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Original poster

Paying off the mortgage

71 replies

Pineconepicture · 24/04/2024 19:58

Is it your goal to be mortgage free? If yes, why? If not, why not?

I always thought that was the point...get a mortgage, pay it off as quickly as you're able, be mortgage free. Boom. But quite a few times recently people have said 'Why are you so keen to pay off your mortgage?' or 'Don't be in such a rush* to pay it off'.

Is paying it off not the point?

*wouldn't say I'm in a rush fyi, we currently have a 25 year term and are looking at options for overpaying to bring that down to 15 years. So that we'll have more disposable income in our 50's rather than 60+, and so that we'll have options to decrease payments/extend the term when/if DC go to uni and we need more funds.

OP posts:
mossylog · 24/04/2024 20:01

I agree with you, especially as the longer you leave it, the more you'll end up paying for it overall.

Bosabosa · 24/04/2024 20:03

When you look at the interest saved, literally 100s of 1000s, most people would be in a rush!

SlipperyLizard · 24/04/2024 20:05

I’m going to try to pay ours off in 5 years (current mortgage term is 21 years, so will take some effort!).

We’ll be early 50s by then, the massive mortgage is the thing that keeps us (me, mostly) tied to our current jobs, so to be rid of it would enable a step back/lower stress lifestyle or, if I keep the same job, the ability to really enjoy the money I earn.

FuckoffeeBeforeCoffee · 24/04/2024 20:06

I paid mine off within 9 years. The goal was always to pay it off as quickly as possible.

BuddingPeonies · 24/04/2024 20:13

Assuming interest rates stay vaguely stable (!) the £1000 monthly repayment today is much more than £1000 in 25 years.

That said, I think there is a balance to strike between living now, and paying down the debt. We overpaid when interest rates were crazy low (rather, continued to pay at the rates we agreed to the mortgage on, before rates tumbled) and it has made moving onto the next house soo much easier.

Original poster
Pineconepicture · 24/04/2024 20:17

Thanks for replying, I'm glad my logic isn't completely off the wall. I don't understand then why people say not to worry about paying it off. Maybe next time I'll ask them.

My DH loves a spreadsheet, and he did all sorts of clever formula to show how much we'd save by overpaying. It's crazy. I'd rather be going on holidays than paying the bank interest!

OP posts:
coodawoodashooda · 24/04/2024 20:17

My interest rate is amazing and fixed term for another couple of years. I'm going to try and pay as much as I can and make the most of it.

CroftonWillow · 24/04/2024 20:17

It all depends whether you're able to generate more income from your capital than the interest on your mortgage.

TheNapkinPot · 24/04/2024 20:23

Never overpaid the mortgage. We have invested money into extending the house and making it into what we needed it to be to grow with our family. We also had several big holidays having some wonderful experiences. We also saved money to cover the children in uni so it wouldn't affect our monthly outgoings. Ds2 will be going to uni in September and Ds1 will be returning home. Due to house renovations both children have a bedroom each plus a separate study each too, as does Dh.

Part of this has been driven by my friend dying unexpectedly and suddenly of sepsis aged 38. We would rather live for now because we may never get to be mortgage free and the children only want to come on holiday with their parents for a set amount of time.

Our current very low mortgage rate will be up when Ds2 finishes uni and we can look at the savings pot and probably almost pay off the mortgage at that point so about 8 years early.

Tumbler2121 · 24/04/2024 20:23

I’ve paid my mortgage off now but just treated it as rent, so over the 25 years. However … because of inflation the mortgage was originally 25% of income, by the end it was less than 10% .. glad I didn't struggle to pay it off early when in later years it wasn’t a lot.

Ibelieveinangles1 · 24/04/2024 20:25

‘I'd rather be going on holidays than paying the bank interest!’

Some people want holidays now though. Or generally value living for now or using the money to invest in something rather than focussing on security.

I definitely want to pay mine off but have lived a much quieter life in that pursuit than other people I know who have been braver/ more reckless depending on how you view it.

1stReal6String · 24/04/2024 20:25

Recently, it has sometimes made more sense for people to earn more by putting extra cash into high interest savings, rather than put that cash into overpaying a mortgage if the interest rate is lower than what you'd earn, iyswim.
Also, I get the wish to be done with it - we've always overpaid and like a PP it's made a huge difference in moving on to the next house but also in terms of saving so much long term. But sometimes it's a balance - earning money via financial products can sometimes be better than overpaying. So for example, you could argue that it's better to pay into a pension over that time, than pay off your mortgage early but have bag all retirement savings in your 50s and have less compound interest.

TeenLifeMum · 24/04/2024 20:26

Not at the expense of sacrificing living now. I’d rather have a longer mortgage but enjoy family holidays and theatre/theme park trips than spending my dc childhood scrimping and saving to pay off a mortgage. Once dc are through uni, well over pay at that stage.

Original poster
Pineconepicture · 24/04/2024 20:30

Ibelieveinangles1 · 24/04/2024 20:25

‘I'd rather be going on holidays than paying the bank interest!’

Some people want holidays now though. Or generally value living for now or using the money to invest in something rather than focussing on security.

I definitely want to pay mine off but have lived a much quieter life in that pursuit than other people I know who have been braver/ more reckless depending on how you view it.

Fair. Trying to find the balance between holidays now and also not paying thousands and thousands of pounds more than we could have done if we'd been more savvy.

OP posts:
Original poster
Pineconepicture · 24/04/2024 20:30

Tumbler2121 · 24/04/2024 20:23

I’ve paid my mortgage off now but just treated it as rent, so over the 25 years. However … because of inflation the mortgage was originally 25% of income, by the end it was less than 10% .. glad I didn't struggle to pay it off early when in later years it wasn’t a lot.

oo that's interesting about the inflation!

OP posts:
Ilikewinter · 24/04/2024 20:31

Weve been overpaying and should pay it off in 7 years, however we are about to move to our 'forever' home and will have to go back upto 11 years! That will put DH just shy of 63, perfect for retirement. If we hadnt overpaid we wouldnt be in a comfortable position to move now, but weve also balanced that out with enjoying life, holidays, regular new cars etc. I think its all aboit having a balance.

TheNapkinPot · 24/04/2024 20:33

TeenLifeMum · 24/04/2024 20:26

Not at the expense of sacrificing living now. I’d rather have a longer mortgage but enjoy family holidays and theatre/theme park trips than spending my dc childhood scrimping and saving to pay off a mortgage. Once dc are through uni, well over pay at that stage.

I completely agree. Uni is costing us just over £5k per year, we have been paying that for Ds1 for the last 3 years and then he returns home and Ds2 is off and another £5-6k per year for him for 3 years too. Hence the savings pot for that so we didn't have to worry about it impacting our daily spending. We have loved every day trip, weekend away, UK holiday and flights abroad to amazing places with the children. We have incredible memories to cherish of them. I wouldn't have been able to do a lot of those things if we had overpaid the mortgage.

Goldmember · 24/04/2024 20:34

Yes, we took out a new mortgage when we moved 2yrs ago. Our mortgage interest rate is 0.99%, we'd be silly to not to make the most of good savings rates now to pay off as much as we can when the fixed rate runs out in 3yrs. It'd be amazing to clear it completely, it would give us so many options then.

Heatherbell1978 · 24/04/2024 20:34

It really depends how you view it. Yes it's a large debt but it's secured against an asset so not quite the same as a credit card debt or the like. So it's not a debt I ever worry about. I've had a mortgage now for about 19 years - moved up the priority ladder so not made massive dents in it but loan to value is around 50% which I'm comfortable with. I occasionally overpay but for the next 10 years will be focusing on hammering the pension instead in the hope that the 25% tax free lump sum will repay it.

TeenLifeMum · 24/04/2024 20:37

I’ll add, we have no other debt - no car lease, nothing on credit cards - so it’s a debt we ignore and get on with living.

Likemyjealouseel · 24/04/2024 20:39

You need to do the sums. If you don’t pay off the mortgage and invest it or spend it another way, what happens?
I paid off my first mortgage by overpaying by age 32, but I’m no longer convinced that was the best idea, though given interest rates it has probably paid off as a decision. Probably it would have been smarter to buy a second property with the money I was overpaying.
I grew up poor and tend to live frugally because I haven’t had enough money for food in the past. Paying off my mortgage earlier wasn’t really a sign of a healthy attitude towards money.

blueshoes · 24/04/2024 20:39

But sometimes it's a balance - earning money via financial products can sometimes be better than overpaying. So for example, you could argue that it's better to pay into a pension over that time, than pay off your mortgage early but have bag all retirement savings in your 50s and have less compound interest.

This might work in theory but a pension is not guaranteed to consistently grow more than the interest on the mortgage. Most ordinary people do not have a crystal ball nor are they sophisticated enough to arbitrage the growth/yield of different financial products v savings on mortgage interest by overpaying.

You cannot go that far wrong to overpay the mortgage instead of putting it in other investments in the hope those investments goes up more than the interest cost over the life of that mortgage.

The peace of mind of paying off your mortgage in itself is priceless and gives you financial freedom to take more risks in other areas.

Cotswoldbee · 24/04/2024 20:39

Paid our 25yr mortgage off in 14yrs but also had enough money to live and do what we wanted.
When we moved, being mortgage free meant we had managed to save and had decent savings. We did take out another mortgage (we upsized) but paid it off after 2yrs (the earliest with no ERC's).
In both cases it involved a lot of work to do this but we (more than) survived and are now reaping the rewards.

From when I took out my first mortgage all those years ago (38yrs to be exact), I always wanted to be a homeowner and not a homebuyer.

HangingOnJustAbout · 24/04/2024 20:41

I'm generally a 'pay it off as fast as you can' type but realised having an interest only mortgage and saving into cash isas was actually a better deal for us. I have mentioned it to a few people and lots say 'how are you not tempted to spend it?' so it is definitely not for everyone.

I do think a balance is needed, I wouldn't want to scrimp on family stuff or working part time just to repay the mortgage early.

There's also the prospect of downsizing. Perfectly possible to have a 25 year interest only mortgage on a dream family home then downsize once the kids leave using equity to buy a smaller property. Lots of things that could go wrong but risks could be mitigated.

blueshoes · 24/04/2024 20:42

*wouldn't say I'm in a rush fyi, we currently have a 25 year term and are looking at options for overpaying to bring that down to 15 years. So that we'll have more disposable income in our 50's rather than 60+, and so that we'll have options to decrease payments/extend the term when/if DC go to uni and we need more funds.

I did this.