While the feeling of fully owning your home may be satisfying, it’s worth thinking about what else you need to save for Paying off the final balance of your mortgage is a huge achievement – and an occasion for a big sigh of relief. Given how many of us expect to be making repayments for decades to come, it is understandable to want to lift that burden from your shoulders if you have the means to do so.
“ERCs typically go hand in hand with fixed rates – charges are higher the earlier you are in a fixed-rate deal, compared with when your approach the end of the fix,” explains James Briggs, head of intermediary sales at specialist lender Together. Do your research to make sure you fully understand how much paying off your mortgage is going to cost. You can ask your mortgage provider for a mortgage redemption statement, which will lay out everything you need to pay, including the outstanding balance and interest, any ERCs, and in some cases an administration fee.If you decide to go ahead and pay off the balance of your home loan, you should receive a closing statement from your provider.
“It’s prudent for borrowers to have a ‘war chest’ to safeguard their future finances and potential changes in personal circumstances,” advises Mr Briggs.