Paying one additional mortgage payment each year, whether in a lump sum or monthly increments, can lower a 25-year loan down to 15 years.  If you pay more than one extra payment, the number of years will decrease even more.  Since this additional payment will be applied only to the principal and not the interest, you end up saving thousands and thousands of pounds on the Total Amount Repayable

This is a good idea if…

You have the spare money and a flexible rate mortgage. A mortgage is by far the biggest financial burden most people take on in their lifetime (apart from taxes!) and if you can reduce the time it takes to pay this down, you will be far better off in the long run. And if you are a long term planner with good financial discipline then this would be a good idea..

However…

In the current financial climate it might be a better idea to pay off any debt that carries a higher interest, like car loans, home improvement loans and credit cards and store cards. The store cards usually have the highest interest rate so you may want to pay those off first, then the credit cards and so on.

Paying off your credit cards also means that you would be able to use the money available on your credit card should the need arise, where as most mortgage products would not let you have your money back.  Having an available line of credit (lots of money available on your credit card) is also good should you suddenly find yourself jobless.

There are ways to find genuine bargains, but there are some evil looking solutions out there too.

For example, Comet has a website where they sell off returns. It’s a good idea to check what is available there although it is not the cheapest option, but the site has additional drawbacks.

The delivery charges are particularly painful, but the website is not really well known so you can get some bargains, although it is obvious that the auction format is not entirely “free” but rigged to favour comet.

Check http://www.clearance-comet.co.uk/ to see if you can find the bargains.

(Personally, I never bother because the site is low on traffic, but if you start bidding, the system magically seem to find competing bidders…)

If you pay more than one extra payment, the number of years will decrease even more. Since this additional payment will be applied only to the principal and not the interest, you end up saving thousands and thousands of pounds on the Total Amount Repayable.”

Only do this if you can afford it. If you’re already short of cash, paying off your mortgage faster doesn’t make sense.

Do your budget planning and make sure you can handle the reduced disposable income before you go ahead.

If you have other debts that charge a higher interest, you are going to be better off by paying those off first.

At the moment I am snowballing an overdraft and 2 credit cards and I am not doing the 13th month until those 3 are cleared up. I use my 13th mortgage payment to actually pay these off faster. I use the monthly increment and add it to the snowball payment.

If you have all the money you need, then this is a great money saving tip.

The best tips I have are quite basic, and it is the plan I will be following myself.

First of all, I will keep a close eye on my monthly outgoings. What ever bills I can fix at a specific monthly cost I will. That way I will reduce the insecurity surrounding how much of my income will be going out on the bills. Having predictability will be the key for me now.

Secondly, I will focus on making extra money where I can. I will be doing car boots with my sons old toys and clothes. And what ever I can sell on ebay I will. I will have an income goal for this activity every month, and I will work my hardest until I have reached that income goal for that month.

Thirdly, I will price compare on EVERYTHING.

Forthly, I will be growing vegetables where I have room in my garden. And if I run out of space, I will try to get an allotment ( although around where I live, there is already a waiting list on all the allotment sites)

Fifthly, I will make pretty darn sure that my job is secure. There are any kind of jobs available out there and I will take any job I need to take in order to make ends meet. I will prefer to make my income in other ways, but if needs must – I will.

Lastly. The debt that I have, I will manage to the best of my ability, and I will continue to pay it down as fast as I can. The payment agreements I have, I will uphold. The interest bearing ones I will pay off faster, rather than saving up a “buffer”. The best buffer I can create is to get rid of my debts.

My goal is to always pay all the bills in order of importance and I will have fun and enjoy every moment of my life while doing so, and I will do it responsibly and sensibly. And I will have a good time doing it.

Now, have you got your financial rescue plan sorted?