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

I know you've said your income will be going down temporarily, but when we got a pay rise, we split it in 3 parts. A third for us in the current account, a third extra into savings, and a third into mortgage overpayment.
We also benefitted from the period where interest rates kept dropping, so we maintained the payment of the higher rate of interest.

Because of the timescales involved, anything you pay off now will have a big effect on the outcome. But I agree with you that you also need to live.

You need to find the right life balance for you as a family. We often have a tendency to increase our lifestyle costs when our salary increases - sure not everyone but many do.
Consider a student, they get by, then they graduate and get a job, their income goes up but they do not continue like a student and use that new found income to pay off debts.

Find the balance that works for you, enjoy life a little but keep in mind that life is a rollercoaster with ups and downs, twists and turns.

I would pay off consumer debt before mortgage.

3 Podcasts:
The Dave Ramsey Show
Meaningful Money
Money to the Masses

Give those a try for varying views about how to manage money. Take the ideas you like and run with them. You may like a lavish holiday which is fine at a certain stage in your financial history - you don't want to be putting it on a credit card but paying for a holiday from your earnings instead of overpaying your mortgage is fine. You get to decide.

I paid my mortgage off, think it took 12 years (must look up the paperwork sometime). Keep chipping away at it, the more you own of your home the better.

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 already shop at Lidl and our holidays have never been big or luxurious. We have always tried to buy things outright when possible. We were approved for a bigger mortgage but chose a more sensible house. We aren't big spenders but our lack of savings worries me.
I don't want to be frugal...I may not have 15years of life left. Who knows!

When our renewal comes up in 4.5 years I will definitely tell them to reduce the term and us keep paying the same that we do now. That seems an easy win!

We used the offset route and cut over a decade off our mortgage - also did not pay interest at all on our mortgage. We did this by borrowing on balance transfer credit cards, depositing the borrowed cash in an account offset against the mortgage, and paying the borrowed cash back before any interest incurred (known as stoozing many years ago). Depending on your interest rate and what sort of amount you can borrow this can still work, though its a bit trickier now. You can now use long term interest free credit cards to do the same - put ALL your purchases and bills on the CC, always make the payments required to avoid interest, and always put the amount you WOULD have paid if you'd been buying with cash into the offset account. You do have to be fastidious about keeping the accounts to make this work, but it is worth it. A little extra effort and a huge reward. And perfectly legal.

We actually invest our mortgage "overpayments" rather than directly pay off our mortgage as we are in the incredibly fortunate position that, with some substantial belt tightening, we could live on just one salary (our take home pay is almost identical) so I don't have the same urgency as other posters to pay off the mortgage asap. But we make these "overpayments" by keeping our total monthly payments equal to what we were paying in rent and also rounding up all "overpayments". Our rent was over £400 a month more than our mortgage, so we've rounded that up to £500 which goes into ISAs each month as overpayments. I regularly log onto internet banking and round down the balance of our current account (e.g. if there is £437.19 in there then I'll send over £7.19, or even £17.19/£27.19 if I'm feeling flush, to the overpayment account). Any additional income we get during the month (travel expenses repaid, selling stuff on ebay, cashback claims, gifts from family) also becomes an overpayment. Then finally whatever is left in the account on payday also gets turned into an overpayment. Basically, I make sure that there is a plan for any and all money that comes into / gets left over in our account so that it doesn't disappear and get frittered away!

The beauty of a mortgage rather than rent is that the repayments won't go up (unless interest rates do) so they are fixed for at least the length of your fixed rate mortgage term whereas rent would increase with inflation (and then some!) each year. So the mortgage repayments essentially get cheaper (a smaller percentage of your take home pay) each year, even if your pay only increases by inflation rather than a nice juicy payrise.

So long as you are putting your money to use (either overpayment, savings or holiday) and not letting it disappear into your general spending then it'll be much easier to move from concentrating on one to another as you need to.

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.

You sound a little defensive about this. Nothing wrong with spending £1500 on a holiday if that is what you choose to do with your money, but you started this thread asking us how we had paid off our mortgage. For me, we booked a small cottage in Wales or Norfolk and had a seaside holiday here for 1/3 of that price. Now, absolutely that might not be the choice for you, but £1500 on a holiday for 3 is a luxury, which is where your choices come in.

I LOVE holidays. For me, I wouldn't want to have gone more than a year without holidays, but we've some great memories of our holidays when the dc were young.
After that, you look at your budget, look at what are the 'optional' items, or the items you could swap for cheaper, and decide - as a family - what you are prepared to go without or to compromise on in order to pay off your mortgage early. All those will be different for different people.

Going against the grain here but given that mortgage interest rates are so low, why not save up your extra earnings, invest in a high return investment which you give you much more money than what you are paying on your mortgage?

You can sleep well knowing you can pay off a huge portion of your mortgage whenever you want, but you are choosing to hold off as the money is working harder elsewhere.

Going against the grain here but given that mortgage interest rates are so low, why not save up your extra earnings, invest in a high return investment which you give you much more money than what you are paying on your mortgage?

Can you tell me where I can get more than 2.5% on my savings please ? I'd love to find that account.

I am not suggesting investing £50 each month in an account but a lump sum in a second property or stocks etc with a longer term view.

Can't really advise - we paid ours off by buying well within out limits (back when such a thing was possible, 20 years ago up north!) and then not having kids so we haven't ever needed to move for expansion/schools.

All pay rises went into overpayments, because we could. On the occasion some disaster happened we took the payments back down to minimum until it was covered, which gave us over £1000/month back.

Nowadays our original mortgage isn't much off what our imaginary children might need to save up as a deposit. Mad.

Our mortgage rate is lower than our savings rates (currently 1.1% vs 1.5-5%), so we're currently doing a 'self offset' thing, where extra money is saved rather than used to overpay the mortgage.

Obviously if things change, we can send some of the savings straight to the mortgage, to over pay and save interest.

Can you tell me where I can get more than 2.5% on my savings please ? I'd love to find that account

Many banks do a regular saver that pays 3-5% You can get a good few thousand, up to around £10/20k earning this rate of interest by circulating the money repeatedly through accounts - takes a bit of setting up, but it probably is possible to equal or beat 2.5% when averaged over time/accounts.

I'm still looking Barbara, and so is Martin Lewis, as I check in on there regularly.

If you have done work on the house since you bought it. The property value may have increased. If that is the case your Loan To Value or LTV may be better now than when you took the mortgage out.
This may get you a better interest rate on your mortgage.
Meaning you can pay the same payments but over a shorter period of time.

I agree with you Op, life is about balance. None of us are guaranteed a long life. And my children both have life threatening allergies so I never take a day with them for granted either.

I would say find a balance that feels right for you between overpayments/living life/savings. And shift that as your finances or priorities change.

We only pay in small overpayments at the moment as we want to build other savings and enjoy life. But that may well change once we have a good savings cushion again. With windfalls (overtime, bonuses etc) I tip a chunk into the mortgage.

And a word of warning - I do the thing where I transfer "loose change" from my main account into the mortgage account. But this month I went to transfer on £0.72 and accidentally transferred £72 instead we can live without the money so am leaving it in there but it could have been a pain if we had needed it!

I see mortgage over payments as doubling up as a worst case "rainy day" scenario too where if we both lost our jobs/health at least those overpayments would buy us some time to get life back on track.

We cleared our mortgage in our early 30’s, it’s not without sacrifice, we didn’t have holidays or nice cars like our friends. It was worth it.

We've got an offset mortgage, so we could pay it off, but have the money accessible instead. Have a look on first direct

It is definitely about balance.

Having now paid off 2 mortgages in both cases the amount we borrowed 10 years later seemed a lot less than it did at the time. We weren't particularly stretched either time to be honest. Inflation does gradually erode it alongside any increases in pay you get. Do you may find it's easier to reduce it more quickly in a few years time and relax for now. You can also put any unexpected money towards it (like inheritance).

We also ended up on one those base rate plus 0.25 deals that were a hangover from the 00s. That massively helped because we weren't actually paying any interest really. I realise you probably aren't that fortunate 🤦🏻‍♀️

We o/p £50 per month standard, and then I chip away at it, so the interest that goes in monthly on savings accounts (so they are a nice round figure) and then another £50 a few times a month, dependant on when our money goes in, and what we have to pay out- so no additional overpayments in December. This way works for us as I manage the joint account generally - do the food shopping/organise the bills and dp isn't massively sold in to reducing the mortgage while the rates are so low, so chipping away works for us. Ours currently stands at £43k, we're in our mid-40s. We're going to have some cheaper years now the children are early secondary school (so no childminding fees but not very expensive clothes wise yet), so I'm going to utilise the funds while we can.