As well as providing a range of services such as PR, media relations, web content and copy writing for a range of mortgage and property clients, I also answer readers’ mortgage queries in House Beautiful magazine. I have just completed the answer for the July issue, which is particularly pertinent:
Q: “Is paying off your mortgage earlier always a good idea?” – Our grown up children have both left home so we have a little extra money each month. We’re trying to decide whether to use it to pay extra into our mortgage so that we can finish it earlier, or use it to reduce our overdraft and credit card bills. What do you think?
Melanie Bien, property finance specialist, says:
‘It is very tempting to overpay on your mortgage, if you can, and clear the balance ahead of the end of the term. The big advantage of doing this is that you pay less interest and pay your mortgage back early, with many of us dreaming of being ‘mortgage free’.
‘However, if you are considering paying off debt, it makes sense to clear your most expensive debt first. As you have other debts, such as overdraft and credit card bills, you should consider paying these off first. The rate of interest charged on these is likely to be higher than on your mortgage so you would be saving more money by paying these off first.
‘Once you have paid off your overdraft and credit card bills, by all means turn to the mortgage. However, it is worth remembering that money overpaid on your mortgage is virtually impossible to access again so you should only use money that you are not going to need at a later date. Keep some back for emergencies rather than ploughing all the cash you have into your mortgage.’