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

You can’t put a price on freedom. Paying off your home early and therefore massively reducing your outgoings will bring you a more more freedom than 100k will buy you in 20 years time.

Not everyone gets a "lump sum" and even if you do, if it is from the normal sources it is likely to be years after the mortgage is paid off.
Every £ overpayment means you are reducing the amount of interest you have to pay back.
It's basic maths.

Our mortgage was cleared in our 40's (by regular overpayments) but we didn't get our "lump sums" until well into our 50's (56 from inheritance and 57 from pension).

I actually hope you’re on the wind up because it’s so depressing but I know there are people like you.

You aren’t paying more than you agreed, you are paying what you agreed over a shorter period of time, and therefore owe less interest.

@Aquarius1234 just to clarify do you understand what an overpayment is?

Eh? If you can afford it and if it makes financial sense for you, it's just sensible. I'm overpaying my mortgage now because when my current interest rate fixed deal ends next year, my mortgage repayments will automatically increase by hundreds a month despite me having paid tens of thousands off my mortgage over the past 5 years.

By overpaying now - and I am making significant overpayments from my savings and going without things my friends are enjoying, like holidays and new cars - even at double the interest rate when I have to get a new deal, I can afford the increased mortgage payments on my current budget and won't feel too squeezed. Plus it'll mean overall I am paying much less in interest long term and can pay my mortgage off a few years earlier than planned and being mortgage free will be wonderful. Nobody else is going to pay my mortgage off for me, I'm not going to win the lottery or receive an inheritance and am unlikely to suddenly start earning half a million a year, so overall if I can afford to overpay my mortgage while I am enjoying a low interest rate I will likely never see again...I'm gonna.

Not smug at all - very financially astute!
You sound jealous! I agree some people would struggle to pay more but more people will spend a fortune on cars and holidays and then complain they don’t have enough.

What lump sum?
You pay far less by paying it off early.
What are you on about?

I think both.
Certainly on a windup as surely no-one can be that thick? 🥴

Are you interpreting being happy as being smug becuase your jealous.

what sort of people?
This is a mystifying thread

Mate is overpay each month but also can't afford holidays. Depends your priorities

Jealousy is a terrible trait to have.

I am not on a high salary (nhs), we have had a mortgage since we were in our early 20's, back in the days of scary 100% mortgages. My mum said always overpay even if it's £5! We now have less than a year left on 1%. Sensible not smug. Small terrace cottage, not huge and fancy but it's ours. We will then probably have to help if the kids want to go to uni etc and top up DH pension as he started late. We still enjoyed ourselves, went camping when the kids were little and never bought stuff we couldn't afford. If we wanted something expensive we worked extra shifts. There will be no secret payout or millions in inheritance!

Are you bitter because you can't afford to do that?

OP, this is going to blow your mind….

If you have a fixed rate loan, the principle value of your loan has fallen as interest rates rise. So, I have a 30 year fixed mortgage for say $1 million. The fair value of this 2.75% loan is about $700,000. It’s worth my while to refinance at 6.5% now if the bank agree to the fair value or $700k. I refi at 6.5% and overpay, refi again when rates drop to normalized rate of 4%.

I’ve just paid off $300k off my mortgage for $20k in closing costs to refi twice.

You really don't understand this AT ALL, do you? Overpaying means you reduce the capital outstanding and term of the loan, meaning that you pay your mortgage off more quickly, and pay less interest overall.

So short term yes you might be paying more. But when you look at the whole lifetime of the mortgage, you're (not your) paying less overall.

I don't see anyone being smug about it. The smugness and people over paying their mortgages are two seperate issues imo

See this is exactly what I mean about misunderstanding the math.

You can pay off y our mortgage with a 1% interest rate OR you can in the same period and for the same amount earn 4% interest rate in savings,. It doesn't matter where the savings "sit", it matters where what you put away grows more. You can then use your savings to clear the balance on your mortgage and be mortgage free.

And who is being "smug" about it? We have overpaid our mortgage by rounding it up for as long as we've ever had a mortgage. I don't think I've ever said to anyone that this is what we are doing.

Talk about a generalisation! A lump sum in 20 years? I shall look forward to that 😀

Do you not understand how interest works? If you overpay now you are actually giving the bank less money in the long run!

Is this thread for real?

After reading through this, all you have done is made yourself look bitter and stupid.

oh bless, you should really look into how paying interest works!

AND we get the pleasure of engaging in intelligent discussion 😁