pay off mortgage asap!

chattykathyblue

When our fixed rate finishes at the end of June we will owe £60,000. We have been using our savings to overpay and will have about £15,000 left which we want to keep for any rainy day emergencies. Can anyone advise me whether we should have an offset mortgage or should we just make overpayments to get it paid off asap? Our present mortgage will revert to C & G's SVR of 2% above the base rate.
We're both nearly 55 & I don't want to have to work full time much over 60.
Any advice gratefully received

originalmiscellany

Your salaries (how much they are combined)
What your outgoings are
If you have any other debt credit cards etc?

2% above the base rate = 2.5% mortgage in the current climate which is a pretty good deal - fixes are increasingly edging towards 4 - 5 % for a decent length fix.

What does your paperwork say re overpayments? Are you limited in terms of amount you can overpay e.g. 10% per year?

If you have a good combined salary, you could possibly clear it within a few years, you mention 5 years time. I'd say get both of you on board and aim to break the back of the outstanding money in the next 2 years say - to ensure you have the potential to retire even earlier - if you do I imagine the effort of economising now would feel greatly beneficial.

First Direct (Offset kings) cheapest offset is currently 3.79% so you'd be better off making overpayments as it is, and hopefully by the time interest rates rise (say to 2.5% next year - so you'd be paying 4.5% on your current deal), it'll be so small you can pay it off no problem.

That's my 2pence worth anyway, hope it helps.

chattykathyblue

Thanks for your reply. We earn about £72k per yr between us and have no other debts but we enjoy a good lifestyle - eating out, holidays etc However, we both really want to get rid of the mortgage so could make a big effort to spend less.
I'll have to check what overpaymets we could make with C & G (we not on the SVR yet)

Jonbvn

OP,

With a mortgage rate of only 2.5%, I would suggest you consider saving instead of OPing. LTSB offer 4% on their classic vantage. With two people, you could save up to 42k.

originalmiscellany

I'd aim to clear it in 2 years, work out how much you need to save per month, and go for it. It will involve some cut backs but as you eat into your mortgage, you'll probably get addicted to this site and this forum!

Whether you overpay directly into your mortgage or into a savings account doesn't really matter - the aim is to clear your debt.
2,500 a month will do it

chattykathyblue

Ooooooh, that sounds so good. I suppose we need to decide how much we are prepared to sacrifice in order to be MF.

Of course the 2.5% is only relevant today as it will rise with the predicted interest rate rises. I also like to have 'rainy day' money as well. Ah, decisions, decisions, decisions. Thanks for all your thoughts

chattykathyblue

I've been thinking about this forum all day and some of the advice given. How on earth could we afford to pay £2500 per month? I bring home £2730 and OH £350 per week. Our Council tax is £180 a month! Is there a better Offset mortgage out there?