How to Pay off Your Mortgage

How to use overpayments to eradicate mortgage debt

Photo by vu anh on Unsplash

Paying off your mortgage early is one of the most powerful steps you can take towards financial freedom, but when it comes to overpayments— here’s why it pays to be the Tortoise, not the Hare.

“Debt is normal — be weird” — Dave Ramsey

There is a lot of talk about mortgages. A lot of talk about how much you should borrow, what term is most appropriate and how not to overstretch yourself. Like most things in personal finance, mortgages are personal, you need to do what’s right for you, but if you need a basic plan here’s one that I’ve found a good guide:

1. The shorter the term the better. If you can’t afford the mortgage on a 15-year term, consider if you can really afford it at all.
2. Whatever percentage of monthly income you think is appropriate to borrow, it’s probably too much. Personally I think 25–30% of monthly income is appropriate — after all, income can come down, and rates can go up.
3. Fix your rate. The amount of times I’ve heard “well interest rates are low, now is a great time to borrow” and it makes me cringe. Yes, interest rates are low, but that’s exactly what makes them more likely to rise over the life of the mortgage.