Home Mortgage Loans

Home Mortgage Loans
Getting rid of​ the​ mortgage early is​ something that many home owners in​ the​ UK aspire to​ achieve .​
Being free of​ the​ principal financial debt in​ most people's lives at​ the​ earliest stage possible offers financial security and peace of​ mind for later on​ in​ life .​
Paying off the​ mortgage early is​ no pipe dream though .​
In 2003,​ the​ average age of​ outright home ownership was 56,​ by 2004 the​ average age had fallen dramatically to​ just 48!
How home owners pay off their mortgages early
The secret to​ paying your mortgage off early lies in​ choosing the​ right type of​ home loan,​ and this is​ where flexible mortgage loans and offset mortgage loans step in​ .​
Flexible mortgage loans,​ as​ their name suggests,​ offer flexible mortgage repayment terms where overpayment of​ mortgage is​ allowed by the​ home owner without incurring a​ penalty .​
Some flexible mortgage loans allow overpayment of​ a​ limited amount,​ such as​ 10% of​ the​ mortgage value,​ while other flexible home mortgage loans cater for unlimited overpayment by the​ home owner .​
The advantage of​ flexible home mortgage loans is​ that as​ well as​ allowing you​ to​ overpay,​ you​ can also underpay,​ so taking a​ 'payment holiday' if​ finances become a​ little thin .​
Underpayment is​ of​ course subject to​ the​ terms of​ the​ mortgage,​ and will normally only be allowed if​ it​ amounts to​ less than the​ funds that have been overpaid .​
Overpayment via flexible home mortgage loans means that you​ get to​ reduce your mortgage capital as​ well as​ pay off interest accrued on​ the​ capital each month .​
For each successive month that you​ make an​ overpayment the​ amount of​ interest paid on​ the​ overall mortgage is​ therefore reduced .​
An overpayment of​ just £65 on​ an​ £80,​000 mortgage with the​ interest rate at​ 6.0%,​ will see mortgage loans paid off 5 years early,​ amounting to​ a​ total saving of​ some £15,​000 .​
Offset home mortgage loans
Offset home mortgage loans were unveiled to​ the​ home owner in​ 1998,​ and have gained a​ great deal of​ respect from home owners since that time .​
Offset mortgage loans help to​ pay off a​ mortgage early by using what is​ known as​ a​ 'sweeper' system .​
Providing that the​ home owner has their current and/or savings account with the​ mortgage loans provider,​ their available balance is​ 'swept' across to​ their mortgage account each day to​ offset/reduce the​ amount of​ mortgage capital subjected to​ interest .​
To illustrate the​ advantages of​ offset mortgage loans,​ take a​ mortgage of​ £100,​000 and a​ balance of​ £10,​000 in​ your current account and/or savings account .​
Instead of​ the​ interest rate being applied to​ the​ £100,​000 every day or​ every month,​ the​ interest rate would be applied to​ your mortgage balance less the​ balance in​ your current account / savings account .​
This means that interest would only be applied to​ £90,​000 of​ your mortgage,​ effectively making 10% of​ your mortgage interest-free!

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