Motivation to pay off the mortgage!

Redbedhead

I checked my bank and mortgage accounts yesterday. As it was the 1st Jan, the mortgage shows it as a new year and just shows the balance b/fwd, then the interest and any payments seperately.

This meant I could see at a glance what the daily interest charge was:rolleyes:

Not sure if it is a good thing or a bad thing to know what you are paying - although I am now very motivated to pay the mortgage off sooner, I am also quite literally waving goodbye to nearly a tenner a day to Mr Nationwide:eek:

David_B_2

Redbedhead wrote:

I am now very motivated to pay the mortgage off sooner, I am also quite literally waving goodbye to nearly a tenner a day to Mr Nationwide:eek:

Good for you. It's not the getting motivated but staying motivated people find hardest.

All the best of luck to you and any others trying to beat the banks!

njb1978

I checked mine (with the Nationwide also) on the 1st and saw roughly what I suspected - just off £9 a day :rotfl: then :eek: then :mad: now motivated...........

Stonk

Another way to motivate yourself ...

Whenever you've got a few £K sitting around spare (on top of your emergency fund), pay off a lump of your mortgage, asking to have the term reduced (not the monthly payments). They will recalculate your term, and you will be pleasantly surprised. Even quite small lump sum payoffs can make surprising changes to the term, because they simultaneously reduce the capital and remaining interest (e.g., pay off a third of the balance, and you'll probably find the term is cut in half).

This becomes addictive. For me, it was the first-year mortgage statement that said something like "£65K outstanding at start of year, £425 paid every month, £64K outstanding at end of year" which got me started; what kept me going was my spreadsheet estimating the reduction in term for various lump sum payments.

Redbedhead

Stonk wrote:

Another way to motivate yourself ...

Whenever you've got a few £K sitting around spare (on top of your emergency fund), pay off a lump of your mortgage, asking to have the term reduced (not the monthly payments). They will recalculate your term, and you will be pleasantly surprised. Even quite small lump sum payoffs can make surprising changes to the term, because they simultaneously reduce the capital and remaining interest (e.g., pay off a third of the balance, and you'll probably find the term is cut in half).

This becomes addictive. For me, it was the first-year mortgage statement that said something like "£65K outstanding at start of year, £425 paid every month, £64K outstanding at end of year" which got me started; what kept me going was my spreadsheet estimating the reduction in term for various lump sum payments.

I can't do that at the moment as I have got a new two year deal. With Nationwide I can pay off an extra £500 each month without penalty, so I do that up to the limit of £500 and then save any additional funds so i can do a lump sum at the end of the 2 year period and before I remortgage again!

virgo149

Redbedhead - just watch out with the Nationwide, unless you tell them specificially, when you overpay the maximum each month (500 pounds) they will reduce your monthly payments, NOT take it off the term. Apparently all you need to do is give them a call and they will make the change to your account to reduce the term.

Redbedhead

virgo149 wrote:

Redbedhead - just watch out with the Nationwide, unless you tell them specificially, when you overpay the maximum each month (500 pounds) they will reduce your monthly payments, NOT take it off the term. Apparently all you need to do is give them a call and they will make the change to your account to reduce the term.

To be honest, there is only maybe 2 months of the year where we can afford the max £500 at the moment, although that might change in a few months, in which case I will reconsider.

Does it actually make any difference though? You only pay interest on the outstanding balance which will be the same either way.

macca64

Yes but if they reduce your payments, you pay less every month, then your capital reduces more slowly than if you had reduced the term, hence you pay more interest. To be beneficial you need to reduce the term, you'll save more that way.

Gray0103

If you overpay by £499, they do not change your monthly payments.

tt07

We spoke to nationwide and they put a flag on our account so if we pay £500 they keep the monthly payment the same. I've just done £500 so I'll see if the payment goes down, if so they didn't listen if it remains the same then that's cool

Redbedhead

macca64 wrote:

Yes but if they reduce your payments, you pay less every month, then your capital reduces more slowly than if you had reduced the term, hence you pay more interest. To be beneficial you need to reduce the term, you'll save more that way.

Ok, I see what you are saying.

We were thinking of reducing the term at our next remortgage but quite liked the flexibility we had by leaving the payments over the full term. If at any time we were short of cash we had lower payments that we HAVE to make.