Are we in a small minority?

spandles

My DD 10years has just looked at the screen and asked me what I am reading. It led to a discussion on mortgages and paying them off. She seemed to understand the basics. Hopefully this will have planted a seed for when she is older!!

Anyway, she has gone back outside to play - if only life was that simple:o

ps. I have also found this thread interesting and motivational.:)

jamesd

Thrugelmir wrote: »

Why the negativity?

Because I was considering what would be useful for a sticky topic in this section. This discussion doesn't seem to be doing much that makes it worth being sticky. Hence it looks to me like a poor one to make sticky here.

Thrugelmir wrote: »

Statements such as "reduced living standards during the overpayment" show a very short sighted view. From my own experience life is very unpredictable. Full of ups and downs. Once a property is owned outright then that is one of life's major worries removed forever.

Yes, I agree about unpredictability. It's one of the major reasons why becoming mortgage free is not my first financial priority. I don't want to end up owning a property without a mortgage and then being forced to sell because I can't live on the remaining money I have if I find I can't work for some reason.

So for me, making sure I can live and take care of all commitments indefinitely, including eventually clearing the mortgage, comes ahead of clearing the mortgage now. I don't think it's worth accepting the increased risk from clearing the mortgage before I can do that or before I've secured my retirement income level. It would be short sighted of me to clear the mortgage before I've done those things.

Fortunately I don't have any dependents so it's cheaper for me to arrange those things than it is for others, but if I had children I'd be even more keen on ensuring I have the living money reasonably secured before clearing the mortgage.

Thrugelmir

jamesd wrote: »

It's one of the major reasons why becoming mortgage free is not my first financial priority. I don't want to end up owning a property without a mortgage and then being forced to sell because I can't live on the remaining money I have if I find I can't work for some reason.

Then I must ask (what I consider to be a daft question) where do you intend living?

I don't think it's worth accepting the increased risk from clearing the mortgage before I can do that or before I've secured my retirement income level

Yet you'll happily put your money into an investment that's untouchable for many years.

Contradictory statements.

RosieTiger

yes indeedy, I do remember fondly those stories of investments that would pay the mortgage off in the future - now they were a poor idea!

pawlala

Don’t delay, overpay your mortgage today

Homeowners have not been overpaying on their mortgages, despite low interest rates making it the ideal time to quickly reduce the size of their debt.

Mortgage lenders told the Bank of England they did not experience 'widespread overpayments' of mortgages last year, even though the monthly repayments were relatively low on some variable rate mortgages which were arranged prior to the financial crisis.

Lenders gave a wide range of reasons as to why borrowers might have passed the golden opportunity up. These included a squeeze in disposable incomes and the growing number of people out of work. It was also suggested some people had chosen to save any extra money they might have rather than pay more off their mortgage.

The revelation backs up recent research which suggested millions of homeowners were missing out on the chance to take years off their mortgage. Barclays said only one homeowner in ten had taken up the option to overpay.

Those homeowners who are not overpaying have been urged to start if they can afford to whilst interest rates - and many tracker mortgage monthly repayments - are still low. The average overpayment is currently £200.82, which on a mortgage of £150,000 over 25 years could see the term reduced by seven years and three months.

Full article: http://moneyfacts.co.uk/news/mortgages/dont-delay-overpay-your-mortgage-today210411/

pawlala

jamesd wrote: »

It's a really poor topic

jamesd wrote: »

The topic is fine and interesting to discuss.

Make your mind up! :rotfl:

adwat

RosieTiger wrote: »

yes indeedy, I do remember fondly those stories of investments that would pay the mortgage off in the future - now they were a poor idea!

Yes, what were those marvellous repayment vehicles called?

Ah, endowments, how wonderful they were.

Give me a good old fashioned repayment mortgage every time thank you.

It's a shame we don't have mortgage rates fixed for the term of the mortgage like the USA.

Jamesd, I think you're suggesting that us overpayers should take a more balanced position other than just overpaying, presumably using various investment vehicles which carry with them some sort of risk. Peoples' attitude to risk varies widely, most of us on here, in my opinion, are here because we want minimum risk and clearing a mortgage and owning your home is the biggest source of worry to us. Once your roof is safe, employment worries become much less as do money worries in general, and yes the money freed up can be put to other uses such as saving for retirement as you say. It's simply a matter of priority - you want to tackle it all at once and see that as the most balanced way of doing things. That's fine, but not everyone will see it like that or indeed have the income to do all these things at once. I contribute to a pension whilst making overpayments, also I feel that whilst I would like to spend more on us, overpayments are a price worth paying in the short term in order to enjoy our income in the longer term. Maybe you have no concerns about ongoing employment that allows you to take the position you do? That's great if that's the case, but you need to consider that unemployment is thrust upon us unexpectedly in most cases and having a smaller mortgage will always be beneficial if this happens. I'm not suggesting that everyone on here is overpaying for this reason, but I suspect that many of us are.

As for this thread being made a sticky, I think that's a good idea, it might give people an idea of why we do what we do and what this forum is all about.

As RosieTiger said, best wishes in your overall financial planning, but please do not dismiss those of us who are also trying to achieve being mortgage free, albeit in a slightly different way to you.

michaels

So two groups - those not on super low rates for whom overpaying is not so easy and those on very low rates for whom overpaying does not make sense as they can earn more on their savings than their mortgage costs - it seems the average person is more financially astute than the average journalist.

pawlala wrote: »

Don’t delay, overpay your mortgage today

Homeowners have not been overpaying on their mortgages, despite low interest rates making it the ideal time to quickly reduce the size of their debt.

Mortgage lenders told the Bank of England they did not experience 'widespread overpayments' of mortgages last year, even though the monthly repayments were relatively low on some variable rate mortgages which were arranged prior to the financial crisis.

Lenders gave a wide range of reasons as to why borrowers might have passed the golden opportunity up. These included a squeeze in disposable incomes and the growing number of people out of work. It was also suggested some people had chosen to save any extra money they might have rather than pay more off their mortgage.

The revelation backs up recent research which suggested millions of homeowners were missing out on the chance to take years off their mortgage. Barclays said only one homeowner in ten had taken up the option to overpay.

Those homeowners who are not overpaying have been urged to start if they can afford to whilst interest rates - and many tracker mortgage monthly repayments - are still low. The average overpayment is currently £200.82, which on a mortgage of £150,000 over 25 years could see the term reduced by seven years and three months.

Full article: http://moneyfacts.co.uk/news/mortgages/dont-delay-overpay-your-mortgage-today210411/

pawlala

remember me? remember this thread?

Brits spend cash rather than pay off mortgage

This is revealed in the inaugural MortgageMood survey from Legal & General’s Mortgage Club. Of those surveyed, nearly half (41%) claimed to be spending money left over at the end of each month. Less than a third - 28% - were using remaining funds to contribute to further mortgage repayments.

For those on tracker mortgages, they are seeing the benefit of ongoing low interest rates as they have the largest proportion of cash left over at the end of each month, after bills and utilities. Around 27% of British mortgage payers have £100-£250 ‘spare cash’ at the end of each month as a result of low interest rates, while 15% have £250-£500 left over and 2% have more than £500 left over as a result of low interest rates. A third (33%) have less than £100 spare as a result of low rates.

Single people paying a mortgage are worse off than couples – no singles had more than £250 of spare cash, with 47% having £100-£250 spare and 53% having less than £100. By contrast, 25% of couples (married/co-habiting) had £100-£250 and 18% had £251-£500 spare.

Read more at http://www.mortgageintroducer.com/mortgages/241470/5/Industry_in_depth/Brits_spend_cash_rather_than_pay_off_mortgage.htm

pawlala

Even less estimated by Barclays (via Mortgage Strategy)

Consumers paying down their debt is an attractive rationale, especially when you consider Britain’s personal debt pile of £1.46trillion is of such epic proportions that it conjures up images of the Tower of Babylon built with stacks of money rather than bricks and mortar. But is this really what’s happening? Figures from banks and mortgage lenders actually show that contrary to popular belief, large numbers of borrowers aren’t valiantly making overpayments.

Research by Unbiased.co.uk found that 63% of borrowers on tracker mortgage deals were not taking advantage of the low interest rates to overpay on their mortgage last year. Only one in 10 were making occasional overpayments on top of their current monthly payments.
More recently, Barclays released figures that show only 10% of home owners are overpaying on their mortgage, while just 6% plan to start overpaying this year.

http://www.mortgagestrategy.co.uk/features/comments/in-my-opinion/1038820.article