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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.

Financeprincess Thu 16-Jan-14 22:19:47

Yes, it is worth it.

Over a typical 25 year mortgage, factoring in interest, you will pay back 2 to 3 times the amount you borrowed. Paying the principal down quickly is a smart thing to do.

It sounds like you are trying to do too much though - you don't have to throw ALL your spare money at it. Even small overpayments each month make a big difference. Keep some back for having fun with!

Before I was married, I paid off my mortgage on my house. It meant that when DH and I got married, and wanted a bigger house, I had a nice pile of cash for a deposit. We're overpaying our mortgage, and should clear it over a 10 year term rather than 25. We still have fun though...you can't enjoy life if you're too austere.

It's a great feeling, not having to pay the mortgage every month. Such a sense of freedom. You're no longer at the mercy of interest rates and the house is all yours.

HermioneWeasley Fri 17-Jan-14 09:38:01

One of the best things I ever did. Been mortgage free since my early 30s, and while the house is not Buckingham palace, it is all ours. I work long hours in a demanding job and it is so liberating to know that it is genuinely my choice to do so, and I could walk out tomorrow if I don't like it anymore.

Also as Princess says, it makes sense from an interest perspective.

CogitoErgoSometimes Fri 17-Jan-14 09:43:04

I was well on the way and had a finishing line in sight of 2017 before I thought better of it, rescheduled, borrowed lots more money and organised some significant home improvements. I have spent the last five years paying 10% of the balance off each time and that has a significant effect on the end date. Will probably carry on doing that tbh. However, at no stage have I committed more than 40% of my take-home to paying off the mortgage each month. Important to strike a balance & still have enough spare for a holiday or treats.

slug Fri 17-Jan-14 11:12:28

The best thing we ever did. It's a tiny flat but there's no way I ever want a mortgage again. It's so liberating. We paid it off when DD was one year old. This meant DH could quit his job and be a SAHD. With no mortgage we were perfectly able to live off my 4 day a week teacher's salary.

Like Hermoine says. It means you never need feel trapped in a job again.

Best thing EVER! Such a feeling of security. Whatever happens to our jobs or health or finances we have a roof over the family.

Worth it ten times over.

We will be. We've got 10 years left, and are now in a position where if we stretch ourselves for the next two months we can pay it off entirely.

Weighing up all the pros and cons it's definitely going to be the best option.

Mmmbacon Fri 17-Jan-14 11:22:58

we are sort off currently overpaying, we knocked 5 years off when bank insisted on making us reapply for mortgage after fil passed away as he was guarantor, we went from fixed to variable, reduced term by 5 years and reduced payment by 50pm, will be increasing when ds is in school asks dont have another mortgage to pay in creche fees, hoping to pay off some extra when his free hours kick in,
Although friend recommended always having a small mortgage as out is easier to remortgage for university for kids than to get a new loan, not sure how reliable that advice is but interesting,

littleredsquirrel Fri 17-Jan-14 13:41:13

We are overpaying lump sums when we have the cash and also a regular amount each month and will be done in 5-6 years at this rate. I can't wait. Mind you we won't know what to do with our income since so much of it currently goes on mortgage payment (all of DH's salary).

Miggsie Fri 17-Jan-14 13:46:23

Yes, we overpaid massively and paid off the mortgage when DD was 5. It meant not a lot of luxuries and no holidays for some years but DD was so small she didn't really notice.

The difference means we were able to send DD to a private school when the local state proved a disaster... If we had had the mortgage still running we could not have afforded that. Gave us a lot more options and meant DH didn't have to take a promotion which would have meant long hours as we were not servicing a mortgage.

Financeprincess Fri 17-Jan-14 14:28:35

Don't remortgage to pay your children's university fees, bacon! You'll be impoverishing yourself in later life. Let them stand on their own two feet and take responsibility for their own debts.

In any case, they won't be pleased if they have to help you out financially when they are in their thirties and you're trying to pay a mortgage from your pension.

overthemill Fri 17-Jan-14 14:32:40

Can I ask if you do overpay, what kind of figure is it? Out mortgage only allows overpayments of 299 a month before something mean happens (?higher interest rate). I always think we will but never have spare cash tho May next year

littleredsquirrel Fri 17-Jan-14 14:51:38

I think the figure would be misleading because it depends on the size of the mortgage in the first place.

We are allowed unlimited overpayments. My monthly "overpayment" is £3,500 but that is because I have an interest only mortgage but we pay each month the equivalent of a repayment mortgage and then some on top.

PirateSchool Fri 17-Jan-14 15:26:55

I can't I'm too greedy.

I could have paid off the mortgage on my first home (in fact I had a similar amount saved when I moved out) but I wanted a nicer house. Just as well I did as that little falling down house would not have been suitable for a family.

House no.2 - an amazing tracker mortgage, if I had overpaid for the last 4 years I could have made a serious dent in it. But it coincided with 2 maternity leaves and childcare-costs-from-hell so we never did.

Then of course we got greedy and have got house no.3. I am really glad we moved here, I love it, not extravagant by the standards of most of my colleagues but we will be nearly 60 when we pay it off.

There is a balance though between enjoying today and being prudent for the future. I wouldn't want to make today miserable in order to pay off the mortgage in 10 years. But if it was a 3 year sacrifice then I would.

WeAllHaveWings Fri 17-Jan-14 16:57:00

Our mortgage deal allowed overpayments of £500 a month, so if we had spare cash would put it in, as a £500 over payment would bring the term down by a few weeks each time (we also had a small £4k inheritance and a small £4k endowment policy compensation that went in £500 at a time)

When the fixed deal finished we went onto their standard rate mortgage which allowed unlimited overpayments, I got made redundant and paid £20k of dunny money into my mortgage.

With the all the overpayments in the last 10 years we've probably taken 12 years off our mortgage term and will save over £20k in interest and insurances. 3 years left to go and will be mortgage free at 48, ds will be 12 then and we can bump up his monthly savings.

There is a great excel mortgage tracker template somewhere that lets you put all your figures in and either regular or oneoff overpayments so you can work out how much you are saving (I used to have it but cant find it on my new PC)

alma123 Fri 17-Jan-14 17:51:42

Thanks for the thoughts so far.

We're allowed to overpay as much as we want on our current mortgage - it is completely flexible.

I guess though that even if we do manage to repay early, we will still have to work to pay bills etc. I mean we would never be able to give up work just because we pay off the mortgage - well I might but DH would still have to work! My monthly council tax is not far off my monthly mortgage payment!

Preciousbane Fri 17-Jan-14 18:34:14

We overpaid, we owe 7K but decided to keep as 0% above tracker so we could have paid it all off by age 38. We risked money in investments and it worked out quite well.

We are about to move and will take out another mortgage and then sell our current home which will release equity and we will again overpay and be mortgage free in about five years when DH reaches 50.

morethanpotatoprints Fri 17-Jan-14 18:39:34

OMG, yes totally worth it.
You don't realise what a mill stone it is until you hear others panicking about interest rates rising. The security it gives you and the peace of mind is worth doing without a new car, kitchen, holiday etc.
The money you save from paying the mortgage and interest can be saved for luxuries, or better lifestyle.

Piffpaffpoff Fri 17-Jan-14 19:18:26

Yes, we overpaid hugely each month, pre-kids, and a then a couple of big redundancy payments got put in there too. Paid it off in full about 2 yrs ago. It's such a good feeling to not have that huge outgoing each month.

Mumoftwoyoungkids Fri 17-Jan-14 21:43:01

We haven't technically but we have significantly more in savings than our mortgage (savings earn more than we pay on our mortgage so we are keeping it that way for now.)

For us it isn't about being able to quit work but about being safe. No one can ever take our children's home. Which is pretty d@mn fabulous in my world.

We did lots of overpaying in our pre kids 20s but didn't completely sacrifice having a nice life to do so. I do slightly regret not having more swish holidays before we had the kids but we has a pretty good time of it so can't complain.

One thing we found was that e mortgage felt like this huge black hole we kept paying money into until one day it wasn't. As it suddenly fell to an amount that seemed manageable. Suddenly we were in control and the numbers seemed to fall really fast because as a percentage the difference in going from 80k to 40k is completely different to going from 180k to 140k.

alma123 Fri 17-Jan-14 21:47:45

Mumoftwoyoungkids, interested to know where you keep your savings! I'm really struggling to find a savings interest rate that is better than my mortgage interest rate (approx 2.5%). That's why I've been paying off my mortgage!

OodlesofOods Fri 17-Jan-14 21:49:59

Look up the MSE mortgage overpayment calculator. I find it quite addictive blush

lljkk Sat 18-Jan-14 19:27:05

WE did, absolutely no regrets, great freedom, highly recommended if possible. We were lucky we were in a position where it didn't feel like a sacrifice.

Mrswellyboot Sat 18-Jan-14 19:36:38

I also used the money saver over payer to kick myself up the arse and now have 13 years rather than 22 years left. I will be out on negative equity in five so able to move please god. Yahoo

Mumoftwoyoungkids Sat 18-Jan-14 20:29:49

alma We have a really good mortgage rate rather than great savings rates. (Combination of lots of equity and a mum who was an accountant before she retired and is a bit bored now and found a really good deal.)

We have our money in ISAs as we'd never beat the mortgage rate if we had to pay tax and we have to remember to move every year or two as often the decent rates include a time limited bonus.

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...

littleredsquirrel Mon 27-Jan-14 14:22:22

We bought our house with a large mortgage of over £450,000. The interest we ought to have paid on the loan was £284,000. Through overpaying (lump sums and regular overpayments) we should be paid off very soon having paid only about 65,000 in interest.

chickydoo Mon 27-Jan-14 16:52:47

I thank God we did! Bills are high each month, kids cost a fortune, thank God we don't have a mortgage too.

Squeakygate Tue 28-Jan-14 19:13:00

We overpay as much as we can and any inheritances / monetary gifts have always gone straight into the mortgage jar. I hope we will pay a 20 year mortgage off in less than 12.
This will then let us pay a bit more into dc savings / pension pots & I'd like to take the dc abroad too.

ml11j4b Wed 20-Aug-14 09:17:17

Message deleted by MNHQ. Here's a link to our Talk Guidelines.

Egghead68 Sat 23-Aug-14 16:27:08

Took on my first mortgage late in life (41). Frantically overpaying to get mortgage-free by 50. This means no car or holidays, taking a lodger and working freelance as well as full-time. I think it will be totally worth it though. I'm now 4 years in and have it down from �143K to �87K so I'm almost on track unless interest rates rise drastically.

Greengrow Sat 23-Aug-14 20:36:23

Yes, paid the first off at 33 and then could move to a much bigger house and on track to pay that off early too. It is definitely worth it if you can.

atticusclaw Tue 26-Aug-14 17:21:24

This is a zombie thread but still an interesting one. We are trying desperately to pay ours off and once we do it we will have saved a fortune (large mortgage). Once we have paid it off we will be thousands better off every month. Overpaying is definitely the way to go.

Didyouevah Tue 26-Aug-14 18:40:09

I agree - fascinating stuff.

arna Wed 27-Aug-14 14:08:35

We are now living in our 4th house purchase having up sized each time with a corresponding larger mortgage. We have overpaid on our offset mortgage but have never extended the mortgage term and we are still on target to technically pay it off in 8 yr's time or less - hopefully before my 50th! I say technically since we probably wish to maintain our hefty credit line should we need it.

foxdongle Wed 27-Aug-14 19:33:14

We paid ours off years ago, very early.
Then bought a house to rent out, so re-mortgaged for that, but the loan was small.
We are due to pay nearly half of that off next Jan when we're out of the fixed rate, using some savings. Then pay off any money left at the end of the month.
Then it will be paid off automatically about 2 years after. Quite a few years early.
It's quite doable if you have any spare left at the end of the month, I wouldn't want to forgo holidays and going out to do it though.

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