Just overpaid 8k, was that the right thing 2 do?

welshman01

After finally arriving at our first savings target (£30k :j), I’ve been able to have money spare to overpay the mortgage. I’m on 2% above BOE base and have just paid 8k off my mortgage to bring it down to £75k.

I’m very very happy with myself as it was very tempting to find other uses for the 8K (new car etc). I paid it without allowing myself enough time to convince myself not too.

Was this the wrong decision with the interest rate being so low?

The house is only worth £100K and the most I’ve ever overpaid in the last 4 yrs is £400 so I felt psychologically I needed to make this payment.

Right or wrong I’m happy, but would appreciate your opinion on overpaying again whilst having these low interest rates. I’m tempted to concentrate on getting the mortgage down to £50k – but like the thought of increasing the savings amount to £55k. I’ve toyed with splitting the money between the two, but my motivation comes from seeing dramatic changes (not good practice I know).

P.S. An extra pat on my own back. 4 years ago I was in £20k debt. Changed my view on spending thanks to this web site!! So big thanks :money:

ryan86uk

Congrates!!!!

DEFINITELY the right thing to do! If I had 30K saved up I would pay off 20K off my mortgage and just leave 10K saved up. If my savings account went up to 14K Id pay 4K off the mortgage straight away!

Mortgage is the single, biggest dept most people will ever have! Get rid sooner rather than later!

Turtle

I agree. We're on 1% over base, it's an offset tracker with first direct. I know I could make better use of the money by saving it then paying it off the mortgage, but my primary motivation is seeing the mortgage number go down. This is particularly important to me because I can just make transfers over internet banking and you see the balance go down immediately.

ryan86uk

Turtle wrote: »

I agree. We're on 1% over base, it's an offset tracker with first direct. I know I could make better use of the money by saving it then paying it off the mortgage, but my primary motivation is seeing the mortgage number go down. This is particularly important to me because I can just make transfers over internet banking and you see the balance go down immediately.

Oh i like that idea!! I can't do that with mine !

cha97michelle

I would say it was the right thing to do as you have just put yourself at 75% LTV ratio, so that will open up better deals to you if/when you look at changing mortgage deal.

Do you really care what anyone else thinks? It sounds like you have a good balance between saving/over paying now you are debt free.

I wish i could balance more to the savings too, but i love the overpaying high too much. I need to remember to be more balance between the two.

zzzLazyDaisy

Even with these low rates, it will be difficult to find interest of 2% over base rate after tax has been deducted, so it isn't as if you are losing the potential for earning more interest by keeping the money in the bank.

It doesn't really matter what anyone else thinks, but in your shoes I would definitely be paying the mortgage down.

Turtle

ryan86uk wrote: »

Oh i like that idea!! I can't do that with mine !

it's a brilliant feature, an incredibly flexible account. It would be tempting if you're not disciplined though because you can move money back out of the mortgage account any time you like as well (as long as you're not on high LTV).

RosieTiger

Good decision!

LilacPixie

good decision... can i ask why 30k savings????

pawlala

I would have done the same.

welshman01

hi,
I'm glad we all agree it wasn't a massive mistake :j.

My target for £30k was as I put my money away into Premium Bonds and £30k is the Max holding amount. I'm winning between £25 and £75 per month so I'm very happy to continue gamble my money in PB rather than a savings account.

Thanks for you replies