Mortgage free

[N12345625]

I am currently living abroad with my husband and children. I am thinking long term about our finances.
We have a 30 year mortgage and payments are about £1300 a month (my husband and I are early 30s).
In our current jobs we are able to save around £3000 a month.
We bought our house for 340,000 and have paid off about 100,000. We rent our house out, so thr mortgage is covered by rental income.
Roughly how long would we have to work abroad for to be able to pay off our mortgage? (We do not have any family so will not get any inheritance).

That depends on the interest rate on your mortgage, OP.

There are lots of online calculators that will help you work out how long it will take you to pay off your mortgage, factoring in the interest rate and overpayments etc. MSE has good resources.

If you want to pay it off earlier, just overpay each month instead of saving so much. An extra £1000 a month will make a huge difference. You need to use a mortgage calculator to work it out though.
https://www.moneysavingexpert.com/mortgages/mortgage-rate-calculator/

We have just remortgaged in May for 5 years at a rate of 5.39%.
We can overpay by 20,000 a year.
So I guess if I do 242,000 divided by 3000, that gives 81 months to pay off the remaining amount.
So 81 months is just under 7 years. Does that sound right? Or do I have to take into account any extra interest?
I am awful at anything to do with mortgages!!

Use the mortgage repayment calculator listed above from MSE.

You just need to put your normal mortgage details, then an over payment of £1,666 per month (so you don't hit your overpayment limit) and it will work it out for you.

I have just used the link above. It says 246,000 is interest. But this will not be correct if we can overpay 20,000 a year right?

www.moneysavingexpert.com/mortgages/mortgage-overpayment-calculator/

This one OP.

Putting your example numbers in it says you would pay it off in 8 years and 3 months, assuming an overpayment of £1,666 per month.

Thank you, I have just used it.
I am really confused. So I have put in all the details. So if we can save up 240,000 in 7 years... why does it still say 21 years?

It says you will clear it 21 years earlier. So if you have a 30 year term, you will clear it in 9 years.

Use the calculators @Soontobe60 suggested, OP. These will give you a clearer picture of your individual situation.

It's unlikely you'll be permitted to overpay £20k a year for the life of the mortgage without penalty - this is usually a % of the remaining mortgage amount each year (will be in your mortgage T+Cs) so the amount you can overpay decreases as the mortgage debt reduces.

It's really worth learning about how mortgages / overpayments etc work; I found it helped me feel a bit more confident about my finances / planning - again, lots of info on MSE (main site and the forums).

When we remortgage after 5 years we will pay off extra money we have saved (so an extra 80,000) in 5 years. Would that make a difference?

Ahh my mistake! That makes sense! Thank you!

Interest is the killer. The earlier in the year you pay off the extra the more it helps. So paying £1500 a month will help, paying the £18K off in a lump sum at the beginning of the mortgage year will take it down more.

If the £3K a month is earning higher interest rate than the interest rate on the mortgage, then its worth having it in savings. If mortgage interest rate is higher pay it off.

If you could, I'd pay off the £20K overpayment allowed at the beginning of the mortgage year, spend the year bulking up savings then repeat.

If it was me and I was in a position to save that much every month I would reduce the term of the mortgage to 7 years. The mortgage would then be £3465 a month and if you had any savings after the fixed rate ended you could pay off the mortgage then. If you reduced the term of the mortgage to 5 years you would pay £4610 a month and have it completely paid off by the end of your fixed rate term. If you find it's too much to pay out you can extend the term a bit.

With an interest rate of 5.39 it would be better to pay down the mortgage than put into savings, although there are a few accounts around that rate at the moment.