HOW TO PAY OFF MORTGAGE EARLY UK (mortgage free from £390K!)

hey hey hi guys so last year we made a really important video called how we paid off our mortgage in seven years in fact more than 5 000 of you have subscribed to this channel from that one video alone the best bit is that you get back 14 years mortgage free that for me was appealing that doesn't turn you on and i'm being a bit geeky right there and this goes to show us that becoming mortgage free is something that many people dream about it's a goal that many people would love to achieve and i can tell you what is what it is about mortgage freedom is the mental freedom i cannot tell you how amazing it feels to be mortgage for in fact you're gonna laugh at me sometimes i go for a walk i got a long route just to come back and point to my house and go that's my mortgage free house and then i open my door and i walk straight in and i feel like this is my mortgage-free landing and i absolutely love my mortgage free home but on a serious note through this period where we've all been going through many challenges you know with this thing that's been going on with the economy being mortgage free has given us a lot of peace that mental freedom is something that not many people talk about so today i want to go back to that particular video we made but explore specific questions that people asked outside of the video itself these are new questions that i'm going to give answers to for how to pay off your mortgage early but we're going to do this in a really fun way i'm going to read the comments from specific people i wonder if it's going to be you i'm going to read those comments going to show them on the screen and then i'm gonna tackle that specific comment and give it an answer and that answer will be the hack for how to pay off your mortgage earning make sense all right whilst you're here come on why don't you hit that subscribe button show your brother some love as well as hit that like button if you're really enjoying this particular video all right let's dive straight in my name's ken off the humble penny and financially joy academy what we do on this channel to give you guys the tips the insights the practical hacks to help you work towards a dream life and this can become real of financial independence and money join all right let's dive straight in and look at the specific hacks for how to pay off your mortgage early and become absolutely 100 debt free okay i'm gonna read for my ipad and this very first comment comes from that amber chick that amber chick said thank you so much for this video as it's quite relevant to me is a mortgage advisor or a mortgage broker the same i'm looking at getting a mortgage and how much should they charge roughly for their services this particular comment leads to my very first hack about becoming mortgage free which is that you should use a mortgage advisor so let me just explain so the mortgage brokers flash advisor are typically used interchangeably but essentially what you're looking for here is somewhat and there's a reason for this is someone who can tell you what products are out there in the marketplace specific to your own needs okay because there are products that are available which you might not be able to find by going to all these mortgage comparison websites these brokers have relationships they have a way in which they can access deals that are not specifically available in the public domain ordinarily now the type of mortgage advisor you should get is a type that gets paid once you've gotten yourself a mortgage okay so once you've either remortgaged or if you're starting out completely fresh once you've gotten yourself a mortgage they get paid by the bank themselves okay now there's a reason why i'm saying get yourself a mortgage advisor which is leading to my very next hack which is to get a mortgage product with no overpayment cap and many people raised this particular point in that previous video we made with many people asking for example natalie murray said great video i'm curious how did you manage early repayment charges normally you can only pay 10 extra per year were your rates generally flexible and therefore able to pay as much as you want it so she's asking this very critical question now this is related to my first post by getting yourself a mortgage advisor now there are two key types of products that you can get broadly speaking so you can either get a fixed product through your mortgage advisor and if you got yourself a fixed product you'll most without a doubt most likely be tied into a a an early repayment charge tied to your mortgage so they will have a 10 overpayment allowance and say say for example your mortgage is 250 000 10 of that is 25 000 okay which is more than two grand per month of overpayments now you can stick within your 10 allowance and paid out okay that's one way of doing it if you've got yourself a fixed rate deal and obviously if you're paying 2 grand extra per month let's not forget that's a lot of money for that scenario for example if you're paying that additional thing every single month what you can do and this is the hack if you want to pay beyond the 10 percent is to wait until your fixed rate deal ends because at the end of that deal you're no longer tied to that 10 cap as well as being tied down by that early repayment charge so that's one of the things we did in order to accelerate this journey the alternative is for you to get a variable deal with your mortgage advice and this is the thing we did as well and the variable deals are fantastic because you can find lenders that offer you mortgage products without any form of cap at all there is no cap whatsoever and you overpay as much as you want and there are without me mentioning specific names one that starts with the letter n you know you can pretty much guess who i'm talking about i'm quite sure it's still offering those products but do make sure you check yourself those products without a 10 cap exist okay use a mortgage advisor to find those products and only when you get the mortgage via you remortgaging or whatever only when you do that do they then get paid their commissions and that commission is paid for by the bank okay so the next question i got was from michaela mervin who said hi ken great video what's the process for setting up standing orders to overpay on a mortgage did you have two standing orders one at the start of the month and one at the middle of the month so she's asking because i mentioned this idea of paying your mortgage twice in a month which leads me very neatly to my third hack which is to automate your mortgage overpayments so i explained in that video we made about how we pay up our mortgage in seven years the importance of overpayment so we illustrated various scenarios but the key things for you to actually automate your overpayments and anything beyond that yes of course you can pay but the keys to automate this is a behavioral thing because what it does is that is that it gets you accustomed to a certain level of payments every single month and what you find is that you then adjust your spending each month to make sure that that level of overpayment goes out every single month without fail so in terms of the question that she asked the key thing for you to do in order to set this up is to call your bank call your mortgage company and say hey here's my mortgage roll number i'd love to know please what's my sort code an account number for me to be able to make overpayments they will give you that so-called an account number and you simply take that go into your online banking once you've logged in create a standing order to that specific sort code and account number and put your mortgage roll number or your mortgage reference in the reference section so that that way by doing that you've basically committed yourself to making that that level of overpayment every month or twice a month depending on what your setup might be and the beauty of doing it as a standing order is that over time if you ever wanted to change that if you if you ever wanted to reduce it or increase that amount or stop that amount for any reason in your own personal life you could simply just go online again and make those changes via your banking monday and to answer her question about whether we had a payments at the start of the month and one at the middle yes we typically had our mortgage go out on the first day of each month and then around the middle of each month we made another payment and the impact of making those two payments is that essentially we're paying off a lot more of a capital element of our mortgage thereby reducing the impact of compounding when it came to interest and getting us to that point of mortgage freedom a lot quicker which in our case was in seven years okay so question number four came from rasheed raja who said thank you great video you've given me the motivation to push myself to increase my payments when i buy my next property then they said would you recommend that i pay a bigger deposit when buying or hold the money back and then make overpayments instead this is a really interesting question because the obvious answer to me is simply make a bigger deposit when you're buying a property because essentially the less money you borrow the more likely you pay your debt off and therefore become mortgage free which then plays into this idea around location because one point worth making for my journey is that the key thing with our journey towards mortgage freedom is that we bought a property outside of a major city like london in our case okay we live just on the outskirts of london in fact within a few minutes walk we're in the london area per se just from our home but the fact that we bought just outside men that we were able to buy our property at a much cheaper price and by doing that we borrowed a lot less money in our case we still borrowed quite a lot 330 000 thereabouts and we paid off in interest about 60 000 totally we paid off 390 they're about between 380 and 390 000 still still quite a lot of money but a lot less compared to say if we had gone and bought within london itself so essentially the point here is this and the hack is is the less you borrow the better and this really should make you think if you're somebody who's already living somewhere and already has a mortgage could that be a case for you to move home as a way for you to become mortgage-free a lot faster i'm just going to leave that as an idea in your mind for you to think about because sometimes it might be that you not only want to make overpayments and the various things that i shared on this particular video and the previous one you might want to really consider this idea of actually moving home as a way for you to actually owe less and therefore become mortgage-free a lot faster okay so to demonstrate hack number five let's read this comment here from alan masso who said who can afford to make overpayments of a thousand pounds per month on a recently acquired mortgage two question marks he put down and i'm thinking to myself i remember reading this thinking to myself hmm this is really interesting the key point to make is that we did not start making a thousand pound overpayments immediately we gradually built up to that and that's the real mindset shift to have which is that yes it would be amazing if we got to that point where we're overpaying by a thousand and beyond but how about just starting with 50 pounds per month or 100 pounds per month and as you adjust your lifestyle as you hustle if i have various side hustles and diverse things to generate extra income you might find yourself hitting 250 each month or 500 pounds each month or even a thousand and beyond in our case in some months we'll go way beyond a thousand because we had figured out a way to generate alternative sources of income as well as to adjust our lifestyles to create that margin for those overpayments to be delivered and made real so the key here is to really focus on making this fun start very small and gamify it and the minute you start to see the impact of those overpayments on your debt over time this will give you a lot of motivation in order for you to find alternative sources for you to build up those extra bits of income to make those overpayments real guys i really hope you enjoyed this video on how to pay off your mortgage early a follow-up from our previous video as i mentioned before paying off your mortgage really is game-changing don't listen to anybody who tells you that nah don't pay off your mortgage listen i'm telling you it will change your life beyond the mental freedom i mentioned earlier there is so much optionality that paying off your mortgage gives you so much the fact that i'm able to do the things i love today would not have been possible without us first paying off that mortgage and just removing that mental thing that baggage around debt and just becoming a hundred percent mortgage free now it doesn't stop us by the way becoming investors in different areas we've got other assets that we are invested into and our investing journey carries on in different ways and in different assets including property assets by the way but the key for us is the becoming mortgage free from a personal perspective in our home as well as in our personal finances generally has been a game changer and i highly recommend really pursuing this goal of mortgage freedom and making it a core part of your journey towards financial independence if you really enjoy this video i'd love to hear from you in the comments what's your debt-free journey looking like that mortgage-free journey what's it currently looking like for you and what sacrifices are you having to make in order for you and your family to become mortgage free i'd love to know share in the comments i think it's very important for people to see what other people are doing what sacrifices they're making in order for them to achieve their goals and it's very important for us to share that and for other people to have complete visibility because it might even give them the encouragement as well as the ideas that they can pursue as well in order to become mortgage free in the future guys thank you so much for watching this video if you really enjoyed it please make sure you hit that like button as well as subscribe if you've been watching these videos for some time have you subscribed please make sure you subscribe because it really helps to grow our channel and make sure that we reach many more people and help many more people over time thank you so much for watching guys and i look forward to seeing you again on our next video as ever in all things be thankful and seek joy take care and bye for now

Channel: The Humble Penny

Views: 7,328

Rating: 4.9703703 out of 5

Keywords: how to pay off mortgage early, how to pay off mortgage early uk, pay off mortgage early uk, paying off mortgage early uk, mortgage uk, mortgages explained uk, how to pay off your mortgage early, mortgage free, paying off mortgage early, pay off mortgage early, debt free uk, debt free, mamafurfur, the humble penny, how to pay off your mortgage in 5 to 7 years, overpaying mortgage uk, paid off mortgage, how to pay off your 30 year mortgage in 5 to 7 years, mortgage, dave ramsey, uk

Id: OxOEdV-7xqQ

Length: 15min 2sec (902 seconds)

Published: Thu Oct 22 2020