Published On: Wed, Sep 4th, 2019

Mortgage free: Can you pay off your mortgage early? Look out for shock fees | Personal Finance | Finance

The average mortgage term stands at 25 years. That said, some people may look to pay off their mortgage sooner rather than later. It may be that this is due to a shorter term or even one makes additional efforts to repay their loan in full. While paying off a mortgage early is possible, it’ll largely come down to a borrower’s financial circumstances as to whether this is a feasible option.

As well as ensuring it’s affordable, and the best financial move, mortgage-holders will need to check their mortgage deal to see whether they could face any charges, as The Money Advice Service points out.

For instance, fees may apply as a result of making overpayments on one’s mortgage.

Other charges could include paying off one’s mortgage early, or making a monthly payment which exceeds the agreed monthly limit.

According to The Money Advice Service, most lenders will allow borrowers to overpay by up to 10 per cent each year, penalty-free.

The website takes a look at how it may be possible to reduce the amount required to be repaid through overpayments – as well as how it could cut the amount of time it takes to become mortgage free.

Taking an example of a £150,000 mortgage at a five per cent rate with 25 years remaining, The Money Advice Service states that paying off a £5,000 lump sum reduces the interest by £11,500.

It means the repayment could be made in full 18 months earlier, The Money Advice Service adds.

A credit expert has suggested checking one’s credit report in advance of applying for a mortgage.

This report details relevant records and the borrower’s credit history from the past six years, and can be used by lenders in order to determine the credit score they give the borrower.

James Jones, Head of Consumer Affairs at Experian, told “For many of us, applying for a mortgage is the most important application we ever make, so it’s worth being prepared.

“This includes investing a little time in reviewing your credit score as early as possible in the process.

“This will give you time to iron out any issues and, if necessary, grow your score to give you the best possible chance of securing a great mortgage deal.”

The team at the Credit Reference Agency, Experian, have also shared some tips on how to ensure a prospective house-buyer’s credit health is in shape, ahead of buying a property.

In addition to ensuring that everything is accurate and up to date on a credit report, it’s possible to improve chances of being accepted, such as registering to vote at one’s current address.

Ensuring past debts are correctly shown as paid and closed, and paying down existing debts where possible, could also prove helpful.

READ MORE: Cheap mortgage: Why cheap rates may not always be best deal – watch out for two key words

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