Move a mile to pay off your mortgage

Many homeowners could pay off their loan early by moving to a less pricey nearby area. Here’s how to make it work

Who needs a mortgage? Most of us, sadly — assuming we’re lucky enough to be able to rustle up the deposit required to buy a home. But hands up who actually wants a mortgage? Thought as much. Even if interest rates remain at rock-bottom levels, those monthly payments can be a source of serious anxiety.

So what would it take to get rid of yours? You don’t have to win the lottery, live on lentils or forgo holidays for a decade. There may be an easier way to pay off a chunk of your home loan: just sell up and move to an equivalent house no more than a mile away.

According to research by Hamptons International estate agency for The Sunday Times, there are dozens of areas around England and Wales where you could sell up, move to a cheaper area nearby and use the surplus cash to pay off the debt left after an average-length stay in either a typical first-time home (with the lender owning only 40% of the property after eight years) or a family house (30% after 14 years).

“The typical first-time buyer borrows three-quarters of the price of their home and spends the next 20 or so years paying it back,” says Fionnuala Earley, residential research director at Hamptons. “When people come to move, they have a real chance to take a chunk out of their mortgage by compromising either on their home or on their neighbourhood. But if it’s the neighbourhood, it may not mean moving far.”

One in 10 people can move less than a mile to find a similar-sized home for 25% less, she explains, though it’s easiest for city dwellers to find a cheaper home nearby. “Postcodes and transport links are the big urban dividing lines, with very different neighbourhoods often sitting cheek by jowl. But even small towns and villages have their premium pockets.”

Paying off the mortgage is “a classic aspirational goal for most people”, according to Jonathan Harris, director of the mortgage broker Anderson Harris. “The benefits are clear — doing so releases the financial pressure of meeting your monthly payments and provides huge comfort in terms of owning your property outright.”

Obviously, there will be sacrifices if you want to join the fortunate band of the mortgage-free, but just how big are they? In Birmingham, as long as you haven’t set your heart on living in a pretty period home, moving one step west from Harborne to Quinton will cost only postcode bragging rights and a bit of extra time on your journey to work. If you’re in London commuter country, moving to clear the mortgage is also likely to see you take a hit on travel time — though it needn’t add too much to the working day.

The young professionals who depart the smart SW postcodes for family-friendly suburbia will pay a good 40% more to live in Cheam than they would across the Surrey border in nearby Banstead. In return, they get to call themselves part of the metropolitan elite, with a Greater London address and a commute to Victoria that takes 35 minutes, not 50 (although Cheam and Banstead stations are only a 10-minute bike ride apart). However, the Surrey town offers certain advantages. “It’s a lovely area with a great centre and good cafes and shops,” says Nicholas Hapgood, senior manager of Hamptons in Epsom.

In Buckinghamshire, there’s a slightly different trade-off. If you moved from Beaconsfield West to Tylers Green (the research is based on council wards), you’d lose a bit of postcode cachet and would have to drive, rather than cycle, to the station, but the houses are similar, the primary schools are just as good and you’re still in the catchment area for the high-achieving selective secondaries. That should give families moving out of the capital, who make up 50% of the market here, pause for thought before they spend an extra £300,000 or more in Beaconsfield.

The leafy suburbs around Chigwell, on the fringe of east London, are popular because of their schools, green space and relative affordability — by capital standards, says Jenny West, manager of Bairstow Eves estate agency in Chigwell. And it’s a spot where a careful choice of location can bring huge savings. The calculation is simple. If you don’t mind a 23-minute walk to the Central line (or a 10-minute bike ride), rather than a short hop to the Tube from Chigwell proper, you can live in Chigwell Row, which has more of a village atmosphere and plenty of green space in the shape of Hainault Forest Country Park. You’ll shell out up to £460,000 less for a detached house in Chigwell Row.

Then there’s the interest you’ll avoid if you manage to pay off the mortgage. Clearing a £500,000 loan six years early would currently save you more than £10,000, Harris says — and that’s with flat interest rates. Which should be enough to make you wonder just how close to the station you need to be, or how crucial a period home really is.

What about stamp duty? The levy on the Chigwell Row home below would be £41,250 — but you’d still be a fair bit better off, and probably a great deal smugger.

Properties for sale

Chigwell £1.4m
It’s not far from the Tube and shops, and your £1.4m also buys the postcode cachet of living on one of the best streets in the Essex/east London borderlands. Built in 1937, this large detached family house is set back from the road: it has four double bedrooms, three good-sized receptions, a neat little office, an up-to-the minute kitchen and a utility room. If one garage isn’t enough, the drive has room to park a fleet of cars. There’s also a hefty 120ft garden at the back. 020 8508 5424, johndwood.co.uk

One mile away …

Chigwell Row £975,000
It’s a bit further from the Tube and shops, but this listed five-bedroom house in villagey Chigwell Row comes in at less than a million. It was built in the late 15th century: the uneven floors and doorways won’t be to everyone’s taste, but it’s a goldmine for anyone looking for a home with character. The property has beamed, vaulted ceilings, a cute cottage kitchen and a private staircase in one of the bedrooms. There’s a huge rear garden with a pool — which could do with a bit of work — and a garage. If that’s not enough open space for you, Hainault Forest Country Park is a short stroll away. 020 8340 8833, johnthoma.co.uk

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