Your wonderful lender, who was ever so grateful when you gave them your business for the next 25 years, never wants to lose you as a client. So what does that mean, well it means they never want you to pay off your mortgage loan.



If you do repay it, it is extremely bad news for them, because you have just reduced their profit margins. You see the lenders make millions, because, all of us who are daft enough to buy into" You must buy your own house, renting is dead money bollocks" are that stupid that for the biggest investment we will ever make, most people do not even know what interest rate they are paying.

They can tell you how much each month they pay back, but not the rate.

Anyway I digress, what I was driving at before is the Lenders NEVER want you to pay off your mortgage because they will lose profits.

Let’s think about that.

No more payments received each month from you. That income stream has just vanished

Cannot sell you any more insurance to protect the payments, because you have stopped paying!

Chances are that you may move a savings account because you only had it with them because you were forced to open one, when they were kind enough to give you a mortgage.

But wait, have you ever moved house? You have, have you, well you have probably just added a few more years to paying that mortgage. How? …………………………………

Let’s say you have had your first home for 5 years and you have bought another for whatever reason, the lender asks you how many years do they want them to quote you on, don’t they. So if you opt for another 25 years, how many years will you have been paying interest to them? That’s correct 30 years.

And if you move again, you could well end up paying that interest for even longer, because when we are young, we think we will never get to 50, never mind paying a mortgage for 25 years. So if you move two or three times, your mortgage could end up being a lot more than 25 years.

It is therefore absolutely vital, that if you do move house, you keep the number of years you will be paying your mortgage to a minimum.

Recent reports suggest that more and more people will retire, not having paid off their mortgage and are having to return to some form of employment to pay it. Not a very pleasant thought that is it?

And of course your mortgage loan is secured against your property, so if you cannot afford the payments you will end up losing the home that you love and cherish. The lender cannot lose either way!

Have you ever thought about how much a 25 year mortgage costs you? On a repayment mortgage of £100,000 at the lenders standard variable rate (currently around 7.74%) the interest charges alone would be over £116,000.So your interest charges will be more than the cost of your home in the first place.

And remember what I said earlier about moving? If you have not adhered to your mortgage term of 25 years and have had the mortgage for 35 years, have a guess what you would have paid, go on think about it. Write a figure down before you carry on reading. I will put you out of your misery; you would have paid over £192,000 in interest charges.

The banks and building societies have what seems to be, a bottomless pit of money to attract new customers. They love new customers, because it is extremely comforting to them, to know that they have got a customer for 25 years, think of all that money they will make. So from their perspective they seem to have woken up to the fact that they need to do marketing every day of every week.

How many TV ads have you seen about a certain bank that gives you extra, how many offers of fantastic savings, with really attractive interest rate for 2 years, but there is of course a catch, you have to pay their SVR after that for a further 97 years( just joking but you know what I mean don’t you?)

They spend millions on advertising for one reason only, to make extra profit at your expense.

But wait a minute, I am a customer of yours, can I not get these fantastic deals? Very rarely, because they are more than content, to let you pay their top rates of interest and save the better deals for the new customers, although there is an odd one who will give you a good deal if you shout and scream loud enough.

To add insult to injury, if you as a borrower want some more money, what is the first thing they offer you? It’s a personal loan and surprise surprise, you will pay a higher rate of interest on this, granted its over a shorter time span but none the less, it’s still bang out of order.

When will they wake up to the fact that they are a service industry and start to look after their existing customers, because without them, they wouldn’t have a business. So for your loyalty to your lender, if you are on SVR, they repay you, by charging you more, than somebody who has been with them for two minutes for the same amount of money. Doesn’t make a great deal of sense, but yet people still put up with being treated this way.

An educated guess would be that your are probably paying about£1000 each year over and above what you would be, if you moved your mortgage regularly. So you help to swell their coffers, so they cannot attract new clients, who will be paying less than you. There is a theme here!

So to recap, I said that you had a £100,000 mortgage and you would pay back over £116,000 in interest didn’t I, so that’s £216,000 yes. So you will have to earn £216,000 over the course of your mortgage to pay it off. Wrong! The £216,000 you’ll pay back to your lender is money you have already paid tax and National Insurance on. This means that you are going to have to earn considerably more to repay your mortgage.

You would have to earn over £350,000 if you are a lower rate tax payer to be able to repay your mortgage. And if you pay the higher rate of tax, over £400,000.

Crikey, what if interest rates go up again, say by 1%, certainly not unthinkable, but what is, is the amount of earnings you would need to pay off that small £100,000 mortgage.

Over £420,000 for low rate tax payers and over £500,000 for the higher rate tax payers.

These figures are scary, but can you for one moment, imagine how many repossessions there would be, if we went back to the time of the mid nineties, when the rate was close to 15%.

Now that I have scared you to death, what can you do about all of this? If you remortgage regularly, you can knock thousands of pounds off the cost of your home loan, over its lifetime.

Homeowners think that remortgaging will involve a great deal of time and effort, it doesn’t, trust me, there are mortgage brokers who can help you. If you are on a fixed rate deal, usually there are penalties if you quit, but often the money that can be saved outweighs any penalties. The important thing to remember is by using www.remortgagesandmortgages.com it will not cost you a penny to find out.

Even now, with the interest rates having risen five times in the past 11 months, you can still save substantial amounts of your money, by remortgaging your property.

Finally, please remember, its no good just looking at your mortgage once and forgetting about it, you need to review it on a regular basis.