WHAT’S the easiest way for a homeowner to make €4,000, €16,000 or even €54,000? By paying off their mortgage early. Apathy and inertia are often the biggest enemies of money management. Although it’s easy to make monthly mortgage payments without even thinking about it, increasing those payments can knock years off the term of the mortgage and save thousands in the process.

Sarah Wellband, the associate director of mortgage intermediary Rea Mortgage Services, is very keen on the idea. “I can’t think of anyone it wouldn’t suit unless they can achieve better returns elsewhere,” she said. “At the moment, the interest on deposit accounts is about 2% but mortgage interest rates are about 3.5%.”

Paying a mortgage off early is a sensible option given current interest rates, and likely future increases could make it even more appealing, says Brian Leslie, the managing director of mortgage intermediary PrimaFinance.ie.

“Interest rates are not going down and they may go up in the next year,” said Leslie. “Bear in mind that although the deposit rate may go up as well, the gap may widen between the deposit rate and the mortgage rate. That would make it even more attractive for people to pay off their mortgage early.”

Before starting to make extra payments, shop around to find the best possible rate. Moving to a lender offering a lower rate can contribute significantly towards the goal of a mortgage-free life, says David Kiernan of OneLife.ie, a mortgage intermediary. “If you were paying €800 and switched to a better rate where you were paying only €600, you can use that extra cash towards paying off the principal or put it into another investment vehicle,” he said.

Even if a mortgage-holder were to switch from AIB’s standard variable rate of 3.3% to its tracker rate of 3.1%, they could make respectable savings. A person with a 25-year mortgage of €300,000 would save €4,710.50 and pay off the mortgage nine months early by this step alone. Before making such a switch it is always advisable to check the cost, as charges and penalties do vary.

The next step is to begin overpaying. The simplest way to do this is to make a payment every two weeks of half the amount you had paid monthly. This effectively means you make 26 smaller payments in 12 months. This can work well for those paid weekly.

Taking the same example of a 25-year mortgage of €300,000 at 3.1%, the mortgage-holder could save €16,387.11, and pay off the mortgage two years and 10 months early.

Those who cannot commit to regular overpayments have other options — unless they are on a fixed-term contract.

“You can pay off a lump sum or make a total repayment without penalty at any time under the terms of the Consumer Credit Act,” said Wellband. “As long as you are making the minimum payments and as long as you are not going into arrears, you can make irregular overpayments. Just make sure the lender is aware of what you are doing.”

Savings from overpaying to any extent will vary from person to person, but anyone can see the benefits by entering their data into an online repayments calculator such as that at Simplymortgages.ie.

To keep track of how the mortgage is diminishing, request a statement from the institution as it is obliged to provide one within 14 days, though there may be a charge.

Another option is to move to a current account mortgage. With the First Active current account mortgage, cash in the customer’s current account acts against daily interest calculations on the mortgage, meaning borrowers can save substantially on interest payments in the long term.

For example, a couple with a net income of €5,000 a month who take out a 25-year mortgage of €300,000 on a rate of 3.29% could save €54,133.39 on the total cost of their mortgage and cut the loan period to 16 years and three months, as long as their monthly expenditure stays at €4,500.

Despite the potential savings, paying off a mortgage early is not always the best option.

Although anyone on a tracker or standard variable rate mortgage can easily overpay, fixed-rate products generally do not allow for overpayments. Once you sign up, you must stick with the terms of the mortgage for the fixed period or pay high redemption penalties.

No amount of mortgage re-jigging will match the guaranteed 25% return offered by a special savings investment account (SSIA). Anyone not contributing the maximum should do so first.

Building up an emergency fund is also essential. “The last thing you want is to pay off a lump sum and then need cash for medical or educational reasons six months later,” said Leslie.

To those who decide to tackle their mortgage aggressively, Wellband says it is worth not going all the way. “There is one advantage to leaving a nominal amount of money, say €100, on your mortgage. The lender will keep title deeds free of charge. If the mortgage is paid off, you would have to pay for a safety deposit box,” she said.