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Have you paid off your mortgage early?

(60 Posts)
alma123 Thu 16-Jan-14 21:39:10

How did it work out for you - was it worth it? I have been paying bits off here and there but I think it's making me a bit miserable. Instead of having a bit of fun with my money, I'm re-directing my spare cash at the mortgage and well... despite paying some off, it still feels like a big number remaining.

LauraBridges Sun 19-Jan-14 11:57:31

We did when I was about 33 by lots of cut backs and over payments. Then realised I'd work for another 30 years and income was growing so got a very big loan on a very large lovely house (but only over 10 years, not 25) which I overpay and hope to pay off in the next 2 or 3 years. Whilst it may seem silly to over pay when rates are low (I pay 3.1% on the loan) it pays off in future years and from the psychological feeling of security. I will be glad when it's all paid off. Any spare money is saved for a once a year repayment.

We have a 30 year mortgage but aim to pay it off in 12-DD will be 13 and DH and I will 41. Please God. We're currently on a fixed rate and are only allowed to make OPs of 20% of the monthly repayment each month but in a few months the fix ends and we're going to throw everything we can at it to get to a better equity % and hopefully a cheaper fix that allows unlimited OPs before interest rates go up. Feels like a bit of a race as we don't know when they'll go up.

AGoodPirate Sun 19-Jan-14 12:31:05

We did overpay a little each month before we had two DC, but now we struggle to spare anything extra. I miss overpaying. I might save up over the next few months and send them some.

GirlWithTheDirtyShirt Sun 19-Jan-14 12:37:59

We are hopeless with money, total spendthrifts.

BUT we have always overplayed the mortgage by 20% each month. In less than four years we've paid off enough to knock six years off the loan period and saved something like £13k in interest.

Nursery fees are still more than the mortgage though!

BackforGood Sun 19-Jan-14 12:52:26

Almost - it's just the BEST feeling ever.
It gives you both security and choices.... spend extravagantly or give up work or reduce your hours or plan to finish a few years early or whatever. Puts you in a really good position to be in.
Also means you pay THOUSANDS less than you would if you just leave it over it's full term.
Have a look at one of the calculators that show you cutting it by just 3 or 5 years, how much you would save in interest.

DinoSnores Sun 19-Jan-14 15:55:45

alma123, we are in the same position as Mumoftwoyoungkids. We have a lifetime tracker of 0.25% above the base rate, so since having the children, we have just put the money we would have paid into the mortgage into savings where it earns a little bit more. We could be mortgage free at the moment if we wanted.

TalkinPeace Sun 19-Jan-14 16:48:11

we overpay into our mortgage but do not reduce the capital
so we effectively get 2.55 % tax free on all of our spare cash ...

the mortgage will be ready to roll over to zero later this year

champagne that evening I tell you

TalkinPeace Sun 19-Jan-14 16:49:23

ps
my "cost of credit cards" thread has a link to my spreadsheets you can all download and play with to see your options on mortgages ...

Oblomov Sun 19-Jan-14 18:23:45

Have never overpaid. Keep meaning to. But never do. Food for thought.

ChocolateWombat Sun 19-Jan-14 18:45:44

Hello. We have overpaid. We always did it a bit. Every now and then, we would then reduce the term of the mortgage. Very satisfying. When the financial crash happened 5 years ago, interest rates plummeted but we never reduced our payments. We maintained the payments which slashed the term remaining. The mortgage came to an end just at the point we wanted to send our DC to private school. We can afford to do it, even on very average incomes because we have no mortgage.
If you are thinking about overpaying, look at it in terms of something big you will be able to have later as a consequence. For us it's the private schooling, but for others it might be a car, a holiday or earlier retirement. Think of it in terms of the big things you'll gain and see the cost in terms of the small things you give up now, like coffees when out and about, or sky TV. Just examples. Def not saying everyone should give up those things.

ChocolateWombat Thu 23-Jan-14 21:27:57

We are close to doing it. Will be clear in the next few months. Will have cleared a 23 year mortgage in 11. Have had mortgages with 3 companies over that period. First 2 allowed overpayment by 10% per year, which we always did via lump sums which came from savings,one our savings reached a certain level. Think we also paid off a lump sm at point of re mortgaging. For last 5 or 6 years have luckily been on a lifetime baser ate tracker at 0.7 above base rate. How amazing that has turned out to be with low interest rates for so long. It had no restrictions on overpayments. As interest rates fell, we maintained payments and reduced the term.
Could have just used savings to pay off the last £10k or £15k but decided not to as savings were earning 4% in fixes rate ISAs. Haven't calculated the actual savings over time, but thousands.
And the big thing for us about it, is that we are considering private school for our DC and the fact that we will be mortgage free means we will be able to do it if we decide to. Otherwise would have been impossible. For us, that's the level of difference it has made, which I think is amazing. Well worth it!

bonvivant Thu 23-Jan-14 21:37:15

Hi, I've always overpaid my mortgages. Cleared my last one about 8 years ago and moved to a bigger house last year. We didn't really need a mortgage but took one out more as a bridging loan. It's completely flexible and we've already cleared most of it - should be cleared in next few months. I think you should always clear your debts unless you are earning more in savings. In my case, I've prioritised paying my mortgage off instead of a pension though. I'm self employed so no one is contributing to the pension but me and at least I know I'm definitely gaining by paying off the mortgage.

Once this one is paid off though, any cash saved is going to my pension pot. I'm early 40s and not intending to move house again!

TalkinPeace Thu 23-Jan-14 22:13:11

I'm using ISAs rather than a pension pot as then I'm in control of the money - especially as the pensions industry has just deferred the fees cap by another year

Supermum222 Sun 26-Jan-14 18:18:54

We have overpaid ours. We are in an offset mortgage with Woolwich (Barclays)...really low interest. Ours is scheduledto finish March 2017. I can't wait. I am part time (NHS) and have been mulling over extra hours as we are short staffed and management have offered. I have 2 kiddies, boy almost 10, girl almost 6. I don't want to regret working extra hours especially as our mortgage hasn't' got long to go. We will be £900 a month better off. I plan on doing some home improvements and we do plan on downsizing when the children are left home.
We don't have any other debt. I budget well...thanks to my student days hee hee.
If I were to work extra hours we would be very well off in 3 years time. Well, better than we are now. I would love to take the children travelling to the USA when they are older...like we used to pre kids.

Mam23 Sun 26-Jan-14 18:28:37

Yes! Paid a 25 year momortgage off in 10 years. Was an offset so we could overpay as much as we wanted. It's amazing when you look at how many tens of thousands you save in interest doing it this way. That's my motivation. We now get to spend those thousands on our family rather than just 'empty' charges to the bank.

LadyKooKoo Sun 26-Jan-14 19:04:08

We are 1 year into a 32 year mortgage and based on the overpayments will be mortgage free in 10 years and will have saved over £100k in interest. I work PT at the moment and we have childcare costs so over the next couple of years should be able to increase the overpayments and may even clear it quicker than that. I love logging into the mortgage account and seeing it drop quickly! DH and I will both be early 40s once it is cleared and I am looking forward to being mortgage free and going on lots of amazing holidays with the DC and DH.

bamboostalks Sun 26-Jan-14 19:29:21

Well surely it depends on the actual size of the mortgage and the value of the house? I mean you can be congratulating yourself on being mortgage free but if that means your house is only worth £200k then perhaps you'd be better taking on a larger mortgage where the potential gains are considerably more. I would love to be mortgage free on a house worth a million but wouldn't be wetting my pants at £350k. I'd be thinkng that I could probably manage to pay more and have a house worth massively more to cash in for my retirement. It's all totally relative.

redgate Sun 26-Jan-14 19:41:19

I can only ever dream of living in a house 'only worth £200k' - and I am incredibly proud of how hard I am working to pay my much much smaller mortgage off early. It is relative, in terms of how much it means to you, not the numbers involved.

LadyKooKoo Sun 26-Jan-14 19:42:11

That is all very well bamboo but mortgage companies give people mortgages based on what they think they can afford, not what they actually can. I am paying almost three times what my mortgage payment is but the bank wouldn't give me a mortgage that was three times more. DH and I have buy to let properties and will be able to purchase more when the mortgage is cleared in ten years time. The revenue from them will be worth far more than buying an extremely expensive house now that I spend 25+ years paying off, just to sell when I retire to live off.

bonvivant Sun 26-Jan-14 20:50:23

I don't agree bamboo. We could afford a bigger mortgage - nearly paid ours off and we both earn well. But I'm not going to take on another mortgage, have worked really hard to get in this position and now I want to relax and have a bit of fun. We don't want to continually be stretching ourselves, to get a bigger, better house all the time. Plus the bills get bigger too as the houses get bigger!

TalkinPeace Sun 26-Jan-14 21:11:06

bamboo
I bought my house for £60k, then extended the mortgage by £100k when I did a mahoosive extension.
My house is currently "worth" £300k
but my earnings would never, ever, allow me to get a £300k mortgage

and I'm looking forward to being mortgage free in 8 months

bonvivant Sun 26-Jan-14 21:26:16

I can't really get excited about increasing house prices because I know what that will mean for the younger generation. Don't get me started on the buy to let trend!

littlemrssleepy Sun 26-Jan-14 21:42:42

We did - due to some good fortune with some shares. But we then ended up re-mortgaging so that we could buy an investment property outright. We could get a much better mortgage with a low LTV on our own property, compared to their higher rates and LTV we would have got if we had mortgaged the rental property itself. Does feel a bit crap that having paid the mortgage off we've now got one again, but the rental completely covers it and so technically (as long as the rental property is let) we are still mortgage free.

Babyroobs Sun 26-Jan-14 21:50:18

We are trying to clear ours by overpaying in the next five years so that by the time the kids go to University ( we have 4 , all 2 school years apart eek !) we will have spare cash to help them hopefully.

ShadowOfTheDay Mon 27-Jan-14 13:08:01

Our house price was £100,000 roughly..... we have paid off the mortgage early...

Paying interest only over 25 years would have cost us around £110,000.... (at an average of 4%)

So our house would have cost £210,000

Paying interest only over 16 years = £63,000

So our house would have cost us £163,000.....

We actually paid less because we did overpayments each month so the interest came down each month...

Actual cost to us of our £100,000 house came to £147,000 - saving us approximately £63,000 for overpaying and paying off early...

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