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Paying off the mortgage

(30 Posts)

Has anyone paid off their mortgage early? Ours is a 30 year term, taken out last year, and we've worked out that with some serious hard work we could pay it off in 7 years. Everyone I mention this to in real life (well, two friends and my mother-I don't talk finances with that many people!) looks at me like I'm mental.

We're not mental are we? We'll save over £80k in interest and be debt free before 40. It'll be hard work for the next 6 years but worth it-right?! I keep thinking we must be missing something massive or why wouldn't everyone overpay whatever they could...especially while savings rates are so low...right?

Moominsarehippos Sat 02-Feb-13 23:22:12

Check of there are any fees (overpayment or early closure). Most advisers will tell you that its the cheapest loan you can have. We are trying to pay off ours over the next year or so too.

redandwhitesprinkles Sat 02-Feb-13 23:26:03

I would be very surprised if there was no early repayment charge. Why did you take the mortgage over 30 years? This is 5 years longer than normal and you could have gone with 10/15 year mortgage?

OddBoots Sat 02-Feb-13 23:27:21

We've not managed 7 years but we have been overpaying so should be done in about 18 months (God and good fortune willing) which would make it about 17 years.

I think the sooner it's cleared the better provided you have a safety-net of some savings elsewhere in case you can't get the money back if you need it and you can still get enjoyment out of life. We could have paid it off faster if we had stopped the children's clubs and holidays etc but we wanted to get a balance.

notcitrus Sat 02-Feb-13 23:29:33

I'm impressed you're able to pay it off that fast - why did you take out a 30 year loan in the first place if you have the money to pay it back faster? Most standard mortgages are 25 or 20 years.

Go for it, but do keep some savings accessible for emergencies, and maybe balance repaying fast with enjoying life a bit too. But definitely better value than a savings account!

heidihole Sat 02-Feb-13 23:30:52

Yes, we paid ours off very early. Even with early repayment charges you save MASSES on interest and you get that lovely feeling of house security. well done you.

katolla Sat 02-Feb-13 23:34:18

Everyone on moneysavingexpert seems to be in favour.. I did my last place in 9 years, traded up and now have 6 years left to go. Since dc1 is due any day, I don think that's going to work out though..

SingingSands Sat 02-Feb-13 23:42:15

Wow...Really? How?

I'm not great at finances, I just plod along at it, what have I missed? Do you just overpay it every month?

DiscoTent Sat 02-Feb-13 23:42:48

A lot of mortgage deals only have early redemption penalties for the first 5 or 10 years, I know someone who carried on paying £10 a month towards the end of the term so it took them an extra couple of years to pay off. Even if you do this you save thousands in interest.

We paid off last week, 12 years after taking a 25 year loan. We were fortunate enough to be with Northern Rock who are currently waiving redemption fees for lots of customers.

The benefit of having a longer term than you're going to need is that, if your circumstances change, you can stop overpaying with no problems. We overpaid when we could, but didn't bother when we needed a bit extra.

Jinsei Sat 02-Feb-13 23:45:48

We are overpaying ours, too. Should be clear in about 5-6 years, if everything goes to plan. If you can do it, why not?! Our mortgage doesn't have any early repayment penalty either.

mercibucket Sat 02-Feb-13 23:46:04

Go for it
Wrt early repayments, if you do have a charge, just don't pay off the last, small amount
Check you can access the overpayments if you don't have savings tho. A redundancy would leave you stuck if you've put all your savings into the mortgage

mercibucket Sat 02-Feb-13 23:46:04

Go for it
Wrt early repayments, if you do have a charge, just don't pay off the last, small amount
Check you can access the overpayments if you don't have savings tho. A redundancy would leave you stuck if you've put all your savings into the mortgage

Mosman Sat 02-Feb-13 23:54:05

For the first 5 years we could only over pay by £6,000 in the January and now we can pay as much as we like off.
With regards to redundancy yes I would keep a small amount of cash savings but the financial help you might get doesn't start until they've all gone so there's only really benefit in having a months worth.

Mosman Sat 02-Feb-13 23:54:31

I'd also have mortgage protection insurance if i had a time machine.

Yes, we took it over 30 years so that if one of us lost our jobs the repayments would still be easily affordable. In the first two years we can only overpay 20% of each payment but after that there's no early repayment charge I think (though I'll check. Unlikely to be over £80k though!).

Ok, I am relieved we don't seem to be missing anything massive!

lightrain Sun 03-Feb-13 07:15:02

Most people don't overpay because they haven't got spare pots of money sat around! Good for you if ou can - but it's the cheapest loan you can get, so we strike a balance between mortgage, having a reasonable amountt of money for savings/ emergency funds and also having a nice standard of life (the odd holiday, takeaway, etc.). I'd rather have those things than be mortgage free and be living a miserable existence.

fridayschild Sun 03-Feb-13 07:23:15

We had almost cleared our mortgage on the first house when we decided to move somewhere with better schools. I'd recommend over-paying. It's great for peace of mind if you have a bad feeling about job security, as well as saving thousands on interest. Sadly the better school area came with higher house prices so now I am almost back to square one, and just making small overpayments when I can!

lightrain I meant why don't most people overpay what they can-I realise there's a balance to be struck! But even an extra £5 can take off a few hundred in interest. It's quite incredible playing with the calculators. And terrifying!

Moominsarehippos Sun 03-Feb-13 08:03:35

Maybe offset? Then the cash is liquid if needed.

lollystix Sun 03-Feb-13 08:09:11

We did an offset and I wish I'd done it years earlier - paid off half in 4 years. Just make sure you slow down as suggested for the last couple of £000's so you don't get redemption fees. Offset is very motivating not to spend. Go for it

Dededum Sun 03-Feb-13 09:14:24

Overpaying by £800 a month, which sounds better than it is as 100,000 of mortgage is interest only, but does take us to the equivilEnt of a repayment mortgage plus about £200. My aim is to keep increasing the overpayment....no redemption charges. Have 13 years left but aiming for under 10 years.

CogitoErgoSometimes Sun 03-Feb-13 09:30:05

I've been paying the mortgage down early. I'm on a fixed rate deal at the moment which involved penalties for early redemption but, every year, I can pay 10% of the balance without penalty. This brings the finishing date forward significantly every time..

Two caveats to paying off early. The practical one is that you should still have some 'liquid' (easy access) cash set aside and not plough every penny into your house. Should you need money in a hurry it's easier and less disruptive to raid a Cash ISA than it is to sell your property. The emotional caveat is that, whilst hard work is commendable, life's also for living and enjoying. So make sure you still work in plenty of treats and holidays and don't make paying off the mortgage the be all and end all.

Paying mine off early, should get it finished when eldest DC is 18 (just in time for all disposable income to go on student feeshmm).
Our main barrier to getting it paid off sooner has been having DCs (which cost whatever you have) and house maintenance.
Make sure you have a maintenance fund, in case you need urgent work on e.g. Boiler or roof.
I like seeing our mortgage balance shrinking month by month, makes a change from the start of the mortgage when most of the payment covered the interest.

Scrazy Sun 03-Feb-13 16:58:07

The other thing to consider is will you need to do any improvements on the property. When the mortgage is paid off the money is gone and you might end up having to mortgage again to keep the house in good order.

Dededum Sun 03-Feb-13 17:04:48

Because we are overpaying so much they send us a letter every month telling they have reduced our interest payments, so more of the payment is going to capital smile

BackforGood Sun 03-Feb-13 17:35:26

I can't understand why you would take out a mortgage over 30 years if it is really realistic to pay it off in 7, but that aside, yes, I've always kept mortgage payments high when the rates are low. When I've had a deal where you can't overpay, then I just have a standing order into a savings account and then pay off a lump sum when we come out of the deal. The figures are incredible of how much you can save with even relatively small overpayments. We're now within sight of the end of our mortgage, and it's a lovely feeling. Once your mortgage is gone it gives you so many more choices. smile

As I said, because we wanted to have a monthly repayment that was low enough for us to cover with one salary in case one of us lost our jobs; while we are both working we can afford to pay more but we don't want to bank on that always being the case.

timetopost Sun 03-Feb-13 19:50:06

We paid ours off after 10 years (had a 25 year mortgage). Because of the time we bought our house, the mortgage really wasn't that big. The main reason for the early pay off was that we had taken out an endowment mortgage and we didn't think it would pay it off at the end of the terms. We were quite lucky in terms of doing share save schemes through work, that did well and allowed us to pay off regular chunks of the mortgage. We kept our cars for longer than most people do, which saved us lots of money that could be paid towards the mortgage.

Paying the mortgage off early was a bigger thing for my DH than me, but now I'm so glad we did it. We've had a few redundancy scares at work, and it means we don't have the same worry/panic over our jobs knowing the mortgage is paid.

The only downside that I can think of is that it's put us off moving, having paid off one mortgage, we are reluctant to have another.

I don't know why, but I'm a bit embarrassed of us having paid it off, I'd never want to tell friends.

manyhands Sun 03-Feb-13 21:53:26

You could reduce the term and not face early repayment charges.

notcitrus Sun 03-Feb-13 22:00:54

yes, reducing the term might also help, now that you've paid a good deal off.
Just reducing our first mortgage from 20 years to 18 meant huge savings overall for about an extra £15 a month. Worth calculating.

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