Mortgage overpayment support thread!

[RosieLeaLovesTea]

Ok I’ve set myself a goal to overpay the mortgage and try to pay off in 10-12 yrs rather than 25! I wondered if others are doing the same? We need a support thread!
encouraging each other and keeping motivated as it feels like a long stretch!

how are you doing it -earning extra income/overtime? Taking in a lodger? Going without luxuries and holidays?

all are welcome to share your experiences!

We are overpaying by almost 50% per month. It's manageable, although obviously the spare cash every month would also be nice. But we just want to get rid of the debt as quickly as possible and enjoy being mortgage free for as long as possible!

I paid mine off in 13 years.

The one tip I give is, if you are lucky enough to get a pay rise, use a gross to net calculator to work out the increase in net pay.
Month one - enjoy the extra cash.
Month two - either increase your mortgage DD by 50% of the net increase in monthly income. Remembering you may be limited to 10%. Alternatively set up a Standing order to pay 50% into an account to pay off the mortgage when your current deal ends. The deciding factors are savings interest vs mortgage interest and your self control!

This way you don’t miss the extra money from your pay rise.

@Harassedevictee great advice thank you!

We have been overpaying for the last few years and sacrificed holidays to do so. It’s been hard at times but totally worth it. Our last and final mortgage payment will be Jan 25 and I just can’t wait for it to be done once and for all. It is totally worth overpaying if you can as it you will be surprised by how much it does decrease the amount you owe on your morfage. Good Luck OP

I’m doing the same with 50% overpayments each month, but a bit confused about Early Repayment Charges when I get to the end. Can anyone who understands these things advise, do ERCs still apply if you pay 10 years early through regular overpayments, and toward the end of the term do I then start exceeding my annual overpayment allowance to warrant a charge?

@LordBummenbachsMagnificentBalls I think you need to check the terms of your mortgage. I have a fixed mortgage and I am allowaed to pay 10% of balance each year without having to pay an ERC. So I just make sure my overpayments will not exceed this. My mortgage was for 5 years. So I have to remortgage in 2027. But I figured if I can pay off as much as possible within 10% limit each year. Then it will help with having a lower figure to remortgage as rates have gone up.

How are you guys managing to do 50%? I thought the limit was 10% of the total value. Or do you mean 50% of the monthly payment, on top of the actual payment?

I am overpaying like mad. No holidays. Bonuses and pay rises (not big in my job) go onto the mortgage, and am putting up with the badly installed kitchen (was here when I bought it) rather than buying myself a new one which I would dearly love to do. But I’d love to be able to not worry about paying the mortgage each month far more!

@ClementineChurchill I hear you! Imagine the freedom of completely owning your bricks and mortar and not having that chunk of money leaving your account every month. You would save up for a brand new kitchen in no time!

@ClementineChurchill id assume they are paying 150% of their monthly payment each month.

For those overpaying, do you also have other savings? Atm I save the max into my ISA and am trying to build up £50k in premium bonds as emergency savings. Once I’ve done that I had intended to start overpaying the mortgage but that will probably be in about 5 years.

It's not always 10%, ours was offset and we could overpay whatever we wanted.

@RosieLeaLovesTea You know what, the reason I’m so motivated is because I spent 10 years with no mortgage! (With my ex, we paid it off). Now I’m on my own again and so have had to take out a mortgage again. I want rid of it! It was so great not to have to worry about earning a certain level of salary to pay the bills. I could take risks in my career. Now I want to get back to that again. Then I can go and do something more worthwhile with my life.

How can you do 50% overpayments monthly?! Lloyds only let you pay 10% for the year. Currently I'm at 61k so can only overpay by 6.1k for the year which is basically the equivalent of my monthly payments.

If you’re paying more interest on your mortgage than you’re earning on your ISA then I’d argue that is not a great idea. But it depends what your current level of savings is and what you consider an adequate cushion for the vagaries of life.

We're aggressively paying ours down. We're currently paying around 4 times the contractual payment a month as standard plus whatever else we can afford.

One little thing that I do is that if I think about having a coffee out or whatever and decide not to, I immediately move the money I would have spent on it to a separate account and then at the end of the month I tip the contents into the mortgage. I find this really satisfying and motivating. It's saved me from many a Deliveroo too!

When we remortgaged we moved to a tracker without any early repayment triggers which is making it easier as we don't have to worry about the 10%.

I have a tracker mortgage with unlimited overpayments. I'm paying about 120% of the monthly payment currently but hoping to increase this. When you do the sums, the amount of interest payments you save on is phenomenal!

Yes, this is a good point. ISA is winning atm as it’s stocks and shares and doing quite well (currently 14% gain) and mortgage is on a good fix until 2027, but will need to reassess when that changes.

Useful to know about trackers and overpayment, thanks all. I think I am ok for the next five year fix but beyond that if I’m still earning around the same level then I would definitely want to be overpaying by more than 10%.

I have just worked out I am overpaying approx 120% per month!

If you can, then do so.... we didn't something slightly different, we paid our mortgage off, cancelled the direct debit, but set up a standing order each month for the amount we would have spent on mortgage and it went into our savings. It helped us retire early.

That's a really aggressive target. I want to clear my mortgage but I'm already half way through the term and think I'd need another 4 years. My mortgage statement clearly shows the interest accrued every month and seeing the overpayments impacting that has been great.

However life is a balance. I actually regret saving so hard (pension, overpayments, and rainy day savings) when my children were younger and wish I'd lived for the day a bit more. Oh the flip side when mortgage rates went up is was manageable. I know I have 6 months living costs available if I lose my job, and my pension is looking healthy, so have done peace of mind.

Sort of done this. We switched to an interest-only mortgage, fixed for X years, some time ago and have been saving bonuses etc. We renegotiate every 2-3 years for the best rate. When our current mortgage gets to the end of its fixed period we have enough saved to pay it all off without having to pay an early settlement charge and won’t be subject to the 10% over-payment limit.

@Rollercoaster1920 don't underestimate the value of peace of mind. My sister is the opposite of me, earns at least five times what I do and yet because of her reckless spending she has huge outgoings, almost no equity in her house, and never ending cash flow problems. She is always stressed about money. I wouldn’t want to swap with her!

We have always rounded up the monthly payment to the next hundred pounds (eg 747.50, we pay 800 pm) as well as putting net bonuses towards it. Last time we remortgaged we kept the payments the same despite the contractual monthly repayment amount having dropped quite a bit. It all helps and there are online calculators where you can see how much sooner it will be paid off and how much interest you have saved.

Every month I just see how much money we get in, what bills to pay etc. and transfer a bit over to the mortgage it’s normally anything from £200 to £1000 on top of our monthly mortgage payment.

We’re trying. We’re overpaying by £300 a month at the moment which isn’t a huge amount but every time one of us gets a pay rise we either up the monthly overpayments or up our pension contributions. We will then use a lump sum from company equity to pay off most of it in a few years. We’re mid 30s so will likely buy a bigger house at some point and end up with a (hopefully much smaller) mortgage again though.