Top tips for clearing a mortgage early.

[DiscoDonkey]

We have a big mortgage (too big really but that's another story) we currently have 22 years left on it but ideally would like to clear it in 13 at most.

We are already over paying each month by around £400 a month and once a year manage to pay off a lump sum of £1000.

If you've cleared a big mortgage early how did you do it? Seems like an impssible task.

less than 5% of mortgages sold in the 1990's and 2000's were repayment

Wow, I did well then. I was offered an endowment mortgage at 21 and said no thanks, too risky. The only decent financial decision I have ever made...

Our mortgage here is huge and still runs for another 22 years. Depressing but we have no way of overpaying just now.

I might be the odd one out here, but the OP mortgage rate is only 2.5%. I would put some of the overpayment into shares. It would be very very hard to not out perform 2.5%. Even trackers bought at 2007 are returning 5% annualised at current value isn't it?

DoesBuggerAll - that depends. I'm with FirstDirect who only recalculate the monthly interest payment when the interest rate changes (but they do take overpayments into account, so essentially you are overpaying the interest and the extra goes towards repayment. I think).

Actually I realise that I'm lying we are in fact on IO. We moved from repayment to IO 5 years ago when recession hit dp's work. We just made IO payments for two years then started to over pay so in respect we have been playing catch up to keep up with the term of the mortgage (hence why despite all the over payments we don't seem to have made a massive dent) we are caught up now though so all our over payments should be reducing the mortgage.
I phoned the mortgage company to ask to go back on repayment but he advised against it as he said if we ever needed to go IO again it would be much harder so his advice was to stay IO and keep over paying.
So guessing the long and short of it is unless we live on beans for 5 years not going to wake up mortgage free before I'm 40. Ho hum, will just keep chipping away then.

I think the mortgage company is right. It's better to be flexible and be able to go IO quickly if you need to. We can 'only' overpay by £499 a month, but have two products so can theoretically double that. No chance however ...

We went for IO mortgage, overpayed lots - bought age 23 when I got a first full time job - paid off in 17 years instead of 25 so we now have that money free to spend and invest.... but do get fed up when family say we are "lucky" to be mortgage free at an early age!!! It was planning and hard work - not bloomin'luck!

Ah disco, then it's very different in your case. I thought you have a repayment mortgage, and are making overpayment on top. Then take back all I said about the return of shares/trackers. Your advisor is right there is no need to switch to a repayment mortgage. But you could work out what the repayment would be if you have say a 2.5% repayment mortgage, on the length of your mortgage, and the size of your loan. Then you would want to make at least that payment every month.

Our IO is old so has lots of flexibility.
Every time we've moved house or remortgaged we've kept the end date the same.
Now have less than two years to go.
I have another of my spreadsheets that calculates my overpayments and everything so I know on what day of the week I'll make the last payment.

Great thread...I have less than 94k in mortgage over 22 year term with aim to repay as quickly as I can. I've no other debt and from July will have approximately £350 disposable income. Should I pay directly to mortgage or put into savings ac? Mortgage rate will track base rate for its duration (so currently 0.5%), savings rate approx 2% from memory ( I could shop around for better though), and I can overpay as much as I like without any penalties.

Mum2fergus you should pay direct to mortgage, because interest you earn on savings will be taxable thus reducing your return.

Talkinpeace - Forgive me if I'm teaching you to suck eggs but you do know that if i read you right in 2 years the entire capital amount will be due since your IO mortgage will expire.
Yes you could remortgage, if they let you.
Perhaps I have misunderstood, or you've overpaid enormously and have very little left.

Definitely offset loan and overpayments. It worked for me and ex!

Mum2fergus what tracker rate are you actually paying though : it wont be 0.5% I'll bet

doesbuggerall
fear not, I know what I'm doing!
the original mortgage was £64k to buy this house. We overpaid capital into the flexi fund down to 22k then borrowed another £100k to do an extension.
Since then we have paid the capital down so that today its £45k
I have a £20k endowment maturing next year (actuarially checked value) and pay off around £2k of capital a month over and above the interest
result = zero in two years time

Yep, 0.5%...I work for bank and get a staff rate.

there used to be more available in trackers - ours was 0.86%.... helped us pay off since our interest was under £50 a month and any extra paid off the capital - and interest was recalculated daily on our Bank of Ireland flex account...

fergus Wow : OK, respect. In that case I'd use every available penny to fill up ISAs and other savings : as inflation is 4 x your mortgage!

startdust
indeed, we used our base plus 0.55% to run the building work.
Now we are on base plus 2 and paying into the overpayment fund ASAP
(I think the co op regret giving us unrestricted access to overpayment fund because some months there are 25 transactions !)