How did you pay your mortgage off early?

[HailEdmundLordofAddersBlack]

We are early 30. Mortgage of about 130k left until age 65. I'd like to pay it off sooner but a little each month seems a drop in the ocean! I know over 30years it will add up but still... we have the choice between savings, a life or paying off mortgage really. If we spread between all three then nothing will be done well.

If I pole everything into mortgage and pay it off 10years early it will mean not much in savings or no holidays...I kind of worry I will die with no mortgage but life not being lived!

Do I just commit to £50 off extra a month and just forget about it? I think £50 a month over 30 odd years would probably add up? Seems a crap amount.

How did you pay yours off early? Not really interested in stories from people who had an inheritance or who were high earners. Not being rude, just isn't something I will ever be/do so it won't help! Thank you

Ok I have been sat with my spread sheet pretty much all evening! Have pencilled in to cut a couple of frivolous things and also phoned a family member to tell them I'm reducing financial help to them (it needed looking at as they are better off now anyway). I've logged in and organised to pay my £70 a month off the mortgage each month. I have recouped that cost so that we won't miss that.

I have also gone through every direct debit and updated my spreadsheet as a lot of things have gone up by a couple of pounds. I have replanned savings so that the aim is 3k by September.

We have a holiday in France and have factored in the cost of that too.

Once my husband starts his college course I have rejigged it all again and made the savings element more realistic.

Sounds a lot but luckily I already had a workable spreadsheet, just needed to look at it and my priorities again.

Will definitely remember that the next time I lose a bill or pay off a debt, I will just put that towards the mortgage. That is very simple but great advice! We are paying of our sofa for a couple of years so that will be an easy win to transfer to mortgage once done.

Thanks all ...hope you are proud of me

Well done OP! I'm about to remortgage so I'll do the same next month

When we moved we didn't borrow the maximum (this was long before we had children). We started paying at 15% as another poster mentioned and so never reduced our payments, then, when DC were little and we had decent savings we remortgaged over a 7 year term and paid it off.

I personally haven't done this much - saved money in savings rather than overpaid, but if I have extra savings that I can do without saving then just overpay mortgage. DH is same - he has separate savings account as well as joint and if he has extra left over he discusses with me what to do - e.g. savings or overpay on mortgage - so he's done this more than me.

as BackforGood says too - I had a credit card with a high interest rate - when that was paid off we added that to our pool of money for savings/overpayment but then depending on outgoings etc we can decide what to do, save or overpay etc.

My mum however, single mum but living with stepdad but paying mortgage by herself - whenever she got extra money, e.g. royalties from books (she's an author), she paid it straight off the mortgage. Managed to pay off all her mortgage by the time she was in her mid 40s.

We saved as much as we could by DD into a building society savings account (one with a passbook and no online access, so we couldn't easy make withdrawals or check the balance and fantasise about spending it).

At the end of every mortgage term, we transferred across the balance in our savings to reduce the outstanding mortgage balance. We then reduced the number of years on the mortgage to keep the monthly payment the same (and at the time we did it there were also falling interest rates, which helped too). Rinse and repeat, until the mortgage was paid off.

The advantage of this approach was that we had a chunk of savings that we could access if needs be in the building society.

From memory, I think our mortgage repayment was approx £600 a month, and we transferred £500 over to the savings account each month. We'd repaid a £100k mortgage in less than 10 years.

If you put all your spare cash into your mortgage payments for a couple of years now you would save thousands in interest of the remaining 33 years.

You’re looking at the time rather than the money you would save, by reducing the capital now you will reap the benefit afterwards.

I overpaid my mortgage by around £400 per month. By paying this for two years it reduced the capital by nearly £10k and therefore the actual payment reduced. So then my payments were lower and I was able to increase the amount I was overpaying by for the next two years, which in turn meant I’d over payed by over £12k and again this reduced the payments.

Then I changed provider and got a better deal and much shorter mortgage as I’d knocked off iver £22k in total, I worked out I’d saved about £30k in interest payments- so we’ll worth it

I overpaid my mortgage by around £400 per month. By paying this for two years it reduced the capital by nearly £10k and therefore the actual payment reduced

This could possibly be an option for a couple of years. I need to see how things pan with my husband's part time wage.

However, if I chucked the equivalent of 2years over payments of £300 at it, it only reduces the term by a couple of years. Not worth it to me!

Although I hear what your saying about reducing the actual amount...I just don't understand it fully

OP I think ivykaty44 means that because she had paid off a chunk of the balance she could opt to reduce her monthly payments keeping the term the same (instead of paying off sooner). However she decided to keep overpaying even after reducing the payments, and therefore cleared another amount of the balance.

Thanks for starting this post. I’ve been dithering about setting up mortgage overpayments as this was always my intention when we took out a 30 year loan, but our pay is lower than I expected. I’ve set up the additional payment tonight (£100 per month) and will look at upping it when we can. At least I’ve made a start

Ok so if you repayment is £600 per month that would mean if you overplayed by £300 you would save £7,200

If you repayment is £800 pm and you over pay £300 you would save £12000

Is it really not worth a few grand?

Is it really not worth a few grand?

I think the problem is, and my husband agrees, that we have never earned as much money as we do now without having something we absolutely must save up for.

We were poor in our 20s and putting every penny away for a deposit during the recession for most of it and not enjoying life at all. Then when we got the house, we had to spend every penny doing the bloody thing up.

At the moment we just want to enjoy our money and actually live a little, whilst still considering the future. So whilst I can completely see a couple of years sacrifice is totally worth it, we've already had 10years of sacrifice together and can now enjoy ourselves so it isn't worth it right now if you see what I mean!

Glad I'm inspiring others to pay theirs off!

Mine is not paid off yet, but I'm making some decent in roads.

I started with not overpaying at all when I first moved in, as I had literally like £1000 in savings. But after a few months I decided I had to prioritise putting Something in, so just popped in £50 a month. I figured I would manage if my gas and electric went up £20 and my mortgage interest £30 so just got on with it. Then I didn't really notice it. When I got a payrise at work I then topped up the mortgage payment again by about the payrise, so now I'm overpaying £150 a month.

I need to up it some more really, but on the £95k remaining balance, £150 makes up more than half the repayment of the principal so I figure it's definitely doing something useful. I've been concentrating on getting the savings accounts topped back up again as I had to buy a new car, but they're at a pretty safe level now, so I should reroute some cash.

We have an offset mortgage so I pour extra money into there. It means I am paying no interest in the amount of savings I have in the account on the mortgage so effectively as though I have paid that money off the mortgage; however I can access it easily should need arise. I much prefer this method than paying it off as it gives me security for easy to access money but has the same effect as overpaying

Op I understand the wanting to live now and have a good time - but you did start a post about paying off the mortgage early. To pay the mortgage off early you are going to have to pay extra...at some point

Remember as your mortgage decreases your loan to value improves. Keep on top of it because as you move through the percentages you get better rates. So you could remortgage, have a lower monthly repayment but keep paying the old amount plus the overpayment.
It's a game almost and the MSE calculator is really inspiring.
Every penny really counts in this and it's worth having savings but occasionally sending some of those savings to the mortgage as a one-off overpayment.

Op I understand the wanting to live now and have a good time - but you did start a post about paying off the mortgage early. To pay the mortgage off early you are going to have to pay extra...at some point*

I am, see my previous post. I am paying an extra £70 a month off to begin with, reducing the term by 5ish years.

Irt savings..if you've got a good buffer paying extra on your mortgage is a big yes...unless your savings interest is more than your mortgage rate..which I doubt.

We had an offset mortgage which was fantastic, as several other posters mentioned because we could easily access our overpayments.
Don't also forget about pension savings... I know rules can change but currently you can get 25% of your pension tax free at 55 and you get a tax credit (depending on your tax rate) when you put money into a pension.
So, we do both with the plan being that when we retire we can use the tax free lump sum from our pension to pay the remainder of our mortgage off (if we haven't done so by then).

As Parttime said, (You basically wrote the post I was going to write) we too had an offset mortgage which suited us perfectly. All the savings balance was offset against the mortgage so you only pay interest on what's left.
While paying your mortgage off early certainly makes you feel good, usually the most effective use of any overpayments would be to pay into a pension. You get your tax back (an effective interest rate of 25% as a basic rate taxpayer) and you build up a larger sum sooner. The growth in the pension pot due to the extra sums invested for longer will almost always be worth far more than the extra cost of having a mortgage longer.

Did you get a fixed deal for a set amount of time op? Baffled about your mortgage tbh.

We just remortgaged on 5 year fixed. Pay same as you per month, £146k left for 23 years. So 10 years less payments than you for more owed.

That's 10 years extra of £585 per month?

Surely you could remortgaged and get s far better deal?

What IvyKaty44 and SciFiScream have explained is absolutely true - once you have paid a chunk off, the next time you remortgage, you are borrowing a lower % of the value of your home, so it puts you in the driving seat, and gives you a better rate.

I can also tell you when you have paid off your mortgage, it is a wonderful, wonderful feeling and gives you all sorts of freedoms about choosing to work fewer hours / days or to retire earlier or to keep working and spend freely or to keep working, but it just gives you so many choices.

I agree with the suggestion of saving into a savings account. Then, at the end of the year, or two years, or whenever you come out of your fix, you can make a choice of 'Do we pay a chunk off our mortgage, or do we go on holiday / replace the car / whatever is your 'luxury', or do we split it and do both' You'll have the actual cash there and can decide if you need a fancy holiday more than saving yourselves ££ in the long run.

Did you get a fixed deal for a set amount of time op? Baffled about your mortgage tbh.

It's about 2.5% on a 5year fixed rate. With about 29years left to go. That was a vast improvement on the rate we locked ourselves into before.

You'll have the actual cash there and can decide if you need a fancy holiday more than saving yourselves ££ in the long run.

I'm not sure where I gave the impression that my holidays are fancy. We spend about £1500 on a holiday for three of us once a year. Unlike many posters, I'm not in a position to pay off a decent chunk in one go. I only have £500 in my savings account so I am paying £70 off my mortgage monthly (due to this thread) and will also build my saving back up at the same time.

I work bloody hard, my husband is about to go part time so all my other little luxuries will be gone for at least 4years. I don't begrudge myself a small holiday once a year.

Thanks for all the advice on this thread everyone. You have inspired me to at least make a small overpayment each month and when our circumstances improve I will definitely be thinking about other suggestions, especially the savings account options.

I can also tell you when you have paid off your mortgage, it is a wonderful, wonderful feeling and gives you all sorts of freedoms about choosing to work fewer hours / days or to retire earlier or to keep working and spend freely or to keep working, but it just gives you so many choices.

Totally agree, which is why I started this thread. However, as I've stated before, I believe it's a balance. I lost a friend this year at age 40. They had worked bloody hard to get mortgage /debt free by that age. They did not do things they wanted and I know she died with regrets. So it has coloured my view somewhat. Yes she left her family in a better situation but, ultimately, we only get one life and i need to strike a balance between now and when I am middle aged.

We paid off our mortgage in our 40s. We saw a financial adviser and lived an extremely frugal lifestyle for around 10-15 years - shopped in the market, at Lidl etc. We still had holidays (and some big ones like the US) but cut back generally. We overpaid the mortgage by a small amount but stuck a set amount in ISAs and savings accounts. The ISAs performed well, we paid off the mortgage and had some left for renovations.

An offset mortgage does not make sense for someone with little or minimal savings as there is nothing to offset and the rate on the exposed part of the loan is generally less favourable than on a repayment mortgage.

Your repayment term is very long OP so your £70 a month is bringing the term to closer to a standard term which makes sense as a starting point.

Just to add further complications to the considerations you could also look at pension contributions. Anything you contribute now is hopefully subject to much better growth than the mortgage rate and you’ll get the return of the 20% tax back so maybe another way of securing your later years.