Prepayment of mortgage interest

If it is your expectation that next year’s tax charge will turn out lower owing for example to your reaching retirement age, it could be advantageous for you to prepay your mortgage interest in 2014 as this could enable you to enjoy extra tax relief.

A maximum term of six (6) months applies where advance payment of mortgage interest is concerned. This makes it important that your prepayment should not extend beyond 30 June 2015. If you prepaid more than six months’ worth of mortgage interest, this would cause you to forfeit your entitlement to tax relief in 2014. Your tax relief entitlement in 2014 would thus be confined to 2014 itself.

Your mortgage lender needs to grant its permission for your prepayment of interest, which will moreover need to be set out in writing.