Who has paid chunks off their mortgage? Was it worth it?

[TwoCoffeesandAMilkshake]

(Numbers are not accurate, but demonstrate the reality).

We don’t have many savings due to a job/ house move that was needed due to covid. We owe (for example) £80 000 over 22 years (did it like this to keep repayments low). If we stick to the plan, we'll pay back £130 000. This means £50 000 worth of interest. Now that I have seen the stark figures, I can’t imagine paying that much interest.

I have savings of £8000 - saved for some work that needs doing and I don’t want to get a loan. Would I be mad to pay off £5000 and then try to save again. I imagine saving £5000 (in case of emergency), then paying this lump off the mortgage. It would mean a limited safety net of savings.

I imagine trying to do this ‘regularly' - once a year?

Personally £8k isn't much as a back up if you lost your job etc. The better way may be for you to overpay each month.

Could you over pay each month instead of wiping out your savings?

we bought 15 years ago with a 25 year interest only mortgage (cause we couldn't afford to have a repayment mortgage at that point). after about 3-4 years of just getting by, whenever we saved up a chunk of money or came into money (redundancy and a gift) we would overpay. we have basically now paid off completely what was £100k mortgage.

TBF without the gift and redundancy we'd prob still have about £20k to pay off but def worth doing IMO. our mortgage has the facility as well that if we ever wanted our repayments back we could get them - so we have always viewed them as being emergency savings if it really came to it.

Not really. The overpayment is where the savings some from. (One or the other, really).

I've overpaid mine, it's wiped about 8 years off and a fuck ton of interest.

DH got laid off and got a chunk out of it so with that, some savings and an insurance policy that matured we paid it off.

Has helped as it's one less thing to worry about. Bloody energy bills are now the focus of worry and neither of us can afford to retire for the foreseeable.

Should have said we had been overpaying when we could so we could then pay it off entirely.

I did it and for me it was worth it.
I didn't have much savings , less than you in fact, but I was obsessed with getting rid of the mortgage. I overpaid every month, I didn't have a penalty for doing this. When covid came in it was a massive help as we were still working, I was getting loads of overtime and I had nothing to spend it on.
Once the mortgage was paid I carried on saving plus saved the equivalent of the mortgage payment. I have got a healthy savings account now.
Some say you shouldn't pay off your mortgage but invest but for me it was a good decision.

We overpaid monthly and paid it off in 15 years instead of 25. Well worth it.

Firstly what is your interest rate on your mortgage? We fixed at 2.2% last year, so I am not making regular overpayments at the moment, but I am saving a chunk to pay off before we next fix in 4 years.

If you are on a fixed rate you need to check how much you can overpay. My intention has always been to overpay as our term is long too. On our old mortgage I made regular overpayments, but I can get more in interest in a savings account right now Hence saving up and overpaying at the end of the fixed term.

If it was me I'd put the savings in an account that pays good monthly interest - I have mine with Chase at the moment and the interest is 3.1% and paid monthly.

Then pay an overpayment each month.

That way you've still got quick access to it if you need it.

It is worth overpaying. It saves interest I the long run. But I’d save the £8000 for a rainy day and just overpay from this point.

This, we overpaid our mortgage, and were mortgage free at 31, definitely worth it if you can do it.

We’ve done both, lump sum and overpaying.

I think you need some money aside fur a rainy day - just in case. From being ill, redundancy to changing the boiler/car.
Once that amount is there, we’ve over paid. Even if it’s a small amount, it will help.

This is a good suggestion. So keep what I have now, but pay extra form now on instead of the savings. That might be a good compromise rather than wiping out the savings that I do have.

Yes, that's what we did. Ours was a tracker and rates dropped after the first two or three years, we just kept paying at the higher rate. I realise things are different at the moment though and you do need to check your T&Cs.

Ours is a tracker (changed from fixed when we sold and moved). If I fix, the rates will be higher and I (probably) won’t be able to overpay - couldn’t before. If I stay on this, I can overpay easily but the monthly repayment is creeping up.

We've enjoyed a little less pressure (went from repay in 15 years to 22), but now need to get sorted again (now we've properly moved and jobs are more settled again).

I’d keep the 8k cushion and whack any spare cash each month into the mortgage.

Most fixed rates allow overpayments of up to 10% per year.

I have savings but over pay each month. 5 years ago l had £100,000 balance, it's now down to £41,000.

I wouldn't use your savings. You need a decent emergency fund. Are they in a decent savings account? A lot attached to your main bank account are offering 5% on balances up to 5k (Barclays rainy day saver for example)

Could you add even £10 a week? Any small changes like taking lunch to work you can make? £50 a month saves almost 8k in interest.
This is a good calculator https://www.moneysavingexpert.com/mortgages/mortgage-overpayment-calculator/

I overpay each month and also manage to save money as well, so I paid off a lump sum last year as well. I have knocked 2.5 years off so far and hoping to do the same again over the next 5 years. I fix for 5 years every time for security.

If you can't afford to do both, then I would overpay some and save some, as that is better than nothing.

But if you have overpaid and did lose job you could negotiate better with mortgage company if you couldn't find another job...

It's a risk but not necessarily the risk it seems.

I'd be more worried about other unexpected expenses such as house repairs than losing job tbh

I have good insurance in case of losing the job and had hoped that if I were to shorten the term by overpaying, that I could bring repayments down majorly by increasing the term again if I were to lose my job. I hope.