How we cleared our mortgage by 45 — and how you can do the same

Even small extra payments can add up to major savings. Here’s how to tackle your biggest debt sooner.

When Adrian Massey was made redundant from his role as a food developer, the mortgage was the debt that worried him most. A little over a decade later, he and his wife, Tulay, had paid it off early, saving £30,000 and freeing up money to launch their own business.

The couple had bought their six-bedroom house in Banbury, Oxfordshire, for £280,000 two years before he lost his job.

With a mortgage rate of 6.1%, their monthly payment came to about £1,400. “It felt like a burden; a chain around my neck,” says Adrian, 50. “I started thinking about the best way to pay it down.”

“It dawned on me what could happen if you overpay even a relatively modest amount. You can really start to make a difference.”

Once he began his next job, he set up a standing order to make regular overpayments. “We looked at our current income and outgoings, and then, based on our spare cash, we decided how much did we want to put into clearing the mortgage without overstretching ourselves,” he says.

They settled on £500 a month. After that, any pay rises went towards the mortgage, and they would sometimes add a lump sum of up to £2,000 from savings.

When their five-year fixed-rate deal ended, they remortgaged to a 2.5% tracker product with no cap on overpayments.

Those extra monthly payments soon made an even bigger difference. By 2021, Adrian and Tulay were mortgage-free, seven years ahead of schedule.

“I know that, purely from a financial point of view, there are advantages to investing more in the stock market because of the returns you get, but the freedom was more important to me,” he says. “It has meant I have been able to invest in myself and the life I want to lead, rather than being shackled to this payment.”

The money that once went into repayments has helped them establish ATM Food Innovations, and Adrian has also increased his pension contributions.

“Making the final payment felt really good; it’s a real sense of relief and liberation,” he says. “You know that whatever happens, no one can take your house away.”

Every bit helps

With interest rates rising, it is no surprise that mortgage-free living is a goal for many households.

Andrew Hagger, finance expert at Moneycomms, says: “For most people, repaying the mortgage means getting rid of the biggest financial commitment hanging around your neck.

“They dream of what they could do with all the extra disposable income: holidays, update the car, home improvements, or retire early. The list is endless.”

Paying off your mortgage not only removes what is likely to be your largest monthly expense, it can also save thousands in interest over the life of the loan.

Even modest overpayments can make a noticeable difference. On a 25-year mortgage of £200,000 at 5%, adding just £20 a month could save £5,700 in interest and shorten the term by nine months, according to Moneycomms.

An extra £50 a month on the same loan would save £13,400 in interest and clear the mortgage almost two years early. An additional £100 a month would save £24,530 and reduce the term by three years and six months.

Overpayments do not have to be made every month. You could make lump-sum payments when a deal ends, when switching lender, or mid-term if your mortgage allows it.

In the example above, a one-off overpayment of £10,000 could save £11,870 in interest and pay off the mortgage one year and two months early.

To make an overpayment, contact your lender. In many cases, it is simply a matter of transferring the money to the account.

As the overpayments begin to have an impact, you will usually be given the choice of lowering your monthly payments or shortening the mortgage term. If you can comfortably afford the repayments, the latter is generally the better option, since more of your money goes towards the debt and you clear it sooner.

One drawback is that overpaid money is not easy to get back if you need it later, so it is important to keep a savings buffer for emergencies. Three to six months of essential spending is usually recommended.

“It’s tempting to try to throw every spare penny at the mortgage, but find a balance between making progress towards being mortgage-free and retaining enough flexibility to deal with life’s unexpected costs,” says David Hollingworth, director at mortgage broker L&C.

Know your mortgage terms: most lenders allow overpayments of up to 10% of the remaining balance each year without penalty. Hollingworth says: “It’s worth checking as early repayment charges can be substantial, often 3-5% of your overpayment, which can erode, or remove, the benefit of the overpayment.”

Offset mortgages: the best of both worlds?

If you want to reduce your mortgage without locking away your cash, an offset mortgage can be a useful alternative to a standard deal. These products link a savings account to your mortgage. The savings balance is deducted from what you owe, so interest is charged on a smaller amount. For instance, with a £200,000 mortgage and £10,000 in savings, you would pay interest only on £190,000.

The trade-off is that you do not earn interest on the savings, but the money remains accessible if you need it. Any withdrawal simply reduces the offset amount. In the example above, taking out £2,000 from savings would mean interest is then charged on £192,000 of the mortgage.

David Hollingworth, director at L&C, says: “An offset can suit those with substantial cash savings or who receive lump sum bonuses. It allows your cash to work harder without limiting your ability to draw on it when required.”

A 25-year, £200,000 offset mortgage at 5.46%, with £10,000 in savings, could save £28,550 in interest and clear the debt one year and nine months early, Moneycomms says.

It is worth noting that offset deals are less widely available than standard mortgages, and they usually come with a slightly higher interest rate. L&C currently lists more than 7,500 mortgage products, but only about 150 are offset deals. Hollingworth says they are typically around 0.4 to 0.5 percentage points more expensive than a standard mortgage.