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!

Pay fortnightly https://www.loans.com.au/home-loans/first-home-buyer/does-paying-your-mortgage-fortnightly-save-money but I don’t know how the 10% limiter works. That’s not a standard caveat in Australia. Overpaying is de rigueur here if you can afford it.

Thanks for the thread it's definitely motivated me. I have 12 years left of a 17 year mortgage and is fixed for another 5.

I've decided I'll add +15% on top of monthly payments a month. Doesn't seem like a lot but should mean I'll pay it off in 10 years instead. I don't want to live beyond my means so this is just through current means. Then if I get any birthday money gifts etc, I'll add that too and so if I can shorten the term further that's a bonus.

Unfortunately I don't get bonuses through my work.

I wasn't far off mortgage free with XH but like a PP, started again now am single. I started with a mortgage til am 74 but rates have dropped as well as me having overpaid at 110% of my monthly payment now means I am remortgaging at a lower LTV and rate so new mortgage knocks 7 years off term as Ive elected to keep new payments at the same £ as my 110%. I hope to be able to overpay this one once consumer debt is cleared to knock another 3 or 4 years off, being mortgage free at 60 would be ideal but think that's too optimistic!

I’ve been overpaying by £70/month for the past two years and have just upped it to £175/month off the back of this thread as I have a new job and pay rise. I have a cheap five-year fix and don’t expect rates to be as low again in the future when I need to remortgage, so would like to pay off as much capital as possible.

That said, am wondering if it would be better to put it in a high interest long notice period savings account or ISA instead, and pay off a lump sum at the end of the fixed term before remortgaging.

@ProbableDoris Congraulations! Increase increase increase! For my psychologically seeing the balance of the mortgage coming down is such a motivator. Not sure if you would get that putting it into an iSA. But I get why you would want to do it if you can earn more in interest.

@RosieLeaLovesTea thanks! I could also save half and use the other half to over pay. 🤔 time for a bit of research.

We did this. When the rate fell from 8 percent down to virtually nil our .05% above base tracker was pennies in interest....and we put our mortgage repayment up! Paid it off 10 years early and have now been mortgage free for years. It's amazing.

My DS will do the same and hasn't even completed yet!

He's started an ISA which is a better rate than his mortgage and will save as much as he can into it (planning on 12k). He will decide when to pay it into his mortgage either per year or just when he remortgages at year 5. He's bought a house sufficient to take a lodger which will form part of that saving.

My son's ISA is 4.05 percent. Mortgage 3.69.

He may use the saved balance annually but wants some savings in case he needs to make repairs

My ISA rate is higher than the mortgage interest rate so I am just filling that up at the moment to give myself the flexibility.
It is really hard to stay motivated and I’ll be honest. I would never sacrifice holidays.
Especially when you’ve got children, you only really have 18 summers with them.

@MyPithyPoster OMG so true! I have never looked at it that way before! Luckily we have not had to sacrifice holidays.

It may not be the best way of doing it, but I’m almost seeing the mortgage as the savings account. Our lender allows us to take a break from paying the mortgage as it will use the overpayment reserve. So if for example, by paying an extra £200 per month above the base amount, in 10 months time we will have £2,000 in the reserve. So if we needed to pause paying the mortgage for a month, the £2,000 in the reserve would cover the basic mortgage payment for that month. We originally had a 35 year mortgage, looking to pay it off in 10 years. Just over 4.5 years to go if we keep on track.

Weve done a combination of what PP have said. I got a 2nd job with variable hours and all my wages for that go straight in the mortgage. I do t hang onto any of it. I also had a pay rise from my main job, an calculated the difference in take home pay and thrown all that at the mortgage each month too.

Although there is an annual 10% overpayment cap, in the last month of our 5 year payment term we are able to over pay by as much as we like. So we are throwing as much as we can each month at the mortgage, and when we hit the 10% max amount We will then put the overpayment into a savings account for the rest of that year. At the start of the next year we will then chuck the built up chunk of change at the mortgage, and repeat until we hit our final year. We should then hopefully have the funds by the last month of the last year to wipe out the last little bit!

good luck to everyone. It is tough by me and DP have gamified it a bit to make it fun 🤭

We never overpaid our mortgage until this year when Ds1 was 21 and Ds2 was 18. We saw enjoying everyday life as a priority over the mortgage. Once Ds1 was through uni and we knew we still had a large savings pot to cover Ds2 in uni we decided to divert the excess money to overpay the mortgage.

We actually paid 10% just before the mortgage year rolled over then front loaded another payment at the beginning of the mortgage year. We have other savings for anything house/car related.

The mortgage should be paid the same month Ds2 finishes uni in 2027, our fix rate finishes and we will have savings to clear the remaining balance. Nationwide allows us to pay 10% of the original mortgage we took out with them, as we have been with them for a while this means it is not our current balance. We asked them to reduce the term each time we overpay not the monthly payment. It feels lovely to know it will be cleared shortly.

I tried this last year and was very dissatisfied at the return at the end of the year! The interest for the savings isn’t x% of the final amount (which would be larger) but is X% daily interest so is calculated in a confusing way.

equally, the mortgage will have daily interest on it, and interest on £150,000 is going to be more added to the amount you owe than a saving of for example £1,000. Does that make sense?! 🫣🤔

I have just used 48k in savings to overpay my mortgage and chop 1/3 off it. I have done this because I'm just about to remortgage and my lovely low fixed rate has come to an end so it makes more sense to reduce my mortgage debt than to have money sitting in savings. I will keep about 4K for emergencies but other than that I'm going to put into my mortgage instead of savings (except for savings for my child's junior ISA).
I'm with first direct so I can overpay as much as I like as long as I don't pay off the entire produce before the current fixed rate deal ends

So maybe you should pay your mortgage every four weeks instead of once a month then that's 13 a year

DH and I did this. We were tempted to move to a bigger house and increase the mortgage but decided (as we actually had enough space for DCs and us) to just pay off the mortgage. I say we, it was actually DH who really pushed for this and I was happy to go along with him. We still had a holiday every year when DCs were at home and didn't go without at all but we could have had bigger/more holidays and a bigger house.
We were fortunate that DH had a job that paid bonuses as part of his salary so we lived on his salary (and mine) and any bonuses DH got were used to pay off the mortgage. We also overpaid by £300-500 every month depending on what else we had going on. We did it in around 17 years instead of 25 but we downsized and used some of the cash released from the sale of our house to pay off the last bit which was about £30k. Now we live mortgage free and were able to take early retirement. Best decision we made.

My DCs are 27 and 31 and come on holiday (with partners and DGCs now too) with DH and I most years so that doesn't really fit! But I totally agree with the sentiment - holidays are and always have been a massive priority for me and my DCs are the same.

I have found my tribe, the mortgage overpayment calculator people will think I’m stalking them I’m on there that often putting in figures.

I took out a 20 year mortgage due to finish when I’m 62. Apparently the computer said I couldn’t afford more, however in the last 24 months since I took it out, I’ve overpaid £17,000. This is via living off my main salary and funnelling all payments from my second flexible hours job into the mortgage. Like other posters I…

live frugally, well within my means, not ‘wasting’ money on frivolous things (but still spending on what I value such as holidays with the kids)

use cash back sites like Quidco and any money made there goes into the mortgage

sell on Vinted etc

i don't get bonuses at work but do get generous annual leave. Sometimes I take the annual leave and do extra hours in my second role.

i do t have a new car, latest gadgets, games consoles, subscription tv, gym membership

but I hope I am buying peace of mind as a single parent and when the mortgage is paid off I can pay the mortgage amount into a private pension or savings account

Awesome achievement!! I am also addicted to the overpayment calculator and thinking of all the things I will spend on once paid off but then consider if I might prefer to cut my work hours down - so many options once this things is paid off!!

I overpay at least £100 a month, plus a bit more if I possibly can.
I read somewhere, if you can pay an extra month a year, that can end up taking a huge amount off your overall amount.

Would you mind sharing anything more about of your flexible second job? Am thinking of trying to find a second income stream alongside my f/t work…

We’ve been making overpayments for the last 10 years, as much as we could possibly afford. We’ll be mortgage free next year. I hope it will feel liberating, we’ll be saving around £25k a year so not a drop in the ocean!

Saving 25k a year? Goodness that's a salary, your payments must be huge!

I do this too. I overpay a minimum of £50 a month and if ever I have "extra" money, half goes off the mortgage. My aim is to pay at least the equivalent of a 13th monthly payment in overpayments per year.

Unfortunately I won't have the mortgage paid by the time eldest may go to uni, (albeit they're not currently keen on that!), but for the siblings it should hopefully be cleared.

@Breakingthrough i work as an exams invigilator/marker, a support worker in a high school, also a car parking attendant for events. All are zero hours contracts.

i work 4 days a week in my main job and pick up hours in any one of these extra jobs as much as i can 1 day a week (sometimes more ie in school hols if the kids are at their dads I do a lot more car park work) this between them can bring in anything from £0 a month extra to £600 which supports the mortgage overpayments.

when my kids get older and move out of home I intend to also take on evening work like a care home/babysitting etc as I know I will be incredibly lonely without them so it will help with pension payments then but also stop me feeling at a loose end