Over paying Mortgages

[Aquarius1234]

AIBU to find those that over pay their mortgages smug?
Moat people can just about afford or want to pay the standard monthly payments. Let alone want to use any more money/ savings on it !!
Why worry about paying off when in 20 years your probably get some form of lump sum anyway

Are you thinking of people who took out an endowment mortgage in 1998? If they have only been paying interest, they're in for a nasty shock when their endowment policy doesn't produce the lump sum they were led to expect

True and if the OP is financially savvy (like a number of other posters on this thread who have chosen not to overpay) and fully understands that, I have no issue. I’m just not convinced that is the case. She seems to genuinely think that overpayments somehow mean the mortgage is more expensive.

I'm not trying to be a know-it-all but as an accountant and someone who works in the investing industry, some of the advice on this thread is misleading and, at times, fundamentally flawed.

The 6 step plan a couple of posts below sums it up very well. People shouldn't think that over-paying a mortgage is always the best plan. Mortgages are usually one of the cheapest forms of debt and not a bad thing per se.

The exception is people that struggle with the discipline of putting money aside if not overpaying on a mortgage.

Maybe you should need basic maths qualification before being allowed to take a mortgage?

I think you're going to fail GCSE Business Studies OP.

Your point is? Yes you're giving the bank more than your agreed monthly payments but you're paying them less than if you just paid the normal amount each month because you're reducing the capital borrowing so it costs less in interest.

as you just want to flame anyone who is overpaying as being smug, I won't talk about overpaying our mortgage, OK?

At the moment overpaying the mortgage is a good thing to do, because the interest rates are getting higher. It makes a difference over the long term to mortgage affordability. If your deal allows it, you can always stop overpaying after a couple of years if you want to, you aren't forced to keep overpaying.

I'm smug... no mortgage now.
I started with an interest only mortgage, 105% loan to value - those were the crazy days. After a few years I re-mortgaged to a repayment mortgage, 22 years I think it was. I chipped away at it, from my salary (which never went above £28k, so no I am not super rich) and 15 years after buying the property, I paid off the mortgage.

Is it financially better than putting money into investments? Probably not, but when I was made redundant in 2017, I did not have a mortgage to pay, so it was one less thing on the stress level.

Mortgage may be seen as 'good debt' but it is still a debt. So why not pay it off, if you can.

I have enough money invested and saved to pay off my mortgage today. I haven't because I get better returns than the interest I pay on the mortgage.

Am I smug? Yes, most probably. But I started out as a homeless, teenage, single mother. My first relationship was violent and he left me in loads of debt (all in my name because I was a dumb teenager) which took years to pay off. So I don't care if that rubs people up the wrong way, I've worked hard and saved hard.

I keep seeing posters mention the cost of living and reading the room on here but they honestly need to grow up. You can still be happy for someone who has made responsible choices in life. Not everyone is struggling. When I was in tons of debt I didn't go around tell people they shouldn't talk about holidays they were taking, cars they were buying or money they were saving.

Do what you want with your money, if overpaying your mortgage makes you happy then go for it.

No way I would pay off my mortgage. It is the cheapest money you can get. Our extra goes into investment and always has done. When I was younger, as soon as there was collateral, we bought another house. We also have invested in long term stocks and shares.

This means we are now in good shape for our retirement. It all depends on your actual incomings, I understand that, we were lucky but also we were not conservative and took professional advice. Becoming financially educated definitely changed my future.

Actually, you’re giving the bank less money overall. Usually far less. Your post highlights your ignorance on this matter.

Don’t read the bloody threads then. People like you are the bane of this site. No one is required to stop discussing things because you don’t like it. Ghastly, begrudging, sour-faced horrors everywhere you look, wailing it’s not fair, what about meeeee!!!???

Huh? They are only smug if they go on about it in an inappopriate, insensitive way (i.e., pretty much mentioning it at all unless asked in a very direct way). Depending on interest rates, tax situation, attitude to risk etc then paying off the mortgage earlier than the original schedule can be a very sensible alternative to saving. Is someone who gets a 20 year mortgage rather than a 30 year mortgage also smug?

Your just giving the bank more money.

What?? Do you understand how loans and interest payments work? You are giving the bank less money. That's the whole point!

Well, it depends, doesn't it?

Investment isn't for everyone so often it comes down to a pretty easy decision of whether you can beat the interest rate you have on your mortgage vs what you can get for savings.

I overpaid my mortgae and have been mortgage free for around 5 years. I'm late 40s and I deciced to retire this year as I'm fed up of working. It may not have been financially as benefical to pay off my mortgage but if I psychologically wouldn't feel able to retire, even though I have significant investments. It was as much about the feeling of being debt free for me as it was the actuals.

Do you actually know how mortgages & interest work OP?

I thought this thread was about how people who overpay their mortgage are the devil incarnate. Not about the merits of overpaying ... oh well, off to be really smug about our reduced borrowings.

Well you must hate me OP because I've just paid my mortgage off completely today, 7 years after I first bought this house, I've saved myself £1000s and £1000s of pounds in interest and I still more than a years earnings in savings and now the money I was paying on my mortgage can be saved and invested for a good return! Its people who keep paying high interest rates who are overpaying the banks imho. Of course not everyone has that choice but if you can afford to overpay or pay off your mortgage early especially if that capital wouldn't earn you more elsewhere within parameters you are comfortable with then its a no brainer.

Congratulations @ladybug93

We overpaid on ours and have now been mortgage free since January.

It’s a great feeling.

You sound bitter and twisted.

This is why real world maths should be taught in schools. You make whatever financial decisions your income and priorities allows but the fact you don’t understand either the implications or why someone else might prioritise differently is depressing.
We overpaid on our mortgage, small amounts regularly and lump sums if we got a bonus etc, and are mortgage free before we get to the ‘kids going off to Uni’ stage which we anticipate being expensive. We’ve saved ourself tens of thousands of pounds by doing that. We’re not smug about it, it’s a decision DH and I made that we don’t discuss with anyone else.

I realise that MN population is quite diverse, but I struggle to believe there are people that thick. It’s a troll or a wind up

Some people are mortgage free are they smug too!🙄

We have health issues we need to contend with so we're paying off the absolute max we can every year (10% of o/s loan value) while we're both still working, fit and healthy.

We overpay each month and will do a lump sum at the end of the term.

5 year fix on a very low rate. Get as much of the debt paid off as possible before the rates jump up in 4 years.

We plan to have the mortgage paid off 10 years early and save close to 28 grand in interest.