Do you over pay on your mortgage?

[worrywilma]

I've just done a calculation and if we overpay on our mortgage, around £500pm between us, we would save around £70k in interest and knock 15 years off!

We're home bodies so don't go out very often, but we do like the odd treat of new clothes and holiday once a year, but it's doable if we put our mind to it.

I'm very undecided on whether this would be a good idea or whether that money could/should be used elsewhere.

I really like the idea of being mortgage free before 50 but my weird brain also thinks "you should live a little!"

First world problems I know, but after a stint of homelessness and literally no more than 20p in my pocket, having a roof over my head that can't be taken away is very appealing.

We did and managed to pay off early, saving a lot in interest. The interest saving was what persuaded me!

Yes. We wanted a shorter term.

I would start with savings if you don't have any. That would give you maximum flexibility in the case of job loss/ill health etc.

I think you need to strike a sensible middle ground between living for today and saving for tomorrow (which may never come).

We do, but not to the exclusion of any other spending and definitely not instead of having an emergency fund.

We do. It’s not absolute though - you can pay in £400 / month and spend £100 on fun things, or whatever.

We have a healthy emergency fund of around £10k for job loss/ boiler breakdowns etc.

@Winter2020 that's why I'm struggling with, the right balance because as you say, tomorrow may never come.

I do and always have. The amount has varied depending on income and other expenses. Does it have to be £500 a month right away? If that feels a bit much, why not go for £250? You could put the other £250 into your savings. If you don’t have savings, I would build those up first before overpaying.

Also consider if your lender would let you “use” your overpayment in future for a payment holiday. Mine would and that gives me security in case of job loss etc.

Unless you have an extraordinarily long mortgage term or small mortgage I am unsure how it will take 15 years off your mortgage term.

What's the interest rate on the mortgage?

Would you be better off putting that money into an ISA with a higher interest rate? That way you're getting extra. If you can afford this type of money a month I'd look at that as a route.

We do overpay, but only by about 5% (e.g. if the normal monthly payment was £1000, we pay £1050). It all adds up though.

We are with Barclays and I like the way that they put it into an overpayment pot that you can the draw on to defer mortgage payments if you needed to in future.

No, I invest the money instead.

I prefer to have access to the cash, and within an ISA it grows tax free anyway.

Yes our payment is £2150 per month but we pay £2500. At that rate it will knock 4 years and £30k of interest off, but I would like to increase the overpayment in time. We bought our first property quite late (I was 41) and I really don’t want to be having to maintain my full on job into my 60’s because of a mortgage.

Sorry it's 13 years.

Mortgage is £180k and the term is 27 years

It's 4.5%. I know nothing about ISAs!

We over paid consistently, and made the last payment this month 12 years early. Would definitely recommend it to anyone who can.

My suggestion might be..........

1. Is there a penalty for early repayment you can usually pay up to a certain amount penalty free
2. When does your mortgage deal expire as thats often when you can repay a lump sum

I might consider repaying the maximum you can without attracting a penalty and possibly double the emergency fund, the recommendation is that you have between 3 & 6 months pay in it then have another look at the situation

We did in our old house, moved last month so a bigger mortgage (well about the same as we were paying inc overpayment). As long as you are mindful to keep within the boundaries set so you don’t have to pay the extra fees. I would overpay if I could.

I used to. When interest rates were falling a few years ago, I kept paying the same amount (can't miss what you never had). My mortgage was cleared 4 years early.

I did and cleared my mortgage 17 years early. I’m now 4 years post mortgage and now I throw everything at my pension having built up a decent emergency fund. Best thing I ever did.

I used to and it enabled me to move into my dream home.

I have spoken to my fa and he's suggested that now we're in our forever home, that rather than overpay, we put the amount we're going to overpay in a private pension, that way we get the tex relief and when I'm 55 I can take my 25% tex free lump sum and pay off the mortgage completely (this would be the same timeframe that I would have paid off the mortgage by overpaying). Plus I'll be left with a private pension income.

We have always overpaid our mortgage.

We live in the SE and have lived in 2 houses.

We paid off our 1st house in 4 years and stayed there for 8 years (so 4 years mortgage free). The house went up 221% in the 8 years we lived there.

Our second house, that we still live in, really stretched us as we had 2 children at nursery at the time as well as borrowing the maximum the bank would allow us. We ended up paying that house off after 8 years (we ploughed all the nursery fees into the mortgage once the children were at school). So we have now been mortgage free for 13 years. This house has probably gone up 200%. Neither of us has ever been a higher tax payer (teachers).

I now take minimum wage and salary sacrifice everything into my pension (private school) so I can choose to retire early or keep working.

The choices we made years ago have made a massive difference to our family and financial/mental well being.

I overpaid regularly and it was so worth it.
Just waking up one morning knowing that nobody could take away the roof over my head was so liberating.
Do it!

We do. We do the maximum overpayment every year . DH has a great share scheme in work and we sell shares to get the overpayment so it's not directly coming from our monthly salary. We're going to be mortgage free next year and we're late 30s. it's going to knock off just under 15 years off our mortgage. I'd highly recommend overpaying if you can .

Yes, we overpay every month which should mean we finish the mortgage 9 years early. We could chuck more at it but as per pp above, we split surplus between savings, investments and overpaying (pension is done salary sacrifice so I don’t count that money because I never see it!) Allows us to live a little and also the flex the amounts if a big unexpected bill comes in

Yes and we wouldn't have been able to afford out house without overpaying on the last one.