Mortgage Overpayment effects
Discussion
http://www.whatmortgage.co.uk/calculators/fleximor...
Ok lets say the Mortgage amount is £150k and its a 25 year life. If you overpay by £10pcm you will reduce the term by 7.2months and save £3.8k in interest.
Remember std monthly repayments are £966 @ 6.0%.
If you say cancelled Sky (£50) and only went out 2 weekends a month (on the beers)[ say a £50 saving per night out thats £150 a month saved. If you put that into the mortgage you would reduce the term by 6years 5months & save £40k in interest charges!!!
lets say rather than changing your car every 3 years (buying brand new) you made them last 5 years. HP @ 8% for 3 years is £627pcm and HP@8% for 5 years is £405pcm so thats a saving of £222.
So a total monthly saving so far of £372 - and really hardly any hardship, this would result in a reduction of 11years 4months & save £69k in interest charges.
Now I always budget (standing order into a Holiday savings account) £100pcm per person for holidays thats 2 holidays one ski one beach & camping trips. However I usually stay in 4star+ but lets say I decided only 1 holiday a year was fine - either ski or sun and alternative it with lots of UK camping (or cheap ferry to france for camping) so I could save easily £50pcm.
Total saved so far £422. That reduces the term by 12 years & £74k in interest.
Next food shopping Im sure I could trim the weekly shopping by £15p.w = £65pcm. Total saving is £487 reduction of term by 13 years & £78k saving.
These are simple steps EVERYONE should try to do the savings are HUGE.
Remember you can always stop at any time and then restart, your investing in your future finances. Ignore House prices if your on the ladder you have a mortgage debt to be repaid (you either made a profit or not on the purchase price of the property & if you ever sell it) so reducing the debt financing is your key thing to do during the period.
Ok lets say the Mortgage amount is £150k and its a 25 year life. If you overpay by £10pcm you will reduce the term by 7.2months and save £3.8k in interest.
Remember std monthly repayments are £966 @ 6.0%.
If you say cancelled Sky (£50) and only went out 2 weekends a month (on the beers)[ say a £50 saving per night out thats £150 a month saved. If you put that into the mortgage you would reduce the term by 6years 5months & save £40k in interest charges!!!
lets say rather than changing your car every 3 years (buying brand new) you made them last 5 years. HP @ 8% for 3 years is £627pcm and HP@8% for 5 years is £405pcm so thats a saving of £222.
So a total monthly saving so far of £372 - and really hardly any hardship, this would result in a reduction of 11years 4months & save £69k in interest charges.
Now I always budget (standing order into a Holiday savings account) £100pcm per person for holidays thats 2 holidays one ski one beach & camping trips. However I usually stay in 4star+ but lets say I decided only 1 holiday a year was fine - either ski or sun and alternative it with lots of UK camping (or cheap ferry to france for camping) so I could save easily £50pcm.
Total saved so far £422. That reduces the term by 12 years & £74k in interest.
Next food shopping Im sure I could trim the weekly shopping by £15p.w = £65pcm. Total saving is £487 reduction of term by 13 years & £78k saving.
These are simple steps EVERYONE should try to do the savings are HUGE.
Remember you can always stop at any time and then restart, your investing in your future finances. Ignore House prices if your on the ladder you have a mortgage debt to be repaid (you either made a profit or not on the purchase price of the property & if you ever sell it) so reducing the debt financing is your key thing to do during the period.
Welshbeef said:
http://www.whatmortgage.co.uk/calculators/fleximor...
Ok lets say the Mortgage amount is £150k and its a 25 year life. If you overpay by £10pcm you will reduce the term by 7.2months and save £3.8k in interest.
Remember std monthly repayments are £966 @ 6.0%.
If you say cancelled Sky (£50) and only went out 2 weekends a month (on the beers)[ say a £50 saving per night out thats £150 a month saved. If you put that into the mortgage you would reduce the term by 6years 5months & save £40k in interest charges!!!
lets say rather than changing your car every 3 years (buying brand new) you made them last 5 years. HP @ 8% for 3 years is £627pcm and HP@8% for 5 years is £405pcm so thats a saving of £222.
So a total monthly saving so far of £372 - and really hardly any hardship, this would result in a reduction of 11years 4months & save £69k in interest charges.
Now I always budget (standing order into a Holiday savings account) £100pcm per person for holidays thats 2 holidays one ski one beach & camping trips. However I usually stay in 4star+ but lets say I decided only 1 holiday a year was fine - either ski or sun and alternative it with lots of UK camping (or cheap ferry to france for camping) so I could save easily £50pcm.
Total saved so far £422. That reduces the term by 12 years & £74k in interest.
Next food shopping Im sure I could trim the weekly shopping by £15p.w = £65pcm. Total saving is £487 reduction of term by 13 years & £78k saving.
These are simple steps EVERYONE should try to do the savings are HUGE.
Remember you can always stop at any time and then restart, your investing in your future finances. Ignore House prices if your on the ladder you have a mortgage debt to be repaid (you either made a profit or not on the purchase price of the property & if you ever sell it) so reducing the debt financing is your key thing to do during the period.
I overpay to the maximum allowed. Knocked 5 years off my term. After recent events my sole goal for the next decade is to clear my two mortgages in full.Ok lets say the Mortgage amount is £150k and its a 25 year life. If you overpay by £10pcm you will reduce the term by 7.2months and save £3.8k in interest.
Remember std monthly repayments are £966 @ 6.0%.
If you say cancelled Sky (£50) and only went out 2 weekends a month (on the beers)[ say a £50 saving per night out thats £150 a month saved. If you put that into the mortgage you would reduce the term by 6years 5months & save £40k in interest charges!!!
lets say rather than changing your car every 3 years (buying brand new) you made them last 5 years. HP @ 8% for 3 years is £627pcm and HP@8% for 5 years is £405pcm so thats a saving of £222.
So a total monthly saving so far of £372 - and really hardly any hardship, this would result in a reduction of 11years 4months & save £69k in interest charges.
Now I always budget (standing order into a Holiday savings account) £100pcm per person for holidays thats 2 holidays one ski one beach & camping trips. However I usually stay in 4star+ but lets say I decided only 1 holiday a year was fine - either ski or sun and alternative it with lots of UK camping (or cheap ferry to france for camping) so I could save easily £50pcm.
Total saved so far £422. That reduces the term by 12 years & £74k in interest.
Next food shopping Im sure I could trim the weekly shopping by £15p.w = £65pcm. Total saving is £487 reduction of term by 13 years & £78k saving.
These are simple steps EVERYONE should try to do the savings are HUGE.
Remember you can always stop at any time and then restart, your investing in your future finances. Ignore House prices if your on the ladder you have a mortgage debt to be repaid (you either made a profit or not on the purchase price of the property & if you ever sell it) so reducing the debt financing is your key thing to do during the period.
Yes, a no brainer..........still lots out there who would rather default that loose their sky subscription! Need to get back to our parents 80's style belt tightening.
What do you do all day - you've got no sky, bugger all in the fridge to eat, an old car sat on the drive, so you sit there darning your socks I bet ...
Jeez ... what a sad life! Yeah, overpay SOME, but don't cut back on ALL of life's niceties to pay for it - as has been said, a bus might have your name on it tomorrow.
If you sat there in the dark, with ten jumpers on you could presumably cut the cost by another £x and save £££ in interest.
Before you died of hypothermia ...
Jeez ... what a sad life! Yeah, overpay SOME, but don't cut back on ALL of life's niceties to pay for it - as has been said, a bus might have your name on it tomorrow.
If you sat there in the dark, with ten jumpers on you could presumably cut the cost by another £x and save £££ in interest.
Before you died of hypothermia ...
Edited by MikeyT on Thursday 9th October 12:40
[/quote]
I overpay to the maximum allowed. Knocked 5 years off my term. After recent events my sole goal for the next decade is to clear my two mortgages in full.
Yes, a no brainer..........still lots out there who would rather default that loose their sky subscription! Need to get back to our parents 80's style belt tightening.
[/quote]
Keep it up.
The other one I forgot to add was annual payrise... as soon as you & your partner get one up the mortgage overpayment.
My Mrs hated this aspect of real cost cutting - BUT seeing the benefit and having a Mortgage free date worked wonders. Knowing that if you buy x piece of junk you dont really need then the date gets no closer if you put what you had planned to spend on that piece of junk then the day gets closer.
Given ISA's & P bonds are maxed out this is the other tax free investment. Clearly benefits the 40% tax payer more so than the lower rate but even so the interest saved & years saved is motivation enough.
It matters little if you dont plan on living there forever as you can move your mortgage (well most are portable). Also given the very good repayments you are making banks are MORE willing to lend to you than someone who doesnt overpay - as they know your history. From their profit point of view your not so profitable but will be a higher credit rating.
Instead of moving a couple of years ago and paying the big mortgage we started making additional contributions for exactly the reasons outlined above. However, I do think there is a balance so that you can still enjoy certain fruits of your labour. After all the mortgage is an insured debt.
BlueEyedBoy said:
There is also the argument that you could get knocked over by a bus tomorrow, so why bother saving to live life when you have retired?
So that your partner will have less debt to repay - OR do you pay for life insurance to cover this possibility.The other thing is - surely you'd love to provide for your kids in such an eventuality.
The other thing is as your overpaying and ending your mortgage many many years early you could retire early too by those same number of years given you spend to the same level as before. Longer retirement.... yes please. Or work until your 65++ no thanks.
I've got an Intelligent Finance flexible mortgage and it's been great. I know that I end up paying Standard Variable Rate but because I can overpay and therefore save interest it suits me well. If you occasionally get bonuses or other unguaranteed/undependable income it would probably suit well too.
And, with the way IF works at least, you can apply to pull back any sums you've overpaid if you find you need the cash.
If you can't overpay by much though then you might be better off with a fixed-term deal (well, if they ever appear again).
And, with the way IF works at least, you can apply to pull back any sums you've overpaid if you find you need the cash.
If you can't overpay by much though then you might be better off with a fixed-term deal (well, if they ever appear again).
MikeyT said:
What do you do all day - you've got no sky, bugger all in the fridge to eat, an old car sat on the drive, so you sit there darning your socks I bet ...
Jeez ... what a sad life! Yeah, overpay SOME, but don't cut back on ALL of life's niceties to pay for it - as has been said, a bus might have your name on it tomorrow.
If you sat there in the dark, with ten jumpers on you could presumably cut the cost by another £x and save £££ in interest.
Before you died of hypothermia ...
Rather than buy ready meals cook the meal from raw ingredients it will be hugely cheaper (we do this all the time) and it will be much healthier no additatives & clearly you know what your putting into it. Plus its an activity you can do together so relationship building.Jeez ... what a sad life! Yeah, overpay SOME, but don't cut back on ALL of life's niceties to pay for it - as has been said, a bus might have your name on it tomorrow.
If you sat there in the dark, with ten jumpers on you could presumably cut the cost by another £x and save £££ in interest.
Before you died of hypothermia ...
Edited by MikeyT on Thursday 9th October 12:40
I know some people who eat out 4 odd times a week - we go out once every 3 months for a meal. Its so much more of an occasion when we go out on those times its really enjoyable - to them its just the norm so not special at all.
Rather than go out for a meal - cook a meal at home as a dinner party miles cheaper (for you and them) and in our experiance a lot more fun.
Welshbeef said:
http://www.whatmortgage.co.uk/calculators/fleximor...
Ok lets say the Mortgage amount is £150k and its a 25 year life. If you overpay by £10pcm you will reduce the term by 7.2months and save £3.8k in interest.
Remember std monthly repayments are £966 @ 6.0%.
If you say cancelled Sky (£50) and only went out 2 weekends a month (on the beers)[ say a £50 saving per night out thats £150 a month saved. If you put that into the mortgage you would reduce the term by 6years 5months & save £40k in interest charges!!!
I don't have sky. And I've never spent £50 on a night out ever. Okay I reckon I spend £50 a month on meals out.Ok lets say the Mortgage amount is £150k and its a 25 year life. If you overpay by £10pcm you will reduce the term by 7.2months and save £3.8k in interest.
Remember std monthly repayments are £966 @ 6.0%.
If you say cancelled Sky (£50) and only went out 2 weekends a month (on the beers)[ say a £50 saving per night out thats £150 a month saved. If you put that into the mortgage you would reduce the term by 6years 5months & save £40k in interest charges!!!
Welshbeef said:
lets say rather than changing your car every 3 years (buying brand new) you made them last 5 years. HP @ 8% for 3 years is £627pcm and HP@8% for 5 years is £405pcm so thats a saving of £222.
So a total monthly saving so far of £372 - and really hardly any hardship, this would result in a reduction of 11years 4months & save £69k in interest charges.
No I didn't really understand that. If you want to save £627 pcm on a car, buy a car for £627 cashSo a total monthly saving so far of £372 - and really hardly any hardship, this would result in a reduction of 11years 4months & save £69k in interest charges.
In my world I can make a £800 car last 5 years. My last car was £40 and lasted 3 years. My Next car will be £500 and last 10 years.
Welshbeef said:
Now I always budget (standing order into a Holiday savings account) £100pcm per person for holidays thats 2 holidays one ski one beach & camping trips. However I usually stay in 4star+ but lets say I decided only 1 holiday a year was fine - either ski or sun and alternative it with lots of UK camping (or cheap ferry to france for camping) so I could save easily £50pcm.
Total saved so far £422. That reduces the term by 12 years & £74k in interest.
I understand this one. Now there's four of us. Your thinking I'd spend £4800 on holidays before ? No. I reckon we spend £2k a year. Still too much if you ask me. We did once go family youth hosteling, but I'm never doing that again. I've got a problem with this one. Next year we are obligated to attend a wedding in the states. Ohio. I'm budgetting £3K, but this is a one off. Total saved so far £422. That reduces the term by 12 years & £74k in interest.
No savings here for me.
Welshbeef said:
Next food shopping Im sure I could trim the weekly shopping by £15p.w = £65pcm. Total saving is £487 reduction of term by 13 years & £78k saving.
Over the last year I've struggled to spend less than £50 a week for a family of 4, and we've arrived at a figure of about £70 a week. I know we could spend double that without trying. I wonder how much you spend. I'm betting you spend £120 a week and £15 reduction is a piece of piss ? For me I'm thinking I could save £5 a week if I buy no alcohol.
Welshbeef said:
These are simple steps EVERYONE should try to do the savings are HUGE.
These are simple steps most of us were making anyway and the savings are not there for most. Welshbeef said:
Remember you can always stop at any time and then restart, your investing in your future finances. Ignore House prices if your on the ladder you have a mortgage debt to be repaid (you either made a profit or not on the purchase price of the property & if you ever sell it) so reducing the debt financing is your key thing to do during the period.
In conclusion, you are right. Save today and there's jam tomorrow. But not as easy as you make it sound. Most people are living like you suggest they should live already. Welshbeef said:
MikeyT said:
What do you do all day - you've got no sky, bugger all in the fridge to eat, an old car sat on the drive, so you sit there darning your socks I bet ...
Jeez ... what a sad life! Yeah, overpay SOME, but don't cut back on ALL of life's niceties to pay for it - as has been said, a bus might have your name on it tomorrow.
If you sat there in the dark, with ten jumpers on you could presumably cut the cost by another £x and save £££ in interest.
Before you died of hypothermia ...
Rather than buy ready meals cook the meal from raw ingredients it will be hugely cheaper (we do this all the time) and it will be much healthier no additatives & clearly you know what your putting into it. Plus its an activity you can do together so relationship building.Jeez ... what a sad life! Yeah, overpay SOME, but don't cut back on ALL of life's niceties to pay for it - as has been said, a bus might have your name on it tomorrow.
If you sat there in the dark, with ten jumpers on you could presumably cut the cost by another £x and save £££ in interest.
Before you died of hypothermia ...
Edited by MikeyT on Thursday 9th October 12:40
I know some people who eat out 4 odd times a week - we go out once every 3 months for a meal. Its so much more of an occasion when we go out on those times its really enjoyable - to them its just the norm so not special at all.
Rather than go out for a meal - cook a meal at home as a dinner party miles cheaper (for you and them) and in our experiance a lot more fun.
My missus cooks everything fresh - I may chop a few peppers or peel an onion or two buyt that's the full extent of my involvement! Yes, it's better for you but we have always done this - it DOES help if one of you can cook.
We'll eat out once a fortnight maybe but then we have no mortgage so it doesn't matter ... !
woohoo no mortgage in 6 years!
oh i am selling it! drat!
_____________
you're entirely right though. and this calculator is a good device.
the thing is though those of us who care already do it...
adited to say - actually you're not entirely right. you're too tight. but in terms of not wasting cash on starbucks, pret, murdoch, porsche i agree.
i for one would rather be shot than go for pile em sell cheep chicken ever again. i woun't be one of those people in the 'flight to s
te' just because of a bit of inflation - i DO have some morals (hard as that might be to imagine if you've been on here reading my posts for 4 years..)
oh i am selling it! drat!
_____________
you're entirely right though. and this calculator is a good device.
the thing is though those of us who care already do it...
adited to say - actually you're not entirely right. you're too tight. but in terms of not wasting cash on starbucks, pret, murdoch, porsche i agree.
i for one would rather be shot than go for pile em sell cheep chicken ever again. i woun't be one of those people in the 'flight to s
te' just because of a bit of inflation - i DO have some morals (hard as that might be to imagine if you've been on here reading my posts for 4 years..)Edited by briSk on Thursday 9th October 13:18
MikeyT said:
What do you do all day - you've got no sky, bugger all in the fridge to eat, an old car sat on the drive, so you sit there darning your socks I bet ...
Jeez ... what a sad life! Yeah, overpay SOME, but don't cut back on ALL of life's niceties to pay for it - as has been said, a bus might have your name on it tomorrow.
If you sat there in the dark, with ten jumpers on you could presumably cut the cost by another £x and save £££ in interest.
Before you died of hypothermia ...
Welcome to the real world, where the car is old we only buy socks in the sale (I don't darn them, but I could and I have). And I keep turning off lights and turning the heating down. Jeez ... what a sad life! Yeah, overpay SOME, but don't cut back on ALL of life's niceties to pay for it - as has been said, a bus might have your name on it tomorrow.
If you sat there in the dark, with ten jumpers on you could presumably cut the cost by another £x and save £££ in interest.
Before you died of hypothermia ...
Edited by MikeyT on Thursday 9th October 12:40
And that was during the boom times.
What I can't figure out is whether I am better off saving rather than overpaying if the mortgage I am on (+.17 lifetime tracker) is a good deal and I will need those fund for a bigger house in the future.
If ISAs are maxed, and I am not on a higher rate tax band, what savings rate would I need to find to beat BoE+0.17?
If ISAs are maxed, and I am not on a higher rate tax band, what savings rate would I need to find to beat BoE+0.17?
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