Paying off the Mortgage early?
Discussion
Yep, i'm on a tracker with Natwest that allows overpayment up to 10% of the total balance.
Currently sticking in an extra £250 a month which will save many years and thousands of pounds.
Have a look on moneysavingexpert for the overpayment calculator that will allow you to see what you could save.
Jontymo
Currently sticking in an extra £250 a month which will save many years and thousands of pounds.
Have a look on moneysavingexpert for the overpayment calculator that will allow you to see what you could save.
Jontymo
I'll have a look at that website.
Since our fixed rate ended, we have the ability to make unlimited overpayments so I am thinking about spending a lot less on living costs and dumping about £2k a month extra into the Mortgage.
I want to limit our exposure when the interest rates go back up.
Since our fixed rate ended, we have the ability to make unlimited overpayments so I am thinking about spending a lot less on living costs and dumping about £2k a month extra into the Mortgage.
I want to limit our exposure when the interest rates go back up.
I've got an offset and paying it down as quickly as I can. The more you can overpay the more it will insulate you from the Inevitable interest rate rises. I pay mine as if it was 8% + overpayments on top when I can. That way rates need to rise by 5.5% before it will start hitting my pocket.
It's kind of easier to overpay while interest rates are low. Some financially astute people will no doubt recommend using the money elsewhere to generate cash, but I belive in getting rid of debt.
I fella I used to deal with (a senior director well paid) said that his priority was to get rid of his mortagage. Once gone if the worst came to the worst then he could always put food on the table. Seemed to make sense to me.
An alternative (dependant on age and sitution) would be chuck a load of dough into a private pension, take advantage of 20/40% tax relief and then when 55 take a 25% tax free sum to clear debt. (a bit more risk though)
I fella I used to deal with (a senior director well paid) said that his priority was to get rid of his mortagage. Once gone if the worst came to the worst then he could always put food on the table. Seemed to make sense to me.
An alternative (dependant on age and sitution) would be chuck a load of dough into a private pension, take advantage of 20/40% tax relief and then when 55 take a 25% tax free sum to clear debt. (a bit more risk though)
Bluequay said:
I've got an offset and paying it down as quickly as I can. The more you can overpay the more it will insulate you from the Inevitable interest rate rises. I pay mine as if it was 8% + overpayments on top when I can. That way rates need to rise by 5.5% before it will start hitting my pocket.
Ours is actually an Offset Morgage, but we have never paid any money into the offset.Bluequay - When you talk about these payments, are you putting the money into the offset part, or actually off the Mortgage balance?
The jiffle king said:
Bluequay said:
The more you can overpay the more it will insulate you from the Inevitable interest rate rises.
I don´t really see them going up for some time.... maybe as late as 2016,FreeLitres said:
Bluequay said:
I've got an offset and paying it down as quickly as I can. The more you can overpay the more it will insulate you from the Inevitable interest rate rises. I pay mine as if it was 8% + overpayments on top when I can. That way rates need to rise by 5.5% before it will start hitting my pocket.
Ours is actually an Offset Morgage, but we have never paid any money into the offset.Bluequay - When you talk about these payments, are you putting the money into the offset part, or actually off the Mortgage balance?
Bluequay said:
A bit of both the 8% equivalent mortgage payment goes into the mortgage, overpayments into the savings offset. I need to start using my ISA allowances now though as well as it will be paid off within 4 years max.
Can you explain why you don't just use it all for the Mortgage balance? Is it because you might need some of the cash in the future?FreeLitres said:
Bluequay said:
A bit of both the 8% equivalent mortgage payment goes into the mortgage, overpayments into the savings offset. I need to start using my ISA allowances now though as well as it will be paid off within 4 years max.
Can you explain why you don't just use it all for the Mortgage balance? Is it because you might need some of the cash in the future?You should never pay off the offset early just let it run down over the original term - you keep the effective overpayment in one of the linked accounts. If you put that into the mortgage you cannot take it back out whereas in a linked account it does exactly the same but you can use it whenever you like.
In addition reason for keeping it going is if you want to borrow more £ for whatever in the future it's vastly cheaper than credit card or personal loan or PCPS or HP ie its the cheapest financing to will ever have.
As for paying it off early or not firstly if you haw other debts which have a higher interest rate pay those off first secondly if you have a work place pension which the company pay in too do that next thirdly overpay the mortgage as mic as you can as has been stated earlier at some point rates will go up and historical rate is c5% so you need to be able to afford that so get used to that now and between now and when it does rise your smashing down the mortgage debt which is great.
Once cleared its something noone can take away from you so even jobless you only pay water rates and council tax (candles and sit in sleeping bags to keep warm)
Once cleared it also means you can then spend what you had on mortgage on other things - personally when ours is cleared I think we may have a crazy 6 months really expensive holidays meals etc and then we'd probably start putting that cash into savings to add to our retirement provisions. I mean £2.8kpcm basic mortgage payment quickly adds up to a sizeable savings pot ISAs premium bonds shares higher company pension payments so that we can have a comfortable retirement. Also means once we get to a position to then don't need to worry too much about buying nice cars and stuff.
Taking it to te macro level they say these days it's 30yo when people buy the first house so 25 year mortgage means mortgage free by 55. Then build up savings for the following 15 years using the money you had been spending on the mortgage as otherwise it will simply just be spent.
In addition reason for keeping it going is if you want to borrow more £ for whatever in the future it's vastly cheaper than credit card or personal loan or PCPS or HP ie its the cheapest financing to will ever have.
As for paying it off early or not firstly if you haw other debts which have a higher interest rate pay those off first secondly if you have a work place pension which the company pay in too do that next thirdly overpay the mortgage as mic as you can as has been stated earlier at some point rates will go up and historical rate is c5% so you need to be able to afford that so get used to that now and between now and when it does rise your smashing down the mortgage debt which is great.
Once cleared its something noone can take away from you so even jobless you only pay water rates and council tax (candles and sit in sleeping bags to keep warm)
Once cleared it also means you can then spend what you had on mortgage on other things - personally when ours is cleared I think we may have a crazy 6 months really expensive holidays meals etc and then we'd probably start putting that cash into savings to add to our retirement provisions. I mean £2.8kpcm basic mortgage payment quickly adds up to a sizeable savings pot ISAs premium bonds shares higher company pension payments so that we can have a comfortable retirement. Also means once we get to a position to then don't need to worry too much about buying nice cars and stuff.
Taking it to te macro level they say these days it's 30yo when people buy the first house so 25 year mortgage means mortgage free by 55. Then build up savings for the following 15 years using the money you had been spending on the mortgage as otherwise it will simply just be spent.
FreeLitres said:
Is anyone here making an effort to pay off your Mortgage early by making large over-payments?
Is it a good thing to do while the interest rates are so low?
I'm seriously tempted to start with regular large over-payments. Anyone else?
If the interest on the mortgage is higher than your savings then yes within reason. If not keep saving until that situation changes then pay off what you can.Is it a good thing to do while the interest rates are so low?
I'm seriously tempted to start with regular large over-payments. Anyone else?
Its all about opportunity cost and net present value of your investments.
Compounded over 20 years a mortgage will cost you a lot.
Or as mentioned work out what repaying your low rate mortgage is worth as opposed to what else you can do with your money.
If you can get a better return elsewhere than what a capital repayment offers, then do so.
Mortgages are cheap and its quite possible to find better returns elsewhere.
Compounded over 20 years a mortgage will cost you a lot.
Or as mentioned work out what repaying your low rate mortgage is worth as opposed to what else you can do with your money.
If you can get a better return elsewhere than what a capital repayment offers, then do so.
Mortgages are cheap and its quite possible to find better returns elsewhere.
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