As the effect of rising interest rates begins to bite, homeowners may be tempted to reduce their impact by eliminating some or all of their mortgage debt.
While this is unlikely to be easy, there are options available, with a range of mortgages available which may be faster to pay off than homeowners' existing deals.
Those who have not switched from the original mortgage they obtained when buying their house could be the most likely to benefit, as there is a good chance they have enough money to provide more of a deposit and obtain a mortgage with a lower loan-to-value (LTV) ratio.
However, even those with no money to spend could see their repayments lowered by switching to an introductory offer or an offset package.
The main options available to homeowners looking to eliminate their mortgages are covered here - although that which is best-suited will always depend on individual circumstances.
Reduce your interest rate
Mortgage holders with a standard variable or tracker rate are likely to have seen their monthly repayments rise following the full percentage point increase in the Bank of England's base rate since November 2006.
Independent mortgage broker John Charcol noted that following the interest rate increase in May, many standard variable rates were around 7.75 per cent - two per cent higher than the best deal available.
Subsequently, when the base rate rose again in July, the firm's senior technical manager Ray Boulger added that "most fixed rates look expensive compared to discounts and trackers, unless Bank Rate goes beyond six per cent".
He explained that as fixed rates provide protection only if the base rate increases, consumers could consider alternatives if they believe the Bank is unlikely to raise rates much further.
Up to 4.5 million households on fixed rates could find they emerge to a climate where the base rate is at least a full percentage point higher than when they obtained their deal, according to Mr Boulger.
Switching to a new offer with due consideration given to the long-term implications of the deal could provide a suitable compromise between immediate affordability and ultimately decreasing the time taken to eliminate the debt completely.
Offset your savings
An offset mortgage uses your savings to reduce the amount of interest you owe, but does not require them to be spent in the form of a deposit.
The main advantages of such a package are twofold, according to the Council of Mortgage Lenders (CML).
Firstly, by reducing the balance of the mortgage on which interest is due by an amount equal to that held in savings, the overall interest paid is reduced accordingly, the CML states.
Meanwhile, the savings themselves do not incur income tax, but may still earn interest at a rate similar to that of the mortgage.
Offset mortgages are proving increasingly popular with consumers, CML figures show, with year-on-year growth of 49 per cent to March 2007, compared with growth of 15 per cent for non-offset lending.
While Britons with no positive savings balance could be unlikely to benefit from such a package, those whose mortgage is their only debt may be able to reduce the amount owed using their savings.
Add value to your home
Adding value to your home could be one way of remortgaging at a lower LTV.
This may allow a borrower to avoid incurring higher lending fees - which the CML warns could be added to mortgages with an LTV of more than 80 to 90 per cent.
Property service SmartNewHomes suggests that adding a conservatory could increase the value of a home dramatically.
Head of marketing Steve Lees advises: "By definition it will because it's extra space - it's an extra room potentially.
"People will be doing that, in terms of extensions or conservatories, to have extra space rather than move to a bigger home."
By adding value to a property, residents could find their mortgage represents a smaller percentage of the total price when remortgaging.
The CML recently reported that Clive Briault, managing director of retail markets at the Financial Services Association, warned against combining a high LTV with a high income multiple when seeking a large mortgage.
He told the council of the risk posed by obtaining a product on the limit of affordability.
Mr Briault added that homeowners should be cautious of increasing their debt by moving to a larger house with a higher asking price than their current home.
An extension could be a means of increasing the value of a domicile by more than the expenditure required from the resident.
Which is the best option?
The best option for an individual generally depends on their circumstances - those with no savings would be unlikely to benefit from an offset mortgage, or to be able to afford to build an extension.
While the CML suggests that lenders may allow a client to remortgage in order to obtain the funds for an extension, this could be a step further away from becoming debt-free.
For individuals with little money to spend, a straightforward remortgage may be the best option - although this will rarely be cost-free.
One-off fees such as application and arrangement charges are likely to feature in any new mortgage request, while a valuation may be required if the market value of the property has changed since the previous mortgage was obtained, the CML advises.
Meanwhile, homeowners whose current introductory offer has not expired could find they are subject to exit fees if they wish to escape the contract and move to another lender.
Contacting the current lender may be an effective way of determining whether they provide an alternative product which could be of greater financial benefit, as well as discovering whether they offer any other advice towards eliminating mortgage debt.
Speak to an FSA regulated impartial mortgage advisor to discuss your mortgage options.
Speak to an FSA regulated impartial mortgage advisor to discuss your mortgage options.
