Keep up the good work

  • So I've watched two of your videos….I have now doubled my mortgage payments and put my savings into a fund with vanguard! Thank you!

  • Hi I just had to message you and let you know that your brilliant video gave me a kick up the backside to do what I did. Today I rang my mortgage company and set up to over pay an extra £150 a mth. This has brought my mortgage from 18 years to 12. Which blew me away. I am also planning on paying lump sums if and when I can. Again if it wasn’t for this very informative video I wouldn’t have done it. Thanks again. Louis

  • I absolutely love the overpayment calculator. I found the tool few months back and started overpaying my first mortage I took up this year. It is morivating and helpful.

  • Thanks for these videos! They have been really helpful, it's fantastic to hear it from a UK point of view and the way you explain is really simple to understand. I'm curious though, what would you recommend if you have extra cash, would you put it into adding additional funds to an Investment ISA or repay the mortgage earlier?

  • Hi – great video. So what if you have (in my case) 2 rental properties as well as your main home with a mortgage. Which one would you look to pay off first?Also my rental ones are on repayment, should they stay on repayment or revert to interest only?

  • I have a mortgage and I have to thank you .I am now paying an extra 100 pound per month morgage is 53000 pound thank you for the advice steve

  • Mamafurfur is it better to do a overpayment of 5000 off mortgage or overpayment 500 each month over 10 months please thanks for your help

  • Mamafurfur thanks for your help i was thinking of investing about 100 pound per month your vanguard strategy looks good I thought about a index tracker .But after watching some of you great videos im probably leaning towards vanguard investment thanks

  • Thanks for this Jennifer, really informative stuff. I'm six months into a 36 years mortgage (necessarily long due to low salary at the time) and immediately started overpaying by £100 a month. MSE calculator informs me that this should reduce my term to 22 years, based on my current interest rate (2.59%) which I know will rise at some point.

    I panicked a bit when you said we have to instruct the bank is deducting the over-payments ff the principle. I thought that was automatic and didn't realise they could use it for the interest?! I will go to my lender and make sure.

    One more point: when you suggested to pay off lump sums with work bonuses etc. is that worth it, considering the bank will punish us for doing that? If I pay off, say, 2k lump sum, the penalty they hit me with will cancel out the interest I saved on?

    Thanks!

  • Great video thanks very much !! One thing for thought… Would we be able to use 'Planned Overdrafts' for the lump sum payments? Just say £1-3K every 6 months. The overdrafts having the 'simple interest rate' aka on the daily balance. (which is better than a credit card). If we get our wages paid into that account we probably have MUCH less interest to pay. Yes, as our monthly expenses go out we will be back in the overdraft by the end of the month but then if we 'save' an x amount every month we can pay back the overdraft over a 6mo period. My logic is that we pay extra interest on the overdraft BUT by putting in a bigger chunk into the mortgage every 6 months we are saving a lot more interest on the mortgage. Thus, the net effect is positive. Let me know if my logic is incorrect.

  • Great vid but Cant u transfer funds from your funds from your credit card (from another bank lender) and put in your current account. then pay the lump sum that way, to avoid your bank from initially declining you request to pay funds straight from your credit card to your mortgage??

  • My two year fixed rate is up in November 2019 and I will have a balance of £120,000 and I estimate my property to be valued at around £170,000. I would like to reduce the mortgage term to 15yrs. I'm a single person in my 30s earning around £46,000pa with shift allowances etc. Do you think the lenders would be willing to offer a 15 yr term? It's currently a 30yr term. Thanks

  • Why not get a 0% purchase credit card. Then when you get your monthly wages pay a huge amount of that cash as a lump to your mortgage. Then use the 0% credit card for living expenses for that month so the two balance out. Thereby indirectly transferring money at 0% off your card to the principal of mortgage. This strategy would work wouldn’t it ?

  • Hi, thanks for the video. Just a thought, as some credit card companies do a balance transfer into your account, will that be useful to offset part of the mortgage? Assuming this should be the scenario here in the UK mimicking the US ccard loan.

  • Hi there, great content. Just wanted to ask do I have to ask the bank specifically to pay either overpayments and/or a lump sum off the principle to ensure it doesn't come off the interest or do I have no choice what the bank do with my overpayments? I'm in the UK, England specifically.

  • Love your common sense and truthful advice. Unlike the BS H.E.L.O.C (not a UK financial product) advice from America on YouTube which probably get you into more debt.

    On a fixed term mortgage and has been paying off extra each month towards the mortgage the last few years. Now the interest is now way lowered.

    Going to continue this method plus a yearly extra one off payment. Hoping to pay off what's left of a 15 years mortgage in 5 years time.

  • Hi. I’ve started watching your videos. They are very good and clear to understand.
    But, you need to invest in some acoustic tiles in your room : )
    Very loud echo.

  • Okay, so every year I aim to pay 10% off my mortgage balance. The bank told me I can’t reduce the term. So do I ask them to put it towards the principal? My interest payment has reduced by about £50+ per month over the years. If I pay over £1000 they reduce my payment automatically so I’m not doing that anymore as that way I can squeeze a little extra principle in my mortgage. I bank with NatWest btw! Thanks for great video x

  • Hi Jennifer, ithank you again video I watched a few times 🙂 I also found that when you make a one of overpayment, using the overpayment calculator you mention it shows time repayed early. I am making £1000 overpayment this month due to loads of overtime at work, and it amazed me that that translated to 5 months of the mortage total time!

  • Can you help me clear the air please. Is it same; making overpayment of £100 a month each month and 4 x £25 overpayment each week?

    Thanks in advance love

  • Hi Jenifer, can you help me explain this please. I have mortgage of £130,000 for 30 yrs with monthly payment of £400. I pay £600 (additional £200)each month towards repayment. My 2yr fix rate ends in May 2019. I can switch deal with the same lender.
    Because I made the extra payment each month .my new mortgage term will be 23yrs(decreasing by 5years) and monthly repayment £500. I still want to keep paying £600(extra £100 each month towards my capital)Will I be better off paying 1 payment of £600 each month or £500 as a normal and 4 weekly payment of £25.
    Which one will reduce my mortgage quick?

  • Great informative video 🙂

    Me and my girlfriend are 21 and using lifetime isas to save a deposit and so far have £25000 invested in them between us, we are debating if it’s better to keep saving to have a larger deposit or to stop investing so heavily into these accounts and focus that cash flow into our Sipp’s and regular stocks and shares isas for future living expenses. As if we focus more into the stock isas we can use chunks of that to pay off our mortgage early using your example at the end of the video.
    We currently have roughly £1500 per month to invest.

    Would appreciate your thoughts if you have any 🙂

  • As a UK youtuber, its so great to see another channel that discusses paying off the mortgage. Thanks – subscribed!

  • Would it be worth getting cash 💰 advances from the credit card, even though they card you a bit more for it ?

  • I am pretty much throwing all my income at my mortgage trying to get it down and paid in 5-7 years. My question is this and hopefully you could do a video comparing…

    1. Concentrate on paying the mortgage off then investing.

    2. Invest half of what you can overpay on the mortgage and the other half on investments.

    3. Invest first to get enough income to pay the mortgage inc bills and then overpay the mortgage

    I don’t know whats best to do.

    My age – 30

  • Fantastic UK-centric video!

    I currently have a 25 year mortgage with Barclays and my 2 year fixed rate will come to an end in September. When would be a good time to start looking into remortgaging before my fixed rate comes to an end? I like the idea of fixed payments instead of variable and would be looking for a 5 year or longer fixed term.

    I'm allowed to make over-payments on my mortgage up to 10% each year (something I haven't taken advantage of yet). Interesting info about 90% or so of your mortgage initially going towards interest payments. It defiantly makes sense putting any spare cash towards the mortgage.

    All of the US videos mention that you must inform your lender that any over-payments to be made should be put on the Principal and not the Interest.

    Is this something UK banks allow you to do? I was always under the impression that there was no way of separating the principal from the interest in the UK. To me, just the very term "pay off the principal" sounds very American 🙂

    I thought I'd ask here before calling my bank and sounding like an idiot! lol!

    Regards,

    Mo.

  • We used to be able to apply for a Virgin One account. Similar to HELOC in the US. Unfortunately we can't get something like that in the UK. We could however apply this method using a 0% fee over draft. The your wages top your account up to zero after a few months. Then repeat.

  • Do i have to tell the Mortgage Company/Bank that i am making over payments or just had the 10% on and say nothing? Thank you for your great videos and info.

  • Im paying lump sums and overpaying every month. This mortgage feels like a ball and chain around my neck i cannot wait to get it paid off!

  • There is potentially a way that you could use credit cards to overpay mortgages that may work out cheaper in the UK. You can get specialist money transfer credit cards on promotional offers, or even money transfer promotions periodically from an existing credit. This essentially is just having money transferred from your credit limit to your current account, which you could then use towards your mortgage as a lump sum capital repayment. The credit cards typically charge an upfront fee for doing a money transfer (around 4%) but this could be worthwhile depending on how long an interest free period you could potentially get on the transferred amount.

    Whether or not this is a worthwhile method, or even possible, will differ for everyone but I thought it was worth adding. Good video though from a UK perspective.

  • As a mortgage broker myself I have some advice.
    1) put your money into a ISA which is freely accessible. You can then choose to over pay or not to. You will also save money by making sure you have a £5k buffer in life in case of emergencies, job losses, losing a loved one or needing a new car etc. Always best to avoid high interest rates which normally happen when you have emergencies.
    2) set up an annual reminder and phone the bank to discuss whether that year you want to make a 10% over payment that year or not.
    3) look at offset mortgages which are amazing.
    4) always remortgage especially if your property increase in value. You will unlock better interest rates at 95%, 90%, 85%, 80% etc until you reach around 50%. The lower the LTV. The better the interest rate. This is also why over payments in the beginning are so good.
    4) flexibility. Get a 35 year mortgage BUT make 10% overpayments. You can have your cash flow and the ability to over pay too. Obviously work on what works best for you but I think this works well as long as you make sure you make overpayments every year.
    5) 5 year fixes are good too. Especially when rates are low. It’s worth protecting your mortgage if you rates may shoot up. 2 year fixes often require a £995 or £1995 fee so make sure you calculate in the arrangement fee to your calculations.
    6) improve your properties they are assets. After a refurbishment you can remortgage typically after 6 months (if newly purchased). You can choose products without any early repayment charges to really reap the benefit of this product. So you begin with a normal mortgage with no ERC’s then do minor decorative to the property. Then remortgage after 6 months. You bought your property for £200,000 with a £150,000 mortgage which is 75%. The property is now worth £230,000. Your loan to value is now closer to 65% hence unlocking a better interest rate than at 75%.

  • I have 137500 interest only mortgage left with ten years left. On uk average wage. Any ideas what i can do so i dont lose the roof over my head at the end of the term.

  • By not getting one in the first place! Don't buy into the illuminati debt system. Live in a tent if you have to.

  • Hello I’ve just stumbled across this video and would like to ask a question! I bought my first house 8 years ago and each time I’ve remortgaged I’ve knocked a few years off my mortgage and I’ve got about 12 years to pay now with 1 year left on my fixed term. In 12 months time I’ll have enough money to pay the balance off my mortgage. Would you advise paying it off if you can afford to do so? I’ve heard different schools of thought on this and that you shouldn’t pay your mortgage off completely as you could ruin your credit score and just wanted to know what your view would be on this 😊 xx

  • Whilst I appreciate you might have had the best of intentions, it was slightly irresponsible to forget to remind viewers that the T&Cs of every mortgage is different. The concept of a “flexible” mortgage (meaning the interest owed is recalculated daily) is relatively new in the UK. A significant percentage of mortgage products have a cap on overpayments.

    What this would mean for the uninitiated is that the overpayment amount would indeed be credited to their mortgage account but the interest charges (over the percentage cap) would not be reduced accordingly.

    To make matters worse, there will be a small percentage of mortgage customers out there who’s T&Cs predate the time when the Australian “flexible” mortgage concept came to the UK. They would really get caught out following your advice because the overpayment would have no affect whatsoever until the end of the financial year. They would be better off keeping the overpayment amount in a savings account.

    The right thing for you to do from a moral standpoint is to delete this video and upload a new one with the appropriate words of caution because looking at the comments already posted a lot of people have already acted on your incomplete advice.

  • She really ought to talk about Offset Mortgages as an option. This is an option where the amount you hold in savings offsets the interest you pay on the principal. Let's say you've borrowed £100k and have £10k in savings, you will only pay interest on £90k.

  • I had a fixed rate Mortage when the interest went up to 14% back in the late 80s I think it was. I saw many people lose their homes when the rate went up so much. I think it went up from 7% to 14% which broke so many people but I was sitting safe. People thought I was stupid going for a fix rate for so long as at the time my fix rate meant I was paying a higher rate but paying a little more back then saved me from the 14% rate that broke so many people back then and also would have done me.

  • I can not see why you said about using a credit card to pay off the Mortage as surly the credit card interest is way more than the interest on a Mortgage.

  • Great video. I'm about to take out my first mortgage and looking to get a 2 year fixed rate deal with the option to overpay 10%. I'm looking to remortgage after the 2 year period is up. If I were to save a decent lump sum during the first 2 years, would there by any potential drawback of using these savings to gain more equity in the house before going into my next agreement? Is this an easy thing to do?

  • Quite basic Jen, they teach this in high school at O level. You seem to tech it like it’s Advance Engineering Mathematics. Shouldn’t you be putting your Masters in Engineering to better work ?

  • Or you can do this the easy way.

    Step 1 : Collect paycheck
    Step 2 : Before paying ANY bills, pay YOURSELF atleast 10 % of your salary
    Step 3 : See how much is left, and pay your bills
    Step 4 : Whatever is left now, is free to spend any way you see fit (this is your current life money)
    Step 5 : INVEST YOUR 10 % ( invest in either real estate, or index funds ) Even in shitty times you should be able to pull like 5 % growth over a 10 to 15 year span.

    This is MORE then the interest your bank will give you, but it should also be MORE then the interest on your mortgage.
    So it is smarter to invest then it is to pay off your mortgage.
    When interest has acumulated to a substantial enough amount, THEN pay off your mortgage.

    The principle here is stupid easy. Make your money work FOR you, instead of doing it yourself.

  • Good one. Also, if you are about to exceed 10% addtional payment per year, you can also topup howmuch ever you want between mortgage or rate switch with no penalties. I generally have two years fixed around 1.5% APR and top up mortgage every two years, you can clear off your mortgage even quicker!

  • I was wondering about how a typical mortgage structure would affect switching. So if the start of a mortgage is 90% interest and only 10% principle, does that reset everytime you switch provider? So your basically always paying majority interest? In that case would the lower fixed period rate be negated by the fact that your interest vs principle never crosses over? I'm coming to the end of a fixed period on my first mortgage and found your vid very helpful, but just trying to take everything into account. Thanks 😊

  • I was wondering when u pay of 9.5k from a loan payment of 10k say, then you would use your wages to clear that loan or credit card off say over 6 months, you would still have to pay your mortgage every month too, even though you have reduced the capital u haven't stopped your monthly repayment mortgage altogether. So wouldn't you end up with a 10k credit which u have used to reduce the capital of say 200k to 190k, but now u have to pay the loan 10k back plus the normal mortgage. Am I right?

  • Thanks for this vid
    Im gonna go get my mortgage papers and have a read
    Im in a fixed rate for 5 years and am already paying 10% but want to add lump sums and not sure is the penalisation is anything to worry about

  • I actually managed to get a 40 year mortgage with nationwide. 2 year fixed period and obviously I don't plan on having it anything like that long, but its made my monthly payments so small that I should be able to pay it off in a few years. id guess you need to be quite young to get one. I was 26

  • I did this for years, also every time I remortgaged, say when I had 19 years left I took out the new mortgage over 17 years and so on. I'm due to be mortgage free in Feb 2021.

  • It might be worthwhile to spend money in a Big and nice whiteboard given than you have paid off your Mortgage rather then buying a tiny one off the Pound shop!

  • Can I pay 10% extra monthly and pay a big chunk of 10% in 1 big payment at the end of the year

  • Hi Jen, you mentioned that you take off 10% off the mortgage term if you pay 10% extra each month. Does it increase exponentially if say I pay 20% extra each month, would say 21% be taken off the term. Can be quite motivating if there are increasing returns to scale. 🙂

  • Good video!

    I'm self employed and with a cash business I pay 10% of the overall balance each year using 0% money transfer offers on a credit card then just use cash to pay off the balance. This reduces the mortgage massively and means I'll be mortgage free in under 10 years.

  • Hey , Thank you fo r the videos :)) .I have a question, I have been using the 10% rule and now I'm up for a remortgage at a 60% ltv. I need to now decide if I want a 5 yr fixed where the rates are slightly higher than 2 yr fixed . My question is , you mentioned upto 50% ltv the rates are the best , so if I go for 2 yr fixed now , in 2 yrs time I will be below the 50% ltv where rates may not be as good when I remortgage again . So do I rather go for the 5 yr fixed now instead ? .Many Thanks .

  • So just to clarify. This method will work even if I am on a fixed mortgage. So long as i am not charged for paying back more than needed

  • Thanks for the tips, I found your video really motivating and have set up a 10% regularl overpayment today!

  • Me and my wife have overpaid from the very first month of starting the mortgage, that was 10 years ago, and we are still overpaying £300 pounds a month. We now only 4 years left and probably saved a lot of interest. Once the mortgage is paid What do you think we should do with the money we save from paying the mortgage? We should be free by 46/47.

  • I was in my Building Society Branch Managers office for 3 hours, where he suggested various types of mortgage.
    I stuck to my guns and said I wanted a 10 year Fixed Rate mortgage, which had an interest rate of just under 4%.
    From the first month of making payments to them, I have made the maximum overpayment possible each month and the mortgage will be paid off in 5 YEARS, instead of 10, Plus, I'll be saving £5,000 (which would have been Interest that the building society would have gained from me over the 10 years)!

  • This video is fantastic. I've been watching Dave Ramsey in US for about a year and have learnt alot but like you say the UK is different.

    Here's my story, maybe you have some advice?

    I purchased my home Apr 17 for £146,000 with a £45,000 deposit age 26. I renovated it myself with a spend of £13,000 and now it's worth around £190,000. My mortgage repayments are £397 but at the time I was earning around £21,000, now I'm on £31,000. My outgoing a month are around £600 bills (excluding mortgage). I have no other debt. I have no car debt. I have around £5000 as an emergency fund. My question is, how can I maximise my mortgage payments to get it paid off quickly? Thanks!

  • In process of downsizing to facilitate my future financial freedom. I was aiming to be mortgage free by the time my kids leave school in 7 years Instead, I have applied for a 27 year mortgage, fixed for 5 years at 1.2% (with intent to overpay) and plan to invest some of my equity.
    I now have the option to clear my mortgage as planned by overpaying, a financial strategy to plug the hole in my pension, and the release from worry about being committed to a stretching mortgage payment if life doesn’t go as planned.
    Regarding the comments about seeking the advice of a REAL financial advisor – I have bought 7 properties so far in my life and always used FAs yet I have found ideas and advice on your channel that are completely new to me and I cannot thank you enough. I now have an excellent FA and thanks to you both my future is looking much brighter.
    I have, however, wasted the last 3 evenings playing with the compound interest calculator when I should be tidying the linen cupboard for my first viewers tomorrow. I won’t know until my house sells how much I’ll have available to invest.
    Before I discovered your channel that sentence would have read I won’t know until my house sells how much I have available to spend on furniture
    I’ll trade a new sofa for making my dreams a reality any day of the week.
    #insight #perspective #grateful
    Greetings from Stirling btw. 🙂

  • Great video, I found your channel through Emily Norris, fellow YouTube mum here if you are interested in checking out my channel and staying connected 😊

  • Hi, just come across your videos and they're fantastic, just what I've been looking for. I already pay into a vanguard, and have just convinced my partner to aswell. Recently quit my job to sell full time on ebay, so check out my channel!
    All the best 🙂

  • Hey! Great video. I’m in UK so couldn’t pay off mortgage with credit card but I could do a 0% money transfer into bank and use that to pay a chunk off the principle.Would that give me the same benefit? Thanks in advance! X

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