Paying Off Your Mortgage Before Retirement: What Could It Take?
This guide is for general information only and does not provide financial advice. Check your lender’s terms before overpaying, as early repayment charges may apply. Your home may be repossessed if you do not keep up repayments on your mortgage.
Some people want to be mortgage-free before they stop work, so that their income in retirement does not have to cover a mortgage payment. Whether that suits you depends on your finances and on what else the money could do. This page shows what it could take in one example, using overpayments. It does not cover pensions, which are a separate decision with their own rules.
A worked example
Take a mortgage with 15 years left (for example from age 50 to 65) at 4.5%. The table shows the current monthly payment and the estimated extra you would need to pay each month to clear the mortgage in 10 years or in 5 years instead. It assumes the rate stays the same, that your lender lets you overpay these amounts without a charge, and that no fees apply.
| Balance | Payment now | To clear in 10 years | To clear in 5 years |
|---|---|---|---|
| £100,000 | £764.99 | about £272 a month (open in calculator) | about £1,100 a month (open in calculator) |
| £150,000 | £1,147.49 | about £408 a month (open in calculator) | about £1,649 a month (open in calculator) |
| £200,000 | £1,529.99 | about £543 a month (open in calculator) | about £2,199 a month (open in calculator) |
Clearing it sooner also reduces the total interest. In the same example:
| Balance | Over the full 15 years | Cleared in 10 years | Cleared in 5 years |
|---|---|---|---|
| £100,000 | £37,699 | £24,347 | £11,853 |
| £150,000 | £56,548 | £36,521 | £17,787 |
| £200,000 | £75,397 | £48,725 | £23,713 |
Questions worth asking
- Could you keep up the higher monthly amount if your income changed? Check with your lender whether you could reduce or stop overpayments later, or whether a shorter term would make the higher amount a required payment.
- What is your lender’s yearly overpayment allowance, and would these amounts exceed it? See the UK mortgage overpayment cap and what an early repayment charge is.
- Would you still have cash you can reach if you needed it? See overpaying or keeping an emergency fund.
- If you are thinking of using pension savings, what are the tax and other consequences? Consider speaking to a pension or retirement adviser; this page cannot help with that.
Free, impartial guidance on mortgages, pensions and retirement is available from MoneyHelper (moneyhelper.org.uk).
Figures are estimates from this site’s calculator, using the assumptions stated above each table. The rates, costs and property values shown are examples, not figures that are available to you. They are illustrations, not forecasts. Try your own figures in the free mortgage overpayment calculator.
If you are thinking about your mortgage and retirement, consider speaking to a regulated mortgage adviser, and to a pension or retirement adviser about any use of pension savings. This page is general information, not advice on your circumstances.
Questions people ask
Should I pay off my mortgage before I retire?
It depends on your circumstances, your rate, your other savings and what the money could otherwise do. Some people value having no mortgage payment in retirement, and others prefer to keep cash or savings. This site cannot say which suits you. You may want to speak to a regulated adviser.
Can I use a pension lump sum to pay off my mortgage?
Whether you can, and what the tax and other consequences would be, depends on your pension and your circumstances. This site does not give pension advice. Consider speaking to a pension or retirement adviser before you decide.
What if my mortgage term runs past my retirement date?
Your lender may have its own rules about mortgages that run into retirement. Check with your lender, or see retirement interest-only mortgages explained and overpaying your mortgage after 55.
Related guides
retirement interest-only mortgages explained, remortgage or product transfer after overpaying. See also overpaying your mortgage after 55, overpaying your mortgage or saving in an ISA, what happens to overpayments when you remortgage and when to speak to a mortgage adviser.