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to want to make mortgage overpayments

(95 Posts)
Nickpan Wed 06-Mar-19 11:58:43

or AIBU to myself to confess to not understanding any of it?

Bumblebeezy Wed 06-Mar-19 12:02:07

Mortgage overpayments are a very sensible use of spare cash, depending on the bigger financial picture.

What is it you don't understand?

mogtheexcellent Wed 06-Mar-19 12:03:06

The MSE website is your best guide. the overpayments calculator is easy to use and a good visual aid if you need to convince others.

overpayments calculator

Nickpan Wed 06-Mar-19 12:09:49

I shall contact the mortgage company at some point, but wanted to hear experiences from my peer group.
It's the whole 'reduces what you owe' vs 'reduces how long you pay' scenario.
Someone also said 'interest rates are so low at the moment, why try and pay more off?' (They probably said: "IL's are SL ATM, why try and PMO?")

WarpedGalaxy Wed 06-Mar-19 12:10:10

What’s not to understand? You pay more than the required monthly capital repayment and it reduces the amount of interest you pay because you shorten the life of the loan. Win win.

Alsohuman Wed 06-Mar-19 12:13:03

It makes sense to overpay when interest rates are low so you owe less when they go up. You reduce the length of your mortgage too.

hammeringinmyhead Wed 06-Mar-19 12:13:45

You can reduce your monthly payment over the same time, or knock the time off. We usually keep the payment the same and it drops from say 23 years to 19 years left.

teyem Wed 06-Mar-19 12:14:02

I think I'd chose to reduce the payments rather than the term.

Bumblebeezy Wed 06-Mar-19 12:14:21

Interest rates might be low but they are paid over a very long period which really adds up.

The overpayment calculator is great and will illustrate this really well- even a small monthly overpayment can save a lot in interest over the term of the mortgage.

teyem Wed 06-Mar-19 12:14:30

Choose, even.

Nickpan Wed 06-Mar-19 12:15:25

"if you have equity, you should be re-mortgaging to spend on cars/holidays/home improvements", was another phrase.
MSE website currently being trawled smile

@WarpedGalaxy I kind of get how it works! It's whether it's the best idea.

livingthegoodlife Wed 06-Mar-19 12:16:25

We overpay

mogtheexcellent Wed 06-Mar-19 12:17:06

My mortgage is 2.09% interest. There arent any savings accounts that pay that much at the moment so its much better to reduce the mortgage term. By overpaying £70 a month my mortgage will be paid off in 10 years rather than 13. If you have the cash spare its worth doing.

livingthegoodlife Wed 06-Mar-19 12:18:01

We overpay and our statement says we will save something like £30k in interest and take 10 years off the term. Still feels like ages away - 15 years to go!! Def do it if you can.

Whisky2014 Wed 06-Mar-19 12:19:03

We set up an overpayment and do Have shaved 7 years off our mortgage term smile if you can afford to, it's advisable to do

MissUGirl Wed 06-Mar-19 12:19:44

I overpaid mine (planned) by the maximum amount allowed every month. The mortgage interest was higher than what I could have earned by investing the same amount of money anywhere else so it was a no-brainer.

When I started doing this, the mortgage company sent me a letter saying they were reducing my monthly payments rather than shortening the life of the loan. I had to make special arrangements for them to stop doing that. Something to watch out for.

teyem Wed 06-Mar-19 12:19:47

I mean, a mortgage is cheaper debt so if you are going to buy those things on credit then remortgaging might be an idea but you run the risk of being in negative equity or even just reducing your equity to the extent that you don't have access to better mortgage rates.

DianaPrincessOfThemyscira Wed 06-Mar-19 12:20:29

Interest rates are so low at the moment - it’s not a savers market at all. You will get much more money by paying off your mortgage than putting into a savings account.

Just speak to your lender and make sure you don’t going over your allowance as otherwise you’ll incur charges (something like, you can pay back an additional 3% of the balance without penalty if you’re on a fixed rate - otherwise they’ll charge you an early redemption fee).

LizB62A Wed 06-Mar-19 12:22:17

Pay more off if you can afford it - you might not be able to afford it when/if interest rates rise.....
Definitely check out MSE: www.moneysavingexpert.com/mortgages/mortgages-vs-savings/

And check out the overpayment rules for your specific mortgage e.g. for mine, any overpayment has to be a minimum of £500 and I can pay off a max of 10% of the outstanding value each year without incurring an early repayment fee (as I'm on a fixed term rate atm)

Judashascomeintosomemoney Wed 06-Mar-19 12:22:36

Depends on your situation. We’re overpaying to end it earlier as DH is twenty years older than me and he would like to have a few mortgage free years before he retires. Three years to go, counting the days! smile

BatsAreCool Wed 06-Mar-19 12:23:33

I overpaid for 5 years doubling the normal payment. I kept the payment the same but reduced the term.

We are now mortgage free which means if one of us cannot work then we can easily manage whereas it would have been tight if we still had the mortgage. I now don't care about interest rate rises bringing bigger bills and actually welcome them as we would get a better return on our savings.

Use the overpayment calculator that a PP linked to and you will see a regular overpayment can make a big difference.

DirtyDennis Wed 06-Mar-19 12:25:15

We overpay by 10% (the maximum we're allowed to without penalty) of the mortgage value at the end of each year.

We're on a fixed term mortgage for two years. When we re-mortgaged the last time in 2017, we paid off an additional £20,000 lump sum.

When we re-mortgage again in 2019, we'll pay off an additional £30,000 lump sum.

This means we'll have paid off the mortgage in 5 years and saved a fuck load of interest repayments (although interest rates are low, 2% per year over the years really adds up)

TheMobileSiteMadeMeSignup Wed 06-Mar-19 12:25:30

If we overpay by a couple of hundred a month (now that we've paid off a loan so the money won't be missed) then we will be mortgage free before the end of the fixed term. Which, given how everything could go tits up shortly can only be a good thing.

We chose a slightly lower repayment monthly value with a longer term to allow us to overpay if we could instead of a high monthly repayment which left us with no safety net for car/other emergency money requirements.

I would choose to overpay and be mortgage free quicker. It means if you sell you'll have the full value of your house to play with and you can get a top-up mortgage if the new place is more expensive. Or you can downsize and have money to play with.

WarpedGalaxy Wed 06-Mar-19 12:25:37

Saving money is always the best idea. Interest rates are low, so you pay more off the capital and if/when interest rates rise there is less loan to pay the higher interest rates on and at that point you might be better putting the extra money in a higher interest savings account or playing the stock market. If interest rates don’t rise then you’re still saving money and reducing the term of the mortgage. Like I said, I don’t get what the difficulty is.

nannynick Wed 06-Mar-19 12:28:07

If you have no consumer debt then the next thing to chip away at is the mortgage as well as putting money towards your retirement (such as in to a pension).

"if you have equity, you should be re-mortgaging to spend on cars/holidays/home improvements"
Do you really NEED a new car? Do you really NEED an expensive holiday? Do you really NEED home improvements?
Those are things you just save up for as part of your normal budget, with possibly the exception of a large home improvement such as extension and even then the more you can cashflow the better as it improves your loan to value once improvements are complete.

Jizzle Wed 06-Mar-19 12:31:04

It doesn't make a huge amount of sense to overpay in the current climate of low interest rates as you can normally get much better rates elsewhere.

For example, we are on a 1.99% mortgage, so if we overpay some of it, we get an instant benefit of 1.99%. However, our other investments are averaging ~7/8% a year, so we plough everything we can in to these and when we come to the end of our mortgage fixed term in 4 years we can overpay in one lump sum having made far more money with the higher interest/dividends.

Didthatreallyhappen2 Wed 06-Mar-19 12:32:52

I would overpay your mortgage. I know that interest rates are very low for a mortgage, but reducing the term (or paying off completely) gives you a sense of freedom.

If I had the choice I would get rid of my mortgage ASAP. Then nobody would be able to take your house from you, regardless of what could happen in the future. It might be simplistic, but to know I owned, 100%, the roof over my head would be wonderful.

TheSandgroper Wed 06-Mar-19 12:33:17

We paid off our mortgage about six months ago. It was a 30year loan and we paid it off in 14 years, 11 months. Interest rates were at about 7% but I set my budget at 10% for leeway. They were about 4% by the time we finished. We started by rounding our payments up a bit, a couple of little bonuses and not reducing direct debit payments when interests went down.

This is in aus where overpaying is considered normal if possible. We didn’t let the bank set the direct debit amount, rather we specified what we wanted to pay. We had no restriction on overpaying and no penalty when finalising.

The MortgageFreeInThree blog is very good if you go back through it. Overpayment is such a thing here that when interest rates were reduced rather sharply after the financial crash, most people just kept on paying their previous amount, mucking up the monetary policy aims and results.

teyem Wed 06-Mar-19 12:37:40

I'm not sure what your situation is but it's a good idea to have a decent buffer of cahs you can easily put your hands on before you throw chunks of cash at either a mortgage or investments.

teyem Wed 06-Mar-19 12:37:55

Cash

megletthesecond Wed 06-Mar-19 12:38:45

Yanbu. Do it.
I'm a LP and even overpaying by just £10 a month for the last decade has reduced the term a bit. I was dead chuffed when I realised I'd hit the halfway mark sooner than originally planned.

Papergirl1968 Wed 06-Mar-19 12:42:59

Overpaying enabled me to be mortgage free on my first house, which I then sold for a good profit and bought my second house with only a small mortgage. Overpaid on that too till it was paid off, and it's a relief not to be in any debt and to know I've always got a roof over my head.
That was in the years when I was working and had no commitments so whenever I had a spare £1,000 I'd put it down as a lump sum on the mortgage, which meant the payments came down and ultimately I could afford more and more lump sums. By paying off the mortgage years early, I must have saved thousands in interest.
One redundancy and two kids later things are much tighter so I'm glad I did it when I could.

DanglyBangly Wed 06-Mar-19 12:44:14

Also, if you overpay now and then later on hit financial trouble, most lenders will let you make underpayments accordingly.

Tomtontom Wed 06-Mar-19 12:45:49

However, our other investments are averaging ~7/8% a year

There's going to be a relatively high level of risk on an investment currently yielding 8%. Your investment could increase, but you could lose the lot. Investing is not for everyone.

bigKiteFlying Wed 06-Mar-19 12:46:09

We have and it look like we'll get a better rate when we come to re-mortgage after fixed term has ended. We'd like to overpay to eventually reduce the term so we aren't paying out right up to retirement.

Though Jizzle ’s plan makes similar sense – we’re not that financially savvy and I’d have the worry DH would allocate the money twice as it were so we’d end up with the mortgage not coming down.

However, we don't have any other higher rate debts and we do have savings we can access quickly.

45andahalf Wed 06-Mar-19 12:47:09

As soon as our DS goes to school in September, we're going to put the koney we were spinding on childcare into overpaying the mortgage. For us, it's a no brainer, but then we don't struggle to meet our monthly repayment. If we did, we choose differently.

bigKiteFlying Wed 06-Mar-19 12:49:18

if you overpay now and then later on hit financial trouble, most lenders will let you make underpayments accordingly

That's also a consideration we had period of unemployment and while we had saving and redundancy package that meant we could pay the mortgage and other living expenses for the 5 months - 4 looking and one waiting first pay check it was stressful and worrying about time we couldn't pay was terrifying.

HollyBollyBooBoo Wed 06-Mar-19 12:51:06

I like to keep a bit of savings for an emergency but then overpay, I pay an extra £200 per month and if I get a bonus pay that in too, currently I'm due to pay my 25 years mortgage off in 15 years and says thousands in interest.

Passthecake30 Wed 06-Mar-19 12:52:44

We overpay £200 a month where we can which should reduce the term by about 6 years. I simply send £50 to the mortgage every now and then using the banking app.
I'd like the mortgage clear before the kids are 18 so that I have could he option of setting some money aside to help them out each month if they go to uni.

Magmatic80 Wed 06-Mar-19 12:53:00

We overpay by £197/month and it’s knocking 5 years and £10k off our mortgage total repayment. I am obsessed! You can find calculators on msn which really help understand the impact of even a small overpayment.

TildaTurnip Wed 06-Mar-19 12:53:01

We overpay each month and opt for bringing the term down.

CountessVonBoobs Wed 06-Mar-19 12:54:09

Who on earth is telling you that you should blow the equity on your house on holidays and cars?

Overpaying is always a sensible choice, as long as you have some cash on hand for emergencies.

ginghamtablecloths Wed 06-Mar-19 12:57:09

Depends which way you look at it. If you overpay your mortgage it can be a sensible thing to do as you pay it off sooner. Bear in mind that you probably have life insurance/critical illness cover included with this which you may find is a good idea to get separately if/when you end the mortgage - but when you're older the premiums go up.
OTOH you may prefer to spend any spare money on different things - holidays, a new car, home improvements, etc. Only you can decide which is more important to you.

reluctantbrit Wed 06-Mar-19 13:01:24

While we overpay we still save money traditionally as a rainy day fund for emergencies. I don’t want to go through the hassle of asking for a new loan and pay fees for a new roof or repair work.

We also have long-term savings via pension funds as you never know what will happen when you retire, downsizing is not always an option, even mortgage free, you still have expenses when you own a house.

Topseyt Wed 06-Mar-19 13:02:12

That stuff about holidays and cars is bollocks.

We overpay the mortgage and it has knocked quite a few years off the term of the loan. All those years we will cease to be paying interest. No brainer really.

ClownpantsKate Wed 06-Mar-19 13:03:25

Its a good idea to make overpayments if you can. For example if you reduce the capital sum which will reduce the amount owed and in turn reduce the term (rather than paying in a sum to reduce the term but not the capital sum owed iyswim). This could be very important if interest rates increase.

Firstly you need to get hold of your mortgage contract and see what it says regarding overpayments any penalties, and how they calculate the interest on your loan. When you time the overpayment may be important. You need to work out from contract and your finances whether its better to pay off a bit extra each month, or pay off just before the end of each year.

toomuchtooold Wed 06-Mar-19 13:04:17

Who on earth is telling you that you should blow the equity on your house on holidays and cars

I'd bet a month's mortgage payment it's a family member who has blown all their equity on holidays and cars grin

Iggity Wed 06-Mar-19 13:04:21

We overpaid by £400 for several years as we were on SVR at around 1.39%. Shaved off around 5 yrs from 25 yr mortgage I think. We decided to pay off remaining amount end of last year. I wish that we had been more proactive and decided to overpay by a lot more as we could easily have afforded it.
I would pay more if you can afford it as long as you also have ample rainy day savings.

IncrediblySadToo Wed 06-Mar-19 13:06:10

What else would you be doing with the money?

Barrenfieldoffucks Wed 06-Mar-19 13:06:39

We overpay a little, taking payment from £650 to £750 p/m. Even this knocks 3 years off term apparently.

Treefloof Wed 06-Mar-19 13:08:41

The utter relief of knowing your home is yours no matter what happens is pretty strong.
Even if you lose your job and cannot get another for a while. Things will be tight dont get me wrong, but that roof cannot be taken away.
I already paid off a mortgage and felt that relief. Then I fucked up and did it again for a nicer house. 13 years to go, 9 if I overpay to the limit.

Nickpan Wed 06-Mar-19 13:17:44

Who on earth is telling you that you should blow the equity on your house on holidays and cars?

While I'm 'young'!

ChocolateChipMuffin2016 Wed 06-Mar-19 13:18:17

We have been looking at this, the reality is that we haven't been able to do much but have made a few very small over payments in the last year (less than £100) BUT we have a one year old and another on the way so very little money spare.
For us the priority is a savings buffer (so 6 months expenses), then pay down the mortgage and then over pay into our pensions. My parents have always been crap with money so I don't want to be like them financially, but it is hard with a young family and huge expenses.
Like others have said though, its basically so we can reduce the term and pay less interest overall.

Moanger Wed 06-Mar-19 13:19:27

We’ve been overpaying whatever we can afford and are hoping to pay it off in the next couple of years. We bought the house in 2005 and we also had to do quite a bit of work to it. We’ve got reduced payments and have access to the overpayments if we really need the money back. We stayed on variable after our fixed term ended so we aren’t limited with what we overpay but I probably wouldn’t have if we were owing a larger amount.

Murinae Wed 06-Mar-19 13:22:14

We have always had mortgages with free overpayments and have always overpaid and have now been mortgage free for about three years. It says you a lot of money in interest payments and gives you a great sense of security when your house belongs to you and not the bank!

Chewbecca Wed 06-Mar-19 13:25:51

We overpay and increase the overpayments every time we get a payrise, before getting used to having the extra cash.

If you have other debt at a higher rate, you have to pay those off first.
You should also make sure you've got sufficient emergency cash savings.
Then finally, when you have spare cash, you basically have 3 choices
- spend it
- save it at a higher interest rate than your mortgage is (with a view to repaying the mortgage at a future date)
- pay it off the mortgage

StormTreader Wed 06-Mar-19 13:30:37

Honestly it's about striking a balance - I've always saved and overpaid but now I'm nearly 40 I do look back at all the holidays and trips my friends had and think "I kind of wish I'd given myself a little more fun money back then".

LoubyLou1234 Wed 06-Mar-19 13:35:11

We over pay £100 on top of a £370 monthly payment. I want to eventually round this to £500 but currently doing work on the house. By overpaying I aim to only be paying for 15 years max. We got a mortgage in our late 30s so ideally want it done by 55 at the very latest.

We also save a little ( rates aren't great) and are both in local government and NHS Pensions is it makes sense for us to do so. Plus we save money in interest!

ScatteredMama82 Wed 06-Mar-19 13:42:00

Definitely overpay if you can. Most mortgage deals will allow you to overpay 10% of the balance per calendar year. If you have spare cash, there's little point in saving at the moment as interest rates are so low so it's better used to reduce your debt. We try to have a savings 'buffer' for emergencies, we keep it at set level and then use any extra to overpay. If we have to use the savings (e.g. for a new boiler or something) then we top them up to the level and then start overpaying again.

Lightsabre Wed 06-Mar-19 13:42:59

How much in emergency savings did you have before over paying please? I'd like to do this but it's also difficult to save 6 months salaries/ 6 months outgoings.

Dimsumlosesum Wed 06-Mar-19 13:44:36

We live simply and massively overpay each month.

Jaxhog Wed 06-Mar-19 13:51:07

No brainer, with saving interest rates so low. But pay off all other debts first, and make sure you have a little bit for emergencies.

ScatteredMama82 Wed 06-Mar-19 13:58:47

@Lightsabre we aim to have £10000 in readily accessible savings before overpaying

Nickpan Wed 06-Mar-19 14:01:56

well, just made a phone call to 'up' my direct debit, which will save me £130K in 21 years time smile

Although that mortgage will end in a couple of years time, so not sure how that will affect things. If it's £2000 to remortgage, I'm just treading water!

Missingstreetlife Wed 06-Mar-19 14:07:19

Pay off any other debt first. Mortgage is cheapest way to borrow. Once money is in equity you can't easily get at it so have savings in case you need them urgently, new boiler, roof, car or redundancy. Is your pension ok? Any large expenses likely?
Then decide if you can make more by investing if you have the nerve.
If not overpay what you can, you may be able to borrow on it or downsize later.

TheTitOfTheIceberg Wed 06-Mar-19 14:08:27

I've recently been temporarily promoted which is making a difference of about £225 a month in wages. I've chosen to overpay the mortgage by £100 pcm, put an extra £100 in the savings account and keep the £25-odd as fun money. I don't quite have the equivalent of 6 months in savings - more like 4, but rising slowly - but I wanted to build up a buffer with the mortgage company. If I can keep paying the £100 beyond the term of my temp promotion, I'll pay off my mortgage 4.5 years earlier than originally scheduled which could be the difference between me being able to take early retirement or not. For me it's a no-brainer.

teainthemorning Wed 06-Mar-19 14:11:53

Being debt free means no-one 'owns' you. It means not being enslaved to lenders.

Poloshot Wed 06-Mar-19 14:22:24

Over pay (check if there's a limit annually as to how much) and they might write to you reducing payments. Tell them you want the payments to remain the same and the overpayments to come off the amount owed so the term reduces.

Maryann1975 Wed 06-Mar-19 14:28:59

Definitely over pay if you have spare cash, although I am in the minority in my friendship groups to do this. We have a bit in savings (not loads, but enough that we are happy) and will feel far more secure once the mortgage is done. It will mean we can choose to take lower paid/lower stress jobs if we wish as our mortgage is ur biggest outlay each month, once it’s gone we can afford to earn less money each month.

PettyContractor Wed 06-Mar-19 14:51:35

For example, we are on a 1.99% mortgage, so if we overpay some of it, we get an instant benefit of 1.99%. However, our other investments are averaging ~7/8% a year, so we plough everything we can in to these and when we come to the end of our mortgage fixed term in 4 years we can overpay in one lump sum having made far more money with the higher interest/dividends.

That's a valid thing to do, but it's not necessarily better, for everyone. Some people won't want to take the risk of having less money in four years time.

(A random web page I just googled gives a historical range of equity average annual returns over 5-year periods as -2% to +28%.)

ShavenConnery Wed 06-Mar-19 15:04:42

With a bit of shopping around it is possible to get fixed-term bonds with a better rate than a fixed rate mortgage - although it depends on your LTV and term length. So it can make financial sense to put into a bond instead of overpay.

But realistically you're only looking at < £100 over 5 years - so the real advantage is you get to choose what you do with the savings at the end of the fixed term.

Lardlizard Wed 06-Mar-19 15:08:38

How on earth could this not be a good thing to do

EssexGurl Wed 06-Mar-19 15:14:33

We had a mortgage that allowed us to make unlimited repayments. We kept the monthly sum the same after any repayments. So we repaid a chunk and each month were reducing the amount owed. We did borrow some back when we did work on the house, and our repayments didn’t go up because the overpayment was so high.
We were both working in the City at the time, so had nice bonuses.

However, we’ve got a BTL mortgage that only allows 10% repayment each year. Not so as flexible.

But overall. If you can afford it I r think it is a great idea.

LaurieFairyCake Wed 06-Mar-19 15:16:24

This thread has just coincided with a few free hours for me (been meaning to do this since Christmas!) where I've phoned and arranged to overpay £800 a month !

I've just reduced my mortgage to 13 years smile

That mortgage overpayment calculator is amazing

CountessVonBoobs Wed 06-Mar-19 16:21:15

It's one thing to remortgage to access an investment or asset which will appreciate, e.g. to buy another investment property outright or get the seed capital for a business. Or even out of desperation in a short term financial crisis of some kind. But to trash your equity for something totally fungible like a holiday, or that starts depreciating instantly like a car, strikes me as one of the dumbest things you could do financially.

It's a good idea to give yourself a bit of "fun money" like a PP said rather than live nose to the grindstone and plough everything into the mortgage. But you know what is really, really fun? Having massive freedom to choose your work, travel, or not work at all because you own your home outright.

DrWhy Wed 06-Mar-19 20:12:37

I always used to overpay the mortgage but now having a decent amount to invest we have a financial advisor. As a PP mentioned our IFA is confident that he can on average get a return significantly better than current interest rates (around 3% even after fees and tax on a low risk income generating investment, more comes with more risk). This leaves the lump sum we have available for any emergencies, redundancy etc.
It sounds logical but of course the IFA makes money if we invest with him, not if we pay off the mortgage! So since we have a year until our fixed term is up we will invest for the year then reassess return and interest rates then and make a decision about whether we pay a lump off or invest again.

BatsAreCool Thu 07-Mar-19 06:06:35

As a PP mentioned our IFA is confident that he can on average get a return significantly better than current interest rates (around 3% even after fees and tax on a low risk income generating investment, more comes with more risk).

I hope he followed that up with it's not guaranteed no matter how confident they are. I invest with an IFA but all investments come with risk and therefore it depends on whether you are happy to have little to show for your investments as we know markets crash or stagnate for long periods of time. Yes it can pay off but no guarantees.

Other people may have a low level of financial ability to handle risk so it has to go on an individual basis. A good IFA would assess whether you have the financial capability to handle risk as well as your appetite.

We decided that we wanted no risk until we payed off the mortgage as investments are not guaranteed but your mortgage debt will go down with overpayments. Paying off our mortgage means we can now handle high risk investments because redundancy and illnesses would not have as much of an impact on us if that was to happen as our only debt has gone.

Uggywuggy Thu 07-Mar-19 06:17:14

I always overpay and sometimes put chunks across on top of that. I’ve cut years off my mortgage, so will end up paying significantly less interest overall.

Go for it!

BlitheringIdiots Thu 07-Mar-19 06:18:39

We overpay by a third of the mortgage payment and have chosen to reduce the term.

We set up a SO to our mortgage account monthly. The sooner they get the money the sooner you save interest

Don't wait til end of year to do it - will get less interest in a savings account than the benefit of the interest you are saving.

MissedTheBoatAgain Thu 07-Mar-19 06:37:06

At low interest rates there may not be a lot of advantage to paying off mortgages early. However, it is certainly a good feeling to know that you no longer have a mortgage.

Iruka Thu 07-Mar-19 06:43:36

Having some fun money is great, nothing wrong with holidays (and cars I suppose, although I am not bothered). But not by going into further debt by remortgaging, that's just stupid.
If you can afford it then saving up a buffer of a few months wages is a good idea, in case you can't work or lose your job. Clear any higher interest debts first, then put it into your mortgage.
And put a little bit aside for fun as well. No point being debt free and miserable.
All this is dependent on being able to afford it obviously, so many people living month to month

MissedTheBoatAgain Thu 07-Mar-19 06:45:15

so many people living month to month

day to day for some too

kirsty75005 Thu 07-Mar-19 07:01:48

When you're young ?

I'd say that for a bunch of reasons it's easier to enjoy life with relatively little spending money when you're young than when you're older.

AnneEyhtMeyer Thu 07-Mar-19 07:02:36

We overpaid as and when we could, sometimes with regular monthly overpayments and sometimes with lump sums.

We paid off the mortgage a few months ago in 12 years 7 months rather than the original 25 year term. The relief and sense of comfort is huge and we have saved tens of thousands of pounds in interest.

MaybeitsMaybelline Thu 07-Mar-19 07:16:02

We overpaid, cleared the mortgage seven years early.

I did it by rounding up the payment to the nearest 100, also whenever I got a small inflation rated pay rise adding this to the payment. Finally whenever a mortgage deal came to an end I negotiated another deal but over a slightly shorter term.

BlitheringIdiots Thu 07-Mar-19 07:18:09

If have spare cash then low interest rates is exactly the time to overpay once all other debt with interest is cleared. Not getting as much interest on small savings amount as would save on overpaying larger mortgage interest, albeit still a low rate

TheSquashyHatOfMrGnosspelius Thu 07-Mar-19 07:27:08

Pay off debts.

Keep a buffer of money with instant access so you could buy a boiler or a cheap car or a flight to Acapulco in an emergency.

Anything left over then goes on overpayments.

scaryteacher Thu 07-Mar-19 07:47:28

We are overpaying substantially as we want the mortgage gone by this November instead of in another 2 years as dh wants to retire early.

Being mortgage free makes that achievable.

BiddyPop Thu 07-Mar-19 08:48:33

We overpaid - as interest rates fell, we kept the payment the same. It knocked us from a 25 year mortgage to paying it off in 17 years ( finishes next year).

Adikbfeayujvxeuhr Thu 07-Mar-19 17:28:15

We overpay as much as possible but I actively chose to have the effect be to reduce ongoing monthly payments rather than shorten the term. The term will end when we retire anyway so that will be fine.

The scenario I wanted to avoid was: what if you choose to reduce the term but keep payment obligations the same, then when you still have 5 years to go, something happens to scupper your income and you still have a fairly hefty minimum mortgage payment to make? Whereas having chosen to keep the term the same but reduce monthly payments, in the same situation the minimum mortgage payment might only be a couple of hundred quid and much more manageable.

DroningOn Thu 07-Mar-19 17:31:27

Overpayment in the early years makes a huge difference to the length of mortgage.

Lots of online calculators that illustrate the benefits.

We've been paying more off with a view to being mortgage free in time for kids starting college/uni/adult life.

StrongerThanIThought76 Thu 07-Mar-19 18:59:25

I borrowed £80k over 30 years, £300 monthly payment.

If I overpay by £150 each month I can reduce my term to 18 years. I pay by standing order. I choose to keep the term as it is for now in case I need to drop to the minimum payment.

No brainer.

BlitheringIdiots Thu 07-Mar-19 19:13:59

We've kept the DD the same but set up a SO for overpayments. That way we can suspend it or reduce it if need to for a few months.

HollyBollyBooBoo Thu 07-Mar-19 21:03:26

@TheSquashyHatOfMrGnosspelius

A flight to Acapulco...brilliantsmile

RainbowMum11 Thu 07-Mar-19 21:15:42

I would over pay (& did and have been mortgage free for a few years now) , however it depends if you have other debts which may have a higher interest rates which you would be better paying off first.

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