Interest only?

frasersmum123

Are there any MFW who are trying to pay off an interest only mortgage?

I would really like to pay mine off sooner than the 24 year term, but can only afford smallish overpayments at the moment. Once I work it out it doesnt seem like im chipping away at all.

Is it worth paying any amount I can?

ailuro2

frasersmum123 wrote: »

Is it worth paying any amount I can?

Yes is the short answer. See below for my Sunday morning mutterings...:D

It should be easy to start off by paying your old mortgage amount when the latest interest rate cut comes through, so your monthly mortgage payment remains the same but you are really overpaying.:j

Phone them and ask them to leave the payment where it was and also increase that amount by £20 a month, or whatever the small amount is you can afford.

On a £100K mortgage that's an overpayment of about £62 straight away, and by the end of 24 years you'll have £16,500 towards paying off the mortgage. What method are you relying on to pay off your mortgage after the 24 years is up?



After a while you won't notice the £20 a month extra coming off(probably because you'll have found Quidco.com , money off vouchers for Tesco shopping deliveries and generally cutting out wasting money on 'extras'), phone up again and ask your mortgage provider to take another 20, 40, 50 a month off....

then when you're finally acclimatised to paying lots extra every month change to a repayment mortgage next time round, if that is something you want to do. I'm of course jumping to the conclusion that you have an interest only mortgage because a repayment one was too expensive. Overpaying might land you in a position to ditch the interest only mortgage.!

Welshlassie

We.re paying off an IO mortgage on an original 30 year term. We have a variety of methods in place to contribute to apying it off at the end of the term, but hope to have reduced that capital element alot before the end comes so we can pay it off sooner. It started at £193+K at the beginning of the year, but is now close to £192k and hopefully will be below this figure by the end of the year. We just throw whatever extra over and above our normal income we can find, so Quidco cash, profit from bingo/betting sites. Any Mystery shops etc. It all adds up.

When we started this process at the in May this year I was anticipating £10 per month max, but have so far paid off over £700 (granted I had a redundancy payout included in that, most of it has gone into savings) but taking that out, it is still over £200 so far.

As a famous superstore says "Every Little Helps"

Plug your numbers into an overpayment calculator and it will show you how much you can save in interest payments over the course of the mortgage. I like the egg one

Good luck

Pewter_2

You can either pay back more on your mortgage, or you may choose to put any extra cash into an investment such as an ISA, and let that grow over time as a means to pay off more of your mortgage. Of course there is a risk that shares can go down in the short term, but the long-term trend has always been up. It depends how far ahead you want to look and whether you prefer simply to know you are reducing your mortgage with over payments.

firesidemaid

also, what is the interest rate on your mortgage?

homeaway

I agree every little helps. Here is a little analogy for you :Do you ever go to the bank and get money out only to find that a few days later you dont have that much money in your wallet and think to yourself "where did i spend it all"? You have not made any major purchases but perhaps bought a coffee on the way to work, a sandwich for lunch, got a take away, a magazine.... small amounts in themselves but they soon add up. It is the same for the mortgage if you overpay by ten pounds a month then you will pay 120 pounds a year more !

george_jetson

If your not paying interest on any other loans, absolutely!

Just go to one of the mortgage calculators (there are several of them mentioned in this forum) and have a play around with them. You should see that even small sums really add up over time and make a huge difference.

Good luck!