10:02 19 July 2013
It seems more and more people are thinking about repaying their mortgage to save on interest. But is it a good option?
The first thing that you need to do is to do is to see if you can find savings accounts that are offering better rates. Although many people may be earning pitiful interest, some may be happy with their savings accounts and cash ISA.
Next thing that you need to know is if you’re going to face overpayment penalties should you repay your mortgage sooner. Some lenders who offer discount rates are usually the ones to impose such penalty.
Third step is to assess your other debts. Do you have other loans or credit card debts? Are the interest rates on these higher than your mortgage? You will need to get rid of those loans with highest interest rate first in order to save money.
Fourth step is to ensure that you have enough emergency funds. If you have just enough money to repay your mortgage, I’d say don’t go for it. It’s always recommended to have a cash emergency fund.
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