How I Manage My Mortgage: Lessons, Strategies and What Has Worked for Me
For most people, a mortgage is likely to be one of their largest financial commitments. It certainly is for me.
I obtained my first mortgage in 2019, which was both a blessing and, in hindsight, something that created unrealistic expectations. At the time, fixed mortgage rates were averaging around 1.5%. Looking back, I probably would have considered locking in for 10 years rather than five, even if that meant accepting a slightly higher rate than was available at the time.
However, I was fortunate enough to take full advantage of my five-year fixed term, which lasted until 2024.
I wanted to share some of the best practices and solutions I implemented to help manage my mortgage during the transition period of going from 1.5% (2019) to 5% (2024). These are strategies that have worked for me and information I regularly share with family and friends.
Warning, this is based on my experience in England. Mortgage products, regulations and practices vary between countries, so what works here may not necessarily be relevant elsewhere.
The 2024 Mortgage Shock
In 2024, I absorbed a tremendous amount of information through self-education as I tried to understand how to counteract the sharp increase in mortgage rates.
Rates around 5% were a huge shock for many homeowners. I think part of the shock came from becoming comfortable with a particular monthly payment for five years, only to suddenly face hundreds of pounds more each month when the fixed term ended.
To put this into perspective, a £100,000 mortgage at 1.5% would require a monthly payment of roughly £400.
After five years, the outstanding balance would be approximately £82,880. If that balance were then refinanced at 5%, the monthly payment over another 20 years would be approximately £547, rather than £400.
That is an increase of around £147 per month, or approximately £1,764 per year.
Unfortunately, I don’t believe there is any amount of planning that would allow me to realistically expect to return to 1.5% mortgages in the short or medium term. Rather than simply accepting the renewal offer from my existing lender, however, I decided to explore what other options were available.
- Use a Mortgage Broker
The first thing I learned was the value of shopping around.
My first mortgage adviser charged me £400, and the service was excellent. However, during my 2024 renewal, I became aware that some mortgage brokers receive their fees from the lender rather than charging the borrower directly.
I was able to use a broker who operated on that basis, meaning I wasn’t paying the £400 fee myself.
The service was once again excellent, but this time I wasn’t personally out of pocket for the advice.
For me, the lesson was simple:
Don’t automatically assume your existing lender is offering you the best deal.
A good mortgage broker can potentially identify products that you may not have found yourself and can make the process considerably easier.
- Consider an Offset Mortgage
The second opportunity I discovered was the offset mortgage.
The basic concept is relatively simple:
The lender links your savings to your mortgage and calculates interest based on the difference between the mortgage balance and your offset savings.
For example, if you have:
- £200,000 mortgage
- £50,000 in an offset savings account
you could effectively pay mortgage interest on £150,000, depending on the specific product.
You generally don’t earn savings interest on the offset balance. Instead, the benefit comes from reducing the amount of mortgage interest you pay.
For my situation, this was particularly attractive because I had considerable savings that I didn’t necessarily want to permanently put into the house.
An offset mortgage gave me the ability to:
- Keep access to my savings
- Add to the offset balance whenever I wanted
- Reduce the amount of mortgage interest I paid
- Avoid permanently locking the money into the property
That flexibility was extremely valuable at that time.
Working with a mortgage broker also helped me find an offset product that suited my circumstances. My existing lender was offering me 6.44%, while the broker found a two-year fixed offset mortgage at approximately 5.09%.
In my circumstances, I calculated that the effective rate was around 2.5% on average using my saving.
- Consider a Longer Mortgage Term — Then Overpay
The final strategy isn’t for everyone.
It requires discipline, some calculations
The basic strategy is: Take the longest mortgage term available and then overpay with the intention of clearing the mortgage much sooner.
For example, you could take a 40-year mortgage, but make overpayments that would clear it in 20 years, 15 years or even 10 years.
The advantage is flexibility. If your finances are strong, you overpay. If you experience a difficult financial period, you can potentially fall back towards the lower contractual payment.
Using a £100,000 mortgage at 5% as an illustration:
| Target repayment period | Approx. monthly payment | Total repaid | Approx. interest |
| 40 years | £482 | £231,455 | £131,455 |
| 25 years | £585 | £175,377 | £75,377 |
| 20 years | £660 | £158,316 | £58,316 |
| 15 years | £791 | £142,360 | £42,360 |
| 10 years | £1,061 | £127,320 | £27,320 |
The figures demonstrate the basic principle: the longer you keep the mortgage outstanding, the more interest you are likely to pay.
By voluntarily paying more each month, you can potentially reduce the interest substantially.
Ultimately, after speaking to different people about their mortgages, I’ve realised that there isn’t necessarily a right or wrong answer.
The important thing is understanding how the different mortgage options work and how they fit your own financial circumstances.
Mortgage rates can change.
Circumstances can change.
Lenders will have their own rules and regulations.
So rather than trying to predict exactly where mortgage rates will go, I’ve focused more on building flexibility into my finances and finding ways to reduce the impact when rates move against me.
I’d be interested to hear how everyone else approaches the mortgage ecosystem.
