Unsurprisingly, people over the age of 50 in the UK are the most likely to be homeowners, with close to 75% of people in the age group owning rather than renting. A mortgage is frequently considered to be a lifelong financial burden, with many people not giving much thought to paying it off early.
However, this is a serious mistake, one that can significantly scupper any retirement plans you might have. Paying off your mortgage in full before you retire is the most effective thing you can do to ensure your golden years get off to the best possible start. Here's why.
It will boost your pension significantly
This will probably not come as a shock but yes, paying off your mortgage before retirement will make your pension significantly larger. Studies from financial experts have shown that a person on an average wage who pays off their mortgage by the age of 50 will have contributed an extra £218,000 to their retirement savings if they were to divert money towards it. There are few other ways to boost your pension so dramatically.
You can make your mortgage cheaper
Another key reason to pay off your mortgage early is that you can refinance and reduce your mortgage payments in order to make the process easier and cheaper. You may be paying too much for your mortgage in hidden fees and interest rates, so consider using an online mortgage broker service such as Trussle to switch providers and reduce your monthly bills. This will help you chip away at it much faster, with minimal effort on your part.
The sooner you pay, the earlier you can retire
This one might seem like another no-brainer, but in an era when retirement ages are rising faster than ever before, it really does bear repeating. Eliminating your mortgage debt as early as possible will free you from the biggest financial burden in your life, allowing you greater flexibility when it comes to choosing your retirement age. Obviously, the earlier you retire, the less you'll have saved, but this is less of a problem if you don't have housing costs to worry about.
Your inheritance will be greater
Those who continue paying their mortgage throughout retirement will find their legacy being eaten away and hoovered up by interest rates. Your legacy and the security you leave behind for your family are undoubtedly very important, which is why you should secure this legacy by paying off your mortgage whilst you're still earning. The less you are forced to shell out on bills and debt, the more will be left for your loved ones.
Selling up will be easier
Like many soon-to-be-retired people, you may already be dreaming about the vast ocean of possibilities that awaits. Perhaps you'd like to sell up your home and move to a villa in the south of France or downsize into a more suitable form of accommodation. If your mortgage is already paid off, it will make the process of selling, moving, and paying off your new property in full much easier, allowing for a stress-free retirement in the sun.
Financial responsibility now is the way towards a happy retirement in the future. Follow these steps to pay off your mortgage sooner rather than later.
About the Author / Gareth Hargreaves
Gareth looks after all editorial content on 50connect. He is the Swiss Army knife of content ideas and production.
