Mortgage Clinic: 'How can I pay off my home loan early?'

Q. 'I want to pay off my mortgage early, but I'm not sure how to do it. Flexible mortgages are tempting, but they don't seem to offer the best rates. Can I just overpay on a normal mortgage as and when I have the money?' NH, Leeds

A. There is nothing to stop you taking out an interest-only mortgage and making overpayments when you can.

This could be because your income is irregular, or because you prefer to make payments into an ISA, pension or even endowment with a view to using the proceeds to pay off the capital at the end of the mortgage term.

But relying on voluntary overpayments will only work if you have both the discipline to keep them up and a mortgage that allows them. Most lenders allow repayments of up to 10 per cent of the outstanding capital each year, but not all do. Nationwide, for example, restricts overpayments to £500 a month.

Bear in mind, too, that overpayment limits are usually the same whether you have an interest-only or a repayment mortgage. The exceptions include standard variable rate mortgages as well as some "flexible" and tracker loans. These may well allow more scope for overpayments, but you need to make sure you are not paying over the odds for such flexibility in the first place.

According to Katie Tucker, from brokers John Charcol, the process for making overpayments is the same, whether your mortgage is interest-only or repayment.

You can either ask to reduce your mortgage term or you can make voluntary overpayments. "Overpaying a £100,000 mortgage by £100 a month will reduce the term of a mortgage from 20 to 15.5 years," she says.

There could be some cases where it makes sense not to repay capital but to save the money. However, this will only be the case if you can earn more on your savings than you are paying on mortgage interest. Keep in mind that once you have used your Isa allowance, you need to factor in the impact of tax on savings interest.

A more practical option could be to opt for an offset mortgage, suggests Tucker. The interest rates on the best offset mortgages now rival those on ordinary home loans, and if you are happy to have your savings, mortgage and possibly current account with the same company, the process is very convenient. Any money that comes in to your savings or current account immediately reduces the interest bill on your borrowing, cutting your mortgage term accordingly.

Confused about your mortgage options? Foxed by jargon? Email Note: We will not reveal your identity, and we cannot give specific advice

Teeth should be brushed twice a day to prevent tooth decay
Bryan Cranston as Walter White, in the acclaimed series 'Breaking Bad'
footballChelsea 6 Maribor 0: Blues warm up for Premier League showdown with stroll in Champions League - but Mourinho is short of strikers
Those who were encouraged to walk in a happy manner remembered less negative words
Arts and Entertainment
Princess Olga in 'You Can't Get the Staff'
tvReview: The anachronistic aristocrats, it seemed, were just happy to have some attention
Renee Zellweger as Bridget Jones
Life and Style

Board creates magnetic field to achieve lift

There have been various incidents of social media users inadvertently flouting the law

Life and Style
Stack ‘em high?: quantity doesn’t always trump quality, as Friends of the Earth can testify
techThe proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
Bourgogne wine maker Laboure-Roi vice president Thibault Garin (L) offers the company's 2013 Beaujolais Nouveau wine to the guest in the wine spa at the Hakone Yunessun spa resort facilities in Hakone town, Kanagawa prefecture, some 100-kilometre west of Tokyo
CSKA Moscow celebrate after equalising with a late penalty
footballCSKA Moscow 2 Manchester City 2: Premier League champions let two goal lead slip in Russia
Latest stories from i100
Have you tried new the Independent Digital Edition apps?

Day In a Page

Indiana serial killer? Man arrested for murdering teenage prostitute confesses to six other murders - and police fear there could be many more

A new American serial killer?

Police fear man arrested for murder of teen prostitute could be responsible for killing spree dating back 20 years
Sweetie, the fake 10-year-old girl designed to catch online predators, claims her first scalp

Sting to trap paedophiles may not carry weight in UK courts

Computer image of ‘Sweetie’ represented entrapment, experts say
Fukushima nuclear crisis: Evacuees still stuck in cramped emergency housing three years on - and may never return home

Return to Fukushima – a land they will never call home again

Evacuees still stuck in cramped emergency housing three years on from nuclear disaster
Wildlife Photographer of the Year: Intimate image of resting lions claims top prize

Wildlife Photographer of the Year

Intimate image of resting lions claims top prize
Online petitions: Sign here to change the world

Want to change the world? Just sign here

The proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
Ed Sheeran hits back after being labelled too boring to headline festivals

'You need me, I don’t need you'

Ed Sheeran hits back after being labelled too boring to headline festivals
How to Get Away with Murder: Shonda Rhimes reinvents the legal drama

How to Get Away with Murder

Shonda Rhimes reinvents the legal drama
A cup of tea is every worker's right

Hard to swallow

Three hospitals in Leicester have banned their staff from drinking tea and coffee in public areas. Christopher Hirst explains why he thinks that a cuppa is every worker's right
Which animals are nearly extinct?

Which animals are nearly extinct?

Conservationists in Kenya are in mourning after the death of a white northern rhino, which has left the species with a single male. These are the other species on the brink
12 best children's shoes

Perfect for leaf-kicking: 12 best children's shoes

Find footwear perfect to keep kids' feet protected this autumn
Anderlecht vs Arsenal: Gunners' ray of light Aaron Ramsey shines again

Arsenal’s ray of light ready to shine again

Aaron Ramsey’s injury record has prompted a club investigation. For now, the midfielder is just happy to be fit to face Anderlecht in the Champions League
Comment: David Moyes' show of sensitivity thrown back in his face by former Manchester United manager Sir Alex Ferguson

Moyes’ show of sensitivity thrown back in his face... by Ferguson

Manchester United legend tramples on successor who resisted criticising his inheritance
Two super-sized ships have cruised into British waters, but how big can these behemoths get?

Super-sized ships: How big can they get?

Two of the largest vessels in the world cruised into UK waters last week
British doctors on brink of 'cure' for paralysis with spinal cord treatment

British doctors on brink of cure for paralysis

Sufferers can now be offered the possibility of cure thanks to a revolutionary implant of regenerative cells
Ranked seventh in world’s best tourist cities - not London, or Edinburgh, but Salisbury

Lonely Planet’s Best in Travel 2015

UK city beats Vienna, Paris and New York to be ranked seventh in world’s best tourist destinations - but it's not London