Do you see mortgage as a debt or a do you see it as just another bill?

[burpsburp]

I was talking to a friend recently and she was aghast that we were overpaying the mortgage to reduce it as much as we can and hopefully be mortgage free sooner than not. Our payments aren't ridiculously high as some others' on MN but we aren't high earners and have a very modest income so it's a decent chunk to us.

She perceives her own mortgage as a bill lik rent etc and eventually it will finish at the end be of the term which is so mant years ahead that it's not worth stressing over now. She'd rather spend the money on whatever now and enjoy life right now and doesn't see it as a debt. Whereas I've always seen a mortgage as a debt. A bloody massive one at that and one I want to get rid off. I do understand where she is coming from but even by paying a little bit extra each month, I can see the years slowly going down. She thinks I'm being mad and I'll be dead before I've even paid it off and it wouldn't have been worth it. I see her point.

Does anyone else see it as a massive burden like I do or just another bill like utilities etc and part of daily living costs?

You can insure against failing to be able to pay the mortgage due to long term ill health- I know we pay quite a lot in personal insurance but it helps me sleep better at night.

You can, but
a) they are notorious for not paying out unless it is for specific conditions
b) That is another, additional expense on top of paying your mortgage. So f you can knock 3 years off the length of your mortgage by over paying, you are not only saving 3 years worth of interest, you are also saving 3 years worth of payments into insurance policies.

It's just a bill. We can't afford to overpay enough to make any significant difference to the term and I'd rather have money to spend on fun stuff now.

It's a debt and we have previously overpaid to bring down the term. However, then we had ds and only pay the actual amount. We would have started overpaying again come September as he will get his 30 hours, but are planning to move which will increase mortgage debt by about 50% and to afford it we will need to go over 35 years.

Whilst it is a debt I also see it as an investment ultimately so where as I worked hard to pay off my car loan for example, it's less urgent with the mortgage.

We see it as debt because it is debt.

Overpaying every month to build up an overpayment fund is also like insurance against unemployment for us, as the deal we have lets us draw down on our overpayments if we need to, without any of the restrictions that an insurance company would impose. Thankfully we haven't needed to yet, but when we were both made redundant over lockdown, it was very reassuring to know that option was there. Hopefully we will have paid the whole thing off just as DC need funding to go to university (halls cost about the same as our mortgage!)

It's definitely a debt, but a good debt as the asset is increasing in value, and we would prioritise investing in the stock market in our ISA and SIPP tax wrappers before overpaying the mortgage. Over 5-10 years we would certainly beat the very low interest rate. Kids are small or expensive at the moment so that won't be happening any time soon. In the unlikely event we maxed out our ISAs and SIPPs we would definitely overpay the mortgage.

I'm a follower of Dave Ramsey, so I understand the thinking behind paying off the mortgage ASAP. I think if we wanted to invest in another house we would do that so we only ever have one mortgage.

It's a debt but unlike a credit card, consolidating bank loan etc you have the asset. So usually (depending on how long you've lived there and the market) you could clear it with the sale or the house.

I've been mortgage free once before due to over payments

Due to be again this year

I cannot wait & I am counting down

Interest rates may be low now, but they were not so low in the past !

It’s a bit of of both for me, l regard it as a bill but overpay to try to minimise the interest. Not sure why she’s reacting like that, you overpaying is a smart financial move.

I view it as a debt, so do overpay it, but like some PP have said it often makes sense to balance this with S&S ISA's etc given interest rates are so low. The return I make on those way outweighs interest savings on the mortgage

I see it as a necessary expense, so a bill I guess. We shortened the term when we remortgaged and have been saving so that when we come off the fixed term we'll have enough to pay it off.

Not a huge mortgage though (less than £60k).

Also just out of interest, has anyone played about with the mortgage overpayment calculators? Was staggered to see how much interest (and mortgage term) is saved on a few overpayments - I'd kind of assumed it was minimal but definitely made me focus on overpaying more.

We dropped down two LTV bands after overpaying over the last couple years also, so the new remortgage rate is 0.7% cheaper - saves 2 to 3 k a year, we opted to reduce the term a few years with it instead but its motivating to see. Because overpaying the mortgage does feel very very boring

We saw it as more like an investment - and the sooner it was paid off the better.

As it was we took out the mortgage in 2009 and paid it off in 2017 and saved thousands by overpaying as much as possible (was a 15 year mortgage)

I view it as both. Some seasons in life lend themselves to overpaying, others treating it like a bill. If mortgage rates are low then I'd rather invest money and get more return than overpay.

Overpaying when we can has so far worked for us.

When we had a lump sum insurance payout it reduced monthly payments making each month less fraught. Later meant we had enough equity in house to move on despite house prices drops as could get deposit we paid out for next place. It got us along with house price increases here the best interest rate possible last remortgage.

We've been in position of unexpected reduancy leaving us no income and then managing to pay for months of dwindling reducancy pay which was stressful - so naturally we like a buffer.

We still saving in saving accounts, paying into retirement funds and managaing to do most things with limits. At minute with repayment retirement more we overpay - set amount each month treat it like rent- the less we have to pay so over time amount is more overpaying - though not so much it hits the limits incuring charges.

If when kids start univeristy we need to stop doing that we can. It's finding a balance - and in early years paying the basic amount was hard enough.

It is a bill but one we can get ahead with as it were - I think we'll probaly end up paying it off early but as it was due to run to near our retirement ages that's probably for the best.

Hmmm I see it as both. It is, of course a debt but then again if you didn't have it you'd have to be paying rent so your housing costs need paying one way or another.

We do overpay but not as much as we could. With interest rates so low there are "savvier" things to do with the money. I know a few people who overpay nothing but invest that money into a Stocks and Shares ISA to build up enough to cancel the mortgage out and be "mortgage neutral."

However, even if there are better ways of saving the money on paper there is a huge psychological element to paying off your mortgage. So we do a combination, we overpay a bit, we put a bit into S&S ISAs and we pay extra into our pensions.

@ladycatlover2 people are probably talking about S&S ISAs, pensions or other long term savings and investments. My mortgage rate is currently 1.64% but my S&S ISA is 21% up at the moment so it makes far more sense to save money in there than overpay. I actually do a bit of both as of course the value of investments can go up and down but if you're saving for the long term the historical trend has been upwards.

Debt. We over pay a little, save a little in long term savings and save a little for fun things. It's a balancing act. We don't have any other debt (or finance as it's cleverly been rebranded).

Definitely debt. After I got divorced at 42 I had to take out a new 25 year mortgage & have been overpaying for years albeit in smaller amounts to start with.

After leaving my marriage in debt, my sole focus has been my long term financial stability so I've been juggling paying off debt, then getting as much into my pension & isa as possible & should be set to retire in about 4 years at 59. I can't do that until my mortgage is paid off though hence the big push to clear it.

I think the choices really depend on your life stage, when I was much younger it wouldn't have occured to me to overpay..now a secure retirement is too important.

I'm overpaying as I want to retire early. My mortgage is due to finish when I'm 65 but I plan to be shot of it by the time I'm 56 at the latest - I'm now 52.

Just a bill. Our interest rate is so low that the savings from overpaying are considerably less than the value in spending the money that could go to extra repayments elsewhere, especially given expected increases in earnings over the coming years.

If interest rates were higher or we didn’t have as much financial slack it would be different.

I used to think like your friend when I bought my first flat in my 20s...I had a very "YOLO" attitude and was too busy enjoying nights out/travel/hobbies to worry about boring things like mortgage overpayments.

I do regret it a bit now though...the carefree 20s suddenly turned into 30s with a husband and baby, and when it came to moving up the ladder we had to scale back our expectations significantly...as there wasn't enough equity and the flat didn't go up in value enough to allow us to buy the kind of house we wanted. If we'd overpaid the mortgage we'd be in a better position. Lesson learned though...we still have many years ahead of us so we'll be overpaying on this house!

Well, it’s a secured debt, as others have said. It’s not really about how you view it - that’s what it is legally.

We don’t overpay because we are hopefully the tightest we will be financially at the moment with two small children. We have 50% equity in the house - we could buy a smaller house and go mortgage free - and the mortgage is 1/6 of our joint income which is very manageable. We’re in our mid-30s so might well take a different view in the future. Dh and I both stand to inherit a bit, one day (hopefully no time soon) so that might be the time to pay off the mortgage.

Borrowing any money thats not interest free in always cheaper if you do it over the shortest time period

But you also have to account for the money you would earn by not overpaying and saving or investing it elsewhere.

Our mortgage costs us about £11 a month in interest. For the last year, I've made nearly that by simply putting £2500 in a nationwide current account.

That comes to an end soon and I will probably move the money to premium bonds because they're also beating the cost of our mortgage by a considerable margin.

And that's before I get my arse in gear and start investing spare money in investment products.