Should we be paying as much as we can?

travellady

Just a thought really, I was wondering if we should be trying to pay as much as we possibly can with the mortgage rate being so low at the moment?

My mortgage goes to a 3.5% standard variable in March and we are l looking to reduce the term from 16 to 10yrs. ( also worked out the payment on a 6% so that we know we can afford it if it does eventually go up).

I was wondering if it would be borth sacrificing some luxuries this year to pay the maximum we can which for us would be double the mortgage per month and 10% of the balance at the end of each year.

Any thoughts?

ailuro2

there is a balance to be had - if you have two overseas holidays and four long weekends away a year then you could cut back without feeling hard done by. IF you've not had a holiday in years, then go on holiday, but try to get the flights, accommodation etc. for the best price you can.

Being mortgage free wannabes isn't about going without ALL luxury, it's about finding a balance you are comfortable with.

The simplest thing people can do, imho, (if they are on a tracker) is to continue paying the same amount they were before the interest rastes were cut - that is overpayments without doing without, iyswim.:D

RosieTiger

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Being mortgage free wannabes isn't about going without ALL luxury, it's about finding a balance you are comfortable with.

The simplest thing people can do, imho, (if they are on a tracker) is to continue paying the same amount they were before the interest rastes were cut - that is overpayments without doing without, iyswim.:D[/quote]
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VERY sensible advice !

gallygirl

I agree that you need to strike a balance. However, with interest rates so low this is an ideal time to make real inroads, at least by maintaining previous levels of payment you can knock years off.

Good luck!

travellady

I understand that I need to strike a balance, but for this year I suppose we can forgo our yrly holiday as we did have a large one last yr (and to top it off we have a baby in March so it wouldn't be a major blow).

after last year spending 10k on a holiday and new kitchen (none on credit) just got me thinking that we could now have a mortgage of 78k and not 88k!

Thanks for the advice though.

StuartGMC

I assume you have the usual recommended savings in place of 3-6-9months income/outgoings and also saving needs account for items like cars etc on a scheduel appropriate to your lifestyle?

If your income hasn't changed and your outgoings are the same (both probably not the case with a baby?) excluding the holiday and kitchen, then it seems to me that you can reduce the mortgage by 10% i.e. £8.8k this year. Why not aim to reduce it by a minimum of say £6k and still have a nice holiday; with a new baby one assumes you may fore go the foreign holiday this year, so £2.8k would more than cover it?

Do strike a balance, my thread indicates one "such" balance, which in my case includes the S-Type Jag I drive and family holiday in Mexico this year, whilst intending to pay off the mortgage in October this year (if all comes together). Other diaries will give you a flavour of the range of ways we all approach the commmon desire to be MF.

Beyond everything else, take time to enjoy yourself with your OH now whilst you still have the chance for a good night's sleep, and very best wishes for March and the journey thereafter.

ixwood

One thing to bear in mind is that interest is top loaded. i.e You pay the most at the start when the capital owed is highest and you're only paying a small repayment amount with standard payments.

So, if you can be careful, make a few sacrifices for a year or 2 and really pay down your debt in this early period, you then free up the money you were paying in interest to be used for repayment and save loads over the term.

Then you can ease up and treat yourself a bit if you want, or keep it going if you get addicted to overpaying.