Overpaying mortgage …

[doneitagain12]

Hello!

looking for abit of advice from “some been there done that kinda people - I understand not to take financial advice off the internet and seek proper professional advice before doing anything… but I’m curious.

Our mortgage rate went up 1.5 years ago, the repayments are still manageable.
I’ve been reading into making over payments, it wasn’t something I was all that clued up about, no family have ever done it to my knowledge and never advised it.

Im 34, I have 26 years remaining on the mortgage. I was looking at overpaying a rather small amount of £100 per month. It’s estimating I’d save £18,000+ in interest and be mortgage free in 21 years instead of 26. So, I’ll be 55….

HOWEVER, I don’t think this is going to be out forever home…. We’ve started a family, just, we have an almost 2 year old. No plans for any more kids but would like a slightly bigger house as we are strapped for space.

So my questions …

Is it worth it if this isn’t going to be our forever home?

if you’ve done it, did you have any regrets? Will that 5 years feel like a massive difference?

and If you’ve done it and are now mortgage free early - what has that meant for you?

Thank you xxxxx

We've always overpaid and don't regret it. Run your numbers through an online calculator to see your potential savings.

This. So many people on this thread have done the mortgage equivalent of winning the lottery and burning the ticket.

You will almost always be able to beat your mortgage rate by saving or investing the money separately so rushing to overpay, especially with the very low rates over the last few years was an expensive mistake rather than financial prudence.

Sometimes decisions aren't as simple as this though and you have to also factor in the psychological benefits too.

When we took out of first mortgage, I had only just qualified and was working in a new industry and my partner is in a career with fixed term contracts and no guarantee of renewal. We only planned on being in our first house for 2-3 years as we needed to assess the way our careers were going and whether we would need to relocate again.

We couldn't risk tying money up in investments and it not being available should one of us lose our jobs. Savings rates were ~1% and our mortgage was 1.8%. We paid 1.5x out mortgage payment each month and periodically paid off lump sums. As things went my partner wasn't happy in his job and the overpaying of the mortgage gave him the option of quitting if needed as we had dropped the required payments. If we had been at the whim of the stock market and potentially risking needing the money back in a dip this would have been more stressful. Luck was on our side and he found a different job but this came with a long commute meaning we needed to move within 6-18m. Covid came along and we still worked full time but with no commuting costs and not really doing much spending meant we were able to overpay a lot of the mortgage. As we came into 2021 we started looking for new houses, the savings rates had picked up and we could now get 2.5-3% so we stopped overpaying. We moved and whilst the rates had increased by the time this happened our overpayments initially meant that the amount we were paying was the same as the previous house. We now had financial security and were in a position to invest.
Since this time, I have been made redundant, had a second child and now am too unwell to work but we are in a position that this doesn't impact us and I can take my time getting better. Our mortgage is £700 a month (half at 2.3% and half at 3.8%) on a 4 bed detached house, we have money in savings at 4.5%+ and investments currently making between 6 and 15%

If we looked back at what the market did do and the way life unfolded we would have been better off investing at least some of the overpayments but at the time we couldn't take that risk and we have no regrets over overpaying when we did. It was the right decision for where we were in life at that moment in time. Where we are in life now it isn't the right decision and the money we have in savings and investments could clear a good chunk of the mortgage if we needed but we don't so we are continuing with investing and actively managing our savings pots.