Mortgage Freedom Day, touted as being the day when new homeowners have earned enough to pay the annual cost of their mortgage, was officially with us on 18 April, according to analysis from Halifax. Did you celebrate?
The date of mortgage freedom is based on the average annual mortgage repayment cost of £7,567 and the average net annual income of £25,588 – using these figures, Halifax calculated that, by 18 April, those with a mortgage will (on average) have earned enough to cover their mortgage payments for the rest of 2015.
However, it's worth noting that 2015's Mortgage Freedom Day is eight days later than it was a year ago, with the official day of celebration last occurring on 10 April 2014. This is the result of net annual income decreasing by £15 in the last year while the average annual mortgage repayment has increased by £613 over the same period, which means it's taken longer to accrue the amount needed to pay off a year's worth of repayments.
Craig McKinlay, mortgage director at Halifax, commented: "While monthly mortgage and rental costs account for the majority of many people's household budgets, Mortgage Freedom Day provides a different perspective on how much we spend on these costs over the course of a year. Our research shows that today, if people had put everything they'd earned since the start of the year towards their mortgage, the average homeowner would be mortgage free for the remainder of the year."
So, did you celebrate? Probably not – chances are, you haven't been in a position to dedicate all of your earnings to mortgage repayments – but it's an encouraging thought nonetheless, and there are other ways you could feel the benefit.
What about overpaying your mortgage? Even slightly increasing the amount you repay each month could make all the difference, and you might find you're able to pay off your mortgage sooner as a result, particularly if you take advantage of the low mortgage rates currently on offer. The average annual repayment may have increased in the last year, but this is largely down to the typical mortgage balance increasing, not the rates. Indeed, mortgage rates have fallen rapidly in the past few months and are now at the lowest levels ever recorded, so why not make the most of them?
If you're yet to get on the ladder you'll want to find the best first-time buyer mortgage deals, and if you're remortgaging, you could find even better rates – and if you overpay at the same time, you could soon decrease the size of your mortgage. Taking advantage of the best deals means you'll be able to enjoy affordable repayments for as long as possible, and you never know, Mortgage Freedom Day could come early next year!
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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