To want to pay off our mortgage

Been in our house 10-15 years on interest only
😬 I didn’t think people were this stupid anymore.
At this time frame interest only was absolutely not advised at all, and you would have had to explain your plan for repaying the capital if you did push to go for it yourself.

We’ve paid off two, we were able to overpay every month in the first and if I ever got a bonus (we are talking c5/6 k a year) I’d never spend it it would go towards the mortgage . Second one we did the same, then my husband retired from the police and got his commutation and some of that paid the balance off. We are quite frugal though, as salaries have increased and we got promoted we’ve never upgraded the type of car we get so that’s also been available to go to the mortgage.

I had an interest only mortgage for the duration but saved alongside it to pay it off. Unless you wish to downsize at some point to enable you to pay off the mortgage, you need to start cutting back in other areas to free up more money for repaying it. This may mean some difficult changes to your current standard of living. There are lots of things we haven’t spent on, to afford to pay our house off on quite a small income.

We aren’t close to paying off ours yet but we make over payments every year and haven’t had any family help. Started off in a smaller house and moved into a bigger house 2017/18 before the prices went crazy so super lucky from that pov

We paid ours off by making it a priority. Interest only is rare here (Aus).

Paid it off in 15 years, 8 of that on one income with young DC. We had/have a careful budget. All extra money (tax returns etc) went into the mortgage. We rarely ate out & went to parks, national parks, free events. Looked for discounts, only bought what we needed. We did still do things that cost money - but they were only what we REALLY wanted to do.

We still enjoyed ourselves, still had holidays, just chose cheaper options. Now we're travelling again, with DC in tow. No way we could afford it with mortgage payments.

We had a repayment mortgage, saved money and took 10% off each year, reduced the term at a mortgage switch when we knew we were close to getting it done. We had also saved enough to clear the last 100k in one go. We never touched bonus money for example, it went straight in the pot. Tbf we had the advantage of being most of the way there before we had DC, doing it with kids can be harder. The only way to do it is to reduce your spending.

Neither of us grew up with money either, it does mean sometimes you aren’t fully aware of how to manage money. I didn’t understand the importance of pensions for example. I do have to say once I was applying for a mortgage I would have felt the pressure to switch to a repayment mortgage asap once I understood. i’m the opposite, disposable income was nice but financial security was my number one priority. I didn’t want to live juggling debt like my parents did.

You can save up a lump sum and use it to reduce LTV at your next mortgage switch or you can sell up and use the equity as a deposit.

Moneysavingexpert has calculators which can be very helpful.

Obviously you are having a good look at your finances now which is great but think about your pensions, investments and savings pots as well.

In your position I would save what I can until you renew your mortgage, to reduce what you owe at that time. Then switch to repayment. Without a big cash injection/windfall I can't see an alternative. At the same time I would look at spending to save more/release income for when your mortgage repayments will need to be higher.

Speak to a mortgage advisor and look at options for over payments on your current and swapping to a capital repayment. Or saving separately and pay off the mortgage at the end of this deal.

It all depends on how much mortgage is left vs how much you can save vs swapping to any new rates of you locked in a good deal

We are not high earners. I prioritised it and paid the extra 10% every year - it was incredibly tough but it was worth it.

I've made some assumptions:

That you're about 45
That your mortgage is £420000 (3 x £140k ish)
That your home is worth at least £600000 as you bought 15 years ago, so you'll have some equity despite having been interest only - LTV will be 70% in that case

Using those figures it took me literally 2 minutes to find a mortgage deal for 22 years, until you're 67 / retirement age basically, to find out that at 4.42% - just with Halifax, the first provider I clicked on - you'll be repaying £2500 per month. From a net income of what, £7500? Sometimes if you stay with your lender they let you move early.

I really don't think this is the problem you're making it out to be. Interest only for 15 years without saving to pay off the capital was silly, but it's not unsalvageable. Calm down, and put a few hours aside next week to sort your financial future. Good luck!

Op contact your mortgage company to see whether they will let you chip away at the capital sum.

I have several BTL interest only mortgages and one mortgage company will let me make unlimited overpayments, another one has a limit and some won't let me.

Work out how much you need to put away each month in order to pay it off. Open up an ISA and/or as many high interest bank accounts as you can and start whacking away the money.

Get your LTV down and perhaps seek to extend the term it in order to give you more time to pay it off.

We aim to have the mortgage paid off in a couple of year's time. This won't be massively early, only by a few years. No significant inheritance or family help, just keeping plodding along.

We have always had repayment mortgages. Current mortgage is a base rate tracker with a savings offset.

I changed job a few years ago which gave us the financial head space to really sort our finances out. Now I pay attention to our spending and making sure we are regularly paying any extra into the mortgage savings offset account.

We made some changes to our spending habits. Got rid of one car (I wfh so my car was gathering more dust than miles). We go on holiday every other year. That holiday is a really good one and 'lasts' us until the next one.

Surely the majority of people just pay theirs off gradually via a repayment mortgage? I’m pretty shocked you have only been paying interest for that long. It never even crosses my mind to worry about paying off our mortgage; we pay a little every month, that’s just part of life:

Yes. And save as much as you can in the mean time so you can pay a lump sum when you switch to a repayment mortgage.

Play around with a mortgage calculator to see how much you can reduce your mortgage term by that you can afford.

We're interest only. We overpay by £600 a month and have been putting lots into pensions. Our aim is to use 25% tax free lump sum to pay off the 200k that will be left on the mortgage in 3 years when we're 55. Fingers crossed it's not removed/ reduced in the budget!

This is how we paid a 25 year mortgage off in 17 years, cleared at 50.

Every time a fixed rate ended we took another but reduced the term by a couple of years. Every time we got a pay rise we increased the payments slightly, even if only by £30 a month, we rounded up payments, so paid £1200 rather than £1193.00 for example.

We never had interest only.

Paying it off early was the best thing we ever did, it enabled us to help DC more and also put a fairly large extra amount in our pensions.

Well the good news is that it is only 3x your net income.

You need to work out how long you have left on your mortgage term and start doing some serious saving.

I saved up for mine every month and then overpaid both monthly and an extra chunk in a lump sum.

Why don't you start by saving the extra you'd have paid on your mortgage if you had a repayment mortgage and had had to renew when interest rates were high (4% say).

Top that up with your entire bonus if you ever receive one. Save them in a ISA or similar.

Ideally you'd be saving enough to pay the whole thing off when the mortgage term ends or you could be in trouble. If you've been on interest only 15 years that could be as little as 10 years, in which case you'd ideally need to be saving 30% of your net income towards it (300% net income divided by ten = 30%).

If it's 15 years it would only be 20%.

Either way, that's a lot so get planning now.

Was literally going to say that too.
It sounds like you're on a good interest rate for your current deal.
You usually can make repayments on interest only mortgages. We had one, and we paid off up to 10% each year and when we'd come to the end of one deal we'd pay off as much as we could before starting another deal

And yes, we will repay ours by just making the monthly payments on our repayment plan. We took out a 25 year mortgage at 30, so now at 40 we have another 15 years. We haven't overpaid yet as we've been in expensive childcare and renovations years, but even if we never overpay I'm ok with being mortgage fee at 55.

Op we pay ours off at the start of November. As in put a small lump sum down and it is done, not a penny owing, the current deal ends at the end of Oct. We have had the mortgage for a decade, two deals, we have been massively over paying and now have a small lump sum to pay off, which we had saved. I earn similar to yourself,my husband also earns,mortgage multiplier was the same, about 3 times.

the financial illiteracy associated with your question is concerning. People pay their mortgages off by paying a repayment mortgage and reducing the capital sum every month, and often overpaying at the end of each year of the deal, and then a small lump sum to close it, or they come into money like inheritance, but that just often pays off what’s left, they still do repayment mortgages.

interest only mortgages are not something most people would consider. Not unless they had to and for a short period as the interest payments always remain high as the capital sum never reduces. Or they have a cast iron way to repay the full amount in a short period.

you need to move to a repayment mortgage asap, and you both need to start to save, as no savings and a large mortgage is far from a privaleged position. It’s a risky one, and storing up a miserable old age.

Most people pay off their mortgage gradually via a repayment mortgage.

It’s strange to me that you have opted for an interest only mortgage when renewing as there has been a lot of negative publicity about them.

You need to start paying off capital if you can now afford to do so. Most Lenders allow you to make overpayments although it may only be 10% of the outstanding mortgage amount per year without incurring financial penalties.

I would phone your Lender and ask what is the biggest lump sum you could pay off each year and take it from there. It’s a good idea to get this mortgage paid off now while you are earning good money.

Your mortgage lender may allow you to overpay by 10% per year. So you could start doing that until your next renewal where you could then switch repayment.

How long have you got left on your current mortgage deal? Sounds like you have a roughly £400,000 mortgage and currently save around £16k a year? That will take you 25 years to pay it off not taking into account interest on the mortgage. Most people pay off mortgages gradually over the 25-30 years of the mortgage term,and make overpayments. You have been paying interest only so are starting this mid way through your mortgage term. You’ll need to save a lot more than 10% of your income if you want to pay it off early, and switch to a repayment mortgage as soon as possible.

If your on interest only, surely you haven’t paid a penny on mortgage yet? You have basically been renting the house for 15 years, and will have to return it to the bank when mortgage is up if you have no way of paying it

switch now to a repayment

We took out a 20 year. Have paid off around half. Haven’t overpaid yet due to various things. Job change, interest increase, baby, cost of living. But it’s already a fairly high monthly amount for us as we took 20 instead of 25/30 year one out as far better rates.
We should be Mortgage free before 50.

We over paid which helped !