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Happy Mortgage Freedom Day!

Happy Mortgage Freedom Day!

Category: Mortgages

Updated: 19/04/2016
First Published: 19/04/2016

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Research from Halifax shows that today, 19 April, is this year's UK Mortgage Freedom Day – the day when new borrowers will have earned enough to pay off the annual cost of their mortgage. So, are you celebrating?

Counting the cost

The figures are based on the average annual mortgage repayment of £7,584 for a new borrower – including both first-time buyers and homemovers, with the repayment figure based on average house prices and a typical loan-to-value (LTV) of 70% – and the average net annual income of £26,023 (according to official statistics).

Using these amounts, Halifax has calculated that homeowners with a mortgage will have today earned enough on average to cover their mortgage payments for the rest of 2016. Mortgage Freedom Day this year occurs just a day later than in 2015, when borrowers would have earned enough by 18 April to cover the full amount, and is the result of the average annual mortgage repayment edging up by £17 in the last year.

However, as may be expected, there's a wide variation across the country: homeowners in Scotland and Northern Ireland, for example, achieve mortgage freedom far earlier on 12 March, but for Londoners this key point doesn't arrive until 26 June, over three months later. This is largely due to differences in house prices across the country – prices in the capital far outstrip those of the north of England – which creates different stages of mortgage freedom.

But what about renters?

Those who rent rather than own their property won't achieve rental freedom until 16 days later (5 May), which is again a day later than it was last year. This is because rental costs are typically higher than mortgage repayments – and have risen further in the last year – which highlights how much pressure renters are under.

Regional variations are broadly similar to that of mortgage freedom, with northern regions typically achieving rental freedom sooner than London, with renters in the capital having to wait until 13 July. Again, this is due to the differences in rental prices across the country, with those in London shelling out far more.

Craig McKinlay, mortgage director at Halifax, commented on the findings:

"For most homeowners, mortgage payments are the biggest outgoing every month; knowing they've earned enough to pay off their mortgage for another year should be a reassuring thought. On the other hand, those who rent will need to work a further couple of weeks to have earned enough to cover their annual rental cost."

What next?

Want to achieve mortgage freedom sooner? A lot of it could come down to the mortgage deal you've got, so check out our best buys to see if you can find a lower rate and slash your annual repayments in the process.

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.