To want to pay off our mortgage

[SparkleShineRainbow]

If you have paid off your mortgage without a cash injection from family / inheritance / lottery, how did you do it?
Would you recommend it?

Live with DH and the 2 DC, both in secondary school, in London. Been in our house 10-15 years on interest only, lots of equity due to value increase. I have a good job, salary in low 6 figures, no reliable annual bonus although some years it’s a decent 4-figure sum. Husband self employed, earns a bit above UK national average.
We enjoy a good standard of living, holidays and kids activities etc. We spend most of what we earn. I save about 10% but only started recently. Not been brought up with money. Disposable spending money has been more important until now. But I don’t want to work forever and I don’t have a plan. I now want to pay mortgage so I feel more secure long term eg if I lose job or want to cut down.

Mortgage principal is a bit over 3x combined annual income (after tax).
We have never and will never receive cash injection from family or inheritance. I sometimes play the lottery though!

We are v privileged, I recognise that and apologise to those struggling who might find the question a bit grotesque.
NC in case outing.

The idea of paying off a mortgage over a 25 year period with same bank is a myth. You WILL swap to other banks, you should pay the ERC if it works out better on a new rate, I kept switching from 3.99% to an eventual 1.19%, you have to duck and dive, bob and weave against the banking system to get a better deal. At our peak (whilst bringing up 2 boys/nursery fees) we were over paying by £1200 a month (we hate debt and have no credit cards) whilst both not earning over £38k each. It can be done and yes we don't go out for Avocado & toast or ever had an iPhone. We've also managed to bust our asses in shitty high pressure public sector jobs and make sacrifices and buy a 2 bed terrace for our son's as how on earth are they supposed to get a deposit to buy a house. This shouldn't trigger any anti-landlord envy. We've had plenty of health and disability curve balls along the way. House mortgage should be paid off by summer 2026. One of you HAS to be a financially alert/competent otherwise you have no chance. My younger brother (48) still lives with my Mum & Dad with his wife/Kid and has never followed any advise I have given him. Hence.

It's a shame the Opening Poster hasn't come back to talk about her plans. I suspect this thread has been a bit of a shock and a wake-up call for her. Actually hopefully that is the case so she can start making changes to sort out her mortgage. People have tried to be helpful to her.

I used to work in banking so am aware of many horror stories over the years, and it does make you very risk averse. The perils of interest only mortgages are well documented everywhere. I guess it's easy for some people to bury their heads, but eventually time runs out.

It's a shame the Opening Poster hasn't come back to talk about her plans. I suspect this thread has been a bit of a shock and a wake-up call for her.

I think you are right, she must have genuinely thought that most people pay off their mortgage via passive means i.e. waiting for an inheritance/lottery win etc. so her whole belief system surrounding money must be completely shaken which I imagine must taking some getting used to! Hopefully she is reading all the posts though as there has been some excellent advice given.

I understood the comment, but wanted to clarify that I am not of that generation and actually my parents couldn’t even afford a home back in those days anyway, so I objected slightly to having that claim levelled against me…

The point is that many people older than, say, 30 think young people are frivolous spenders, hence cannot buy. If you bought a house in 2003 at 25 then you are mid-40s, so yes, you are that generation, who bought before 2008. So am I. My first house? 125k for a 2 bed with 6k deposit. Same house just sold for £260k.

Thanks @Suzuki70 you have understood my point (I appreciate I am not the world's clearest communicator!)
I am from a fairly large family, and getting on the property ladder became progressively harder and harder for each of my younger siblings (over a 15 year pretty even spread, we all went to uni). The most 'successful' sibling in terms of the value of their current home and the equity they have in it is the oldest sibling, so they bought first and in addition to that they are in a long-term marriage also with someone who got on the property ladder in the early 2000's.
This 'successful' sibling is by far the lowest earner out of us all, and has the most children, but we all have similar standards of living in terms of cars/holidays, the advantage of every single year of house price growth PLUS 2 incomes has been incredible in driving up their personal wealth/equity.

Surely that can't be the case? How can anyone take out a mortgage and think the money to pay the balance is going to materialise through a lottery win or some other good fortune. If the OP is indeed in the high earning job suggested, she has a good modicum of intelligence and can't possibly not know how mortgages are repaid.

It's literally in her opening post that she thought that it was the norm for most people - implying that anyone not using inheritance/lottery must have a secret way of paying their mortgage without realising the majority of us have a bog-standard repayment mortgage. Absolutely mindboggling!

If you have paid off your mortgage without a cash injection from family / inheritance / lottery, how did you do it?
Would you recommend it?

This.
We got on property ladder at a time when price rises would tide you through and we never (but should have) properly revisited the plan.
Thank you so much for all the comments and responses, I’ve been a bit overwhelmed my the sheer number of replies in the thread and I’m going through it all. Thank you

I'm still staggered that you have been able to have an interest only mortgage, let alone one for so long.

I took out my first mortgage when Endowment mortgages were popular, and it was made very clear you had to have an investment in place that would grow to pay off your loan after the 25 years. How have you not grasped this ? Especially as endowments aren't even offered anymore.

I hope you take on board all the advice offered on this thread and sort this out asap, making a plan to start paying down the capital pronto.

So what if they have

If it means the difference between buying and renting and being more flexible in what you can spend your money on when you have nursery fees or you get made redundant, or the 1001 things that life throws at you

25 years ago is 1999

How many houses aren’t worth more than the cost in 1999

How many houses that were bought in 1999 with an interest only mortgage and have been sold this year didn’t make enough to buy an alternative home for the residents

How many people actually live in the same house with the same mortgage for 25 years
People split up or buy bigger homes or buy smaller homes.

It’s a long game. You won’t materialise it overnight. My point is that mortgage overpayments have an investment opportunity cost.

most don’t realise the calculation exists, let alone do it.

for me personally, achieving an investment pot roughly equivalent to my outstanding mortgage balance invested at c8% earns enough to pay my monthly mortgage repayment.

therefore, I am “mortgage free”. And I have an investment that will keep paying out after the mortgage term ends.

it’s taken many years to get to this point.

which was the premise behind interest only mortgages coupled with an endowment policy. But investments sometimes under perform and people “forget” about their tax obligations

I can definitely see why you did this at first - I mentioned up thread we did the same for our first flat, but once we bought a family home using the increase in equity as a deposit we went on to a repayment mortgage as we weren’t planning to move for many years and wanted the security of actually owning a home. Interest only mortgages are just renting from the bank with hopefully an increase in equity if you are happy to downsize.

Did you use a mortgage broker? If so at best they didn’t advise you very well, at worst they actually gave you terrible advice!

I managed to pay mine off at 55 by taking money out of my pension, tax free and no penalty

I think what you’ve done is actually quite a good idea! Enjoy having spare money for fun when you’re young and healthy (eg in your 20s, 30s, 40s) and your children are young. Most people in their 50s and 60s will have had promotions and pay rises, so pay off the largest chunk in these older years, when you have more money and your children have left home. Or don’t pay back the principal amount at all and just sell up and downsize. By enjoying life, you are also more likely to be healthy into your older (working!) years!

We’re lucky we’ve paid ours off. Head down for a while , overpaid every month and did without luxuries and foreign holidays for a few year. Every time we overpaid the balance went down but we still kept the basic monthly payments the same which really helped as well and reduced the interest significantly. Most mortgage companies let you overpay 10% of the balance every year if your in a deal. If you’re not in a fixed deal just do what you can. I know that our home is ours and the freed up money helps with the kids so we can now do what we left out when they were really little. More importantly if anything happened to me or DH I know the children are secure.

OldLondonDad - interest only - you can usually only pay off 10% a year. I paid mine off last year and for various complicated reasons did it early and chose to take the tip in terms of penalty for early repayment. Before that I had paid 10% a year off without penalty. Anyway I am glad I am done with it now in early 60s but will work until I die as chose to get divorced and chose to help adult children buy properties and my help included the 25% pension tax free lump sum and taking the pension as a lump sum at 55 with a massive sum paid to HMRC - basically 45% of 75% of the pension fund (or 33% of the whole sum). After the Autumn statement his week that 25% tax free pension lump sum right may disappear but we will see.

I don't like avocado etc comments as everyone's situation differs. we were very badly hit in the 90s property crash and sole our last house at a loss etc. It has not been all plain sailing in the past and won't be for most of us in the future