Should I pay off my mortgage early?
Paying off your mortgage early can give you peace of mind, could save you thousands of pounds in interest, and one less monthly bill to worry about. But it won't be right for everyone.
Before you throw every spare penny at your home, let’s take a look at the disadvantages of paying off your mortgage in the UK, whether it makes more sense to save instead, and how to decide what’s right for your financial goals.
In this guide
- What is the average age to pay off a mortgage in the UK?
- How many people in the UK are mortgage-free?
- How long does it take to pay off a mortgage?
- How to pay off your mortgage early
- Should I pay off my mortgage early?
- See what you could be offered by remortgaging
- Why is it not smart to pay off your mortgage?
- What happens when you pay off your mortgage in the UK?
- Is it worth being mortgage free?
See what you could be offered by remortgaging
Use our Remortgage Calculator to see what you could be offered, including interest rates and indicative monthly costs.
What is the average age to pay off a mortgage in the UK?
Paying off a mortgage earlier used to be more common - 40% of borrowers who took out a mortgage in 2017 will be over 65 when their mortgage matures. But 34% of all mortgages are now lasting longer than 30 years (compared to just 20% in 2007), so paying off a mortgage in retirement is becoming increasingly common.
Borrowers could become mortgage-free sooner if they make regular overpayments or remortgage their homes to shorten the term, but this can be hard to do with the cost of living on the rise. For many, paying off their mortgage early simply isn’t a priority.
How many people in the UK are mortgage-free?
The majority of households in the UK are not mortgage-free, but this is rising. In 2023/2024, 37% of households owned their homes outright, rising from 33% in 2013/2014. Surprisingly, just 28% of homes are owned with a mortgage, while the percentage of households being rented out (19%) remained higher than those rented out as social housing (17%).
How long does it take to pay off a mortgage?
Most mortgages in the UK are taken out over 25 to 35 years, but how long it actually takes depends on your term, whether you remortgage, and whether you make overpayments. Even small regular overpayments can shave years off your mortgage, and thousands off the total interest paid. Many people aim to pay off their mortgage before retirement, though rising house prices and borrowing costs are making that goal tougher to reach.
Learn more: What happens when my fixed-rate mortgage ends?
“Overpaying your mortgage can come with some drawbacks. If you had invested the money instead, you could have achieved a return higher than the amount you saved in interest. But to do this, you normally have to invest the money for a number of years”
Andy Shead
Senior Mortgage Advisor at Tembo
How to pay off your mortgage early
If you decide paying off your mortgage early is right for you, there are a few ways you can do it. You could contact your lender and ask to increase your monthly payments (just double-check that they won’t charge you any penalties for overpaying!). If you have a lump sum of cash, for example from a bonus from work or an inheritance, you could use it to make a lump sum payment against your mortgage (Again, check your lender’s overpayment rules first!).
Another way of paying off your mortgage earlier is to opt for a shorter term when you remortgage. This increases your monthly payments but helps you become mortgage-free faster and pay less interest overall. You won’t have the flexibility that comes with making the occasional overpayment here and there, so make sure you can commit to the higher monthly costs before shortening your term.
Learn more: How long should I fix my mortgage for?
Should I pay off my mortgage early?
It might be worth paying off your mortgage early if:
- You can afford to make regular overpayments
- You’ll save a substantial amount of interest
- Becoming mortgage-free will give you peace of mind
- You want to use the money you’re currently spending on your mortgage for other things
- Your mortgage interest rate is higher than the interest you’d earn from savings
- You’re struggling to remortgage to a better deal
- You don’t feel comfortable investing in the stock market
Even if you meet one of the situations above, it’s still worth talking through your options with an expert to ensure you’re making the right decision for you. Our award-winning team of mortgage experts are available 7-days a week, including evenings. Plus. if you’re finding it hard to remortgage due to affordability issues, we may be able to help.
See what you could be offered by remortgaging
Use our Remortgage Calculator to see what you could be offered, including interest rates and indicative monthly costs. The number may surprise you!
Why is it not smart to pay off your mortgage?
There are a few disadvantages to paying off your mortgage early, especially if it means sacrificing your financial flexibility. Here are a few reasons it may not be the right move:
- Early repayment charges (ERCs). Many lenders let you overpay by up to 10% of your mortgage balance each year. Go beyond that, and you could face hefty fees.
- Lack of liquidity. Once your money is tied up in your home, it’s harder to access in an emergency. If you don’t have a healthy cash buffer, this can be risky.
- Better returns elsewhere. High-interest savings accounts, pensions, or long-term investments may offer greater returns than your mortgage interest rate, particularly if you are locked into a low-rate deal.
- Missed financial goals. If you focus entirely on repaying your mortgage, you might neglect other important goals like retirement planning, building an emergency fund, or investing.
Remember, you don’t have to choose between overpaying your mortgage or saving. You can split your money between multiple goals, for example, putting some towards your mortgage, some into an ISA, and some into your pension.
Even occasional overpayments can reduce your mortgage term and the total interest paid, without sacrificing your short-term financial well-being.
What happens when you pay off your mortgage in the UK?
Once you’ve made your final mortgage payment, your lender will issue a closing statement confirming the loan is fully repaid. Your title deeds will show you as the sole owner of your property, and any legal charge held by the lender is removed.
At this point, you’ll no longer need to make monthly payments, but you’ll still need to cover the cost of home insurance, council tax, maintenance and other homeownership costs.
Is it worth being mortgage free?
Being mortgage-free can offer serious benefits. You’ll save money on interest, reduce your monthly outgoings, and gain the peace of mind that comes with owning your home outright. That sense of security is priceless for some people, especially if you're approaching retirement.
For example, if you have a £200,000 mortgage over 25 years at 4.5%, your monthly payments would be around £1,110. By overpaying just £200 a month, you could become mortgage-free more than 6 years earlier and save over £36,000 in interest.
But being mortgage-free isn’t the right goal for everyone. If your mortgage interest rate is relatively low, your money might work harder elsewhere, like in high-interest savings accounts, your pension, or stocks and shares. Ultimately, the right decision depends on your priorities: security, flexibility, or growth.
Before making a decision, ask yourself:
- Do I have enough cash saved for emergencies?
- Will I face penalties for overpaying?
- Could I get better returns by investing?
- Is financial flexibility more important right now?
For many people, the ideal approach is a hybrid one: make modest mortgage overpayments while continuing to save and invest for the future.
Learn more: Where to invest your money
Considering remortgaging?
If you’re thinking of remortgaging your home to shorten your term or access a more affordable mortgage deal, register your details with Tembo today. We’ve helped dozens of customers remortgage their property - whether to release equity from their home, move onto a better mortgage deal or help a loved one buy their first home.
