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.

@sallysas as it's a huge monthly outgoing

And if ill - lose job - etx it's one less thing to worry about

And once paid you have a secure forever roof over head

We've always tried to over pay a bit. Maybe only a £100 per month. It's help chip away at the balance.
Plus really helped us in the pandemic, we are both self employed and don't have much savings, but when we had to stop working and didn't get the government grant for a few months. We were able to ring to mortgage company and they told how much we had overpaid over the years and said we could use the whole over payment amount as a mortgage holiday. We only actually took a break for a few months but it's nice knowing its there if we need it plus its reducing the interest etc.

Overpaid, saved and scrimped, paid off £300, 000 in 4 years and 3 months. Became mortgage free on the 3rd March 2023. With mortgage rates at nearly 8% in NZ ( risen from 2.5% over 14 months) it was my priority. Mortgage term was 30 years.

DH evidently just happy I will now stop the ‘economising’ and asked if we will now start eating food without yellow stickers on it. DH has a degenerative health condition which means he was unable to work, and having no mortgage means so much more freedom for us, plus I hate debt.

Yeah, stocks and shares are for something different again. Not emergency buffer money.

this won't work for everyone but for me I worked out that an offset mortgage is the best solution.

I don't want my savings locked away and inaccessible in a high interest bond, so interest rates for easily accessible cash is around 2%

offset mortgages charge about 0.7% more than a normal mortgage, but balancing the effective difference between the interest rates because my savings effectively "earn" the mortgage rate (by wiping out that amount of mortgage interest) so I am richer than I would be with my savings elsewhere and my mortgage independent of that. but my savings are still accessible if needed. however, my savings are more than 25% of my mortgage balance. if your savings are only 10% ish of your mortgage then it might be that the boost from your savings is outweighed by the higher mortgage interest rate. there are only about 5 lenders who do offset rates - Yorkshire had the best deal when I was looking but of course it changes regularly.

Totally depends on what you would do with the money. If you are going to spend it on stuff you don't need in 10 years time you will be glad
You overpaid. If tou are going to invest it - maybe not.

I wish i had set up junior isas for my children not overpaid the mortgage and shopped in waitrose.

My emergency buffer is in premium bonds.

I have stocks and share isa not much in it but it's not doing well at the moment.

We over pay about 70 a month.
I want to increase that by another 50 quid.

I think the desire to pay off a mortgage is a very deep seated psychological one - it’s about security and having something which is entirely yours, and also about a feeling of freedom (not being trapped in a job). Realistically I agree that if you’ve got a good interest rate it’s not always the logical financial option but people don’t behave according to logic, there are lots of other drivers at play.

I also think those of us who lived through the recession and the negative equity in the early 90s (I think I’ve got the right) remember the repossessions and might have known someone who lost their house. We knew someone like that, at the start of their career and with a young family, and it was devastating for them.

I've always done a mix of overpayments (£70 per month), S&S ISA, pension contributions and cash savings rather than putting all my eggs in one basket, although when I had an inheritance a few years back I did pay a lump sum off. I now have decent s&s investments which have had more time to grow rather than only starting to think about them after the mortgage is paid off.

At the moment my rate is fixed at 2.25% and although I can make unlimited overpayments I'm deliberately not doing that because my money is earning more in the bank. But when my fixed rate expires at the end of September I'm likely to pay a big chunk off if my new rate is more than savings accounts are paying. By then I will have more cash than my outstanding mortgage balance so I might just get rid of it but it will depend what other options there are for making the most of my money.