Should I pay off my mortgage? Discussion area

edinburgher

Cupcakesjo wrote: »

Hi, can anyone help, we have an interest only mortgage and I want to know if I can make over payments and is it worth doing, we have £172k and 15 yrs left to pay. Thanks

Check your mortgage T&Cs re. can you overpay. Re. is it worth it - what is your mortgage interest rate and are you a basic or higher rate tax payer?

Lee252

Hi,

We are looking at overpaying the mortgage with a plan of remortgaging after we have completed a extension and paid off up to £15,000 before we remortgage.
Below are the choices that we have, any good advice.

Pay off your mortgage earlier by reducing your mortgage term. (This option is only available if you have a capital and interest repayment mortgage)

- Reduce your future monthly repayments

- Keep your existing payment and term 'as is'. At the next natural mortgage payment change; for instance an interest rate change, your repayment will be automatically recalculated.

AineC

Hello,
I have read a lot of the posts under this heading, but cannot find one that is similar to my own, so here goes and thank you to anyone who replies!
I have 9 years left on my mortgage - 4.99% - and am facing a sizeable cut in pay next year, which is making me nervous i.e. mortgage and life insurance (on mortgage) monthly payments. I have a bond coming up in October and that would pay off the mortgage, which carries over £3000 early repayment penalty (Leeds Building Society/shame on you!), with a few thousand left to put into an ISA. Over the 9 years left on the mortgage, if my calculations are correct, even with that hefty repayment, I would still be £10K ahead, based on what the money would earn in savings versus paying off the mortgage.
At first, this seemed like a no brainer, getting rid of the monthly burden AND the long term savings, but I am nervous about using most of my 'at hand' savings in case the pay cut means having to dip into savings. I feel as if I'm missing something here!
Any thoughts fellow members?

jbrenc

Hello! Since taking out my mortgage just over a year ago I am lucky enough to have received a pay rise and I can afford quite a bit more each month, I'm struggling to figure out the maths though to decide on the best course of action:

- Mortgage = 4.6% fixed rate until May 2017- approx £70k to pay, 25 year term taken out in May 2014
- I currently pay £447.61 per month
- I have an ISA which pays 1.4% interest
- I can make over-payments of up to £999 per month without penalty however they do not have any affect until the mortgage is recalculated every February
- I can make capital repayments of £1000 or more but pay a penalty of 3% until May 2016 then 2% until May 2017
- At the end of each month I typically have at least £500 leftover (sometimes up to £8/900).

What I am trying to work out is, is it better for me to:
- Put any left over amounts in my ISA each month, earn the interest, then each January pay whatever is in there off my mortgage, knowing there is a fee.
- Pay any left over amounts as overpayments on my mortgage but know they will not affect my mortgage interest but also know that I have not paid a fee (I guess I should consider the lost ISA interest of 1.4% as my fee)
- Something else? I have read about reducing the term of the mortgage but this seems to be discouraged in the article? I guess the downside here is that I am locked into a payment which could be problematic when my fixed term ends and interest rates may have increased, plus I wouldn't have the option to use the money to save for a holiday or something else if I choose one month.

Thanks for any help - I want to get it right as it seems to have the potential to save big money over the course of the mortgage!

Jake

barry_mac

I would like to make overpayments to my mortgage but am confused as to which would be of most benefit! My mortgage is made up of 2 parts - Interest only - £41800 - 2.79% Fixed and
Repayment - £15955 - 2.79% Fixed
I have 10 years left to repay the loans and can afford to over pay £100 a month.
I am really really confused and would gratefully appreciate any advice! Many thanks!

ViolaLass

Do you have a plan for paying off the interst only part? If not, sensible to tackle it.

diamonds

Having me new DEBT FREE status (and badge MSE! thanks ) I would just like to say to others about mortgages....it is a (working) lifetime debt for the most part and well given the current climate savings are best for now.


Secondly, if you like most people want to leave your kids something let it not be a physical asset, let it be time, love, support and financial and food prep education because with these things your kids will flourish in life for themselves - it is more important to have these things than a bought house over time, love and financial education etc.


If you can downgrade house size or move to rented property and downgrade your work hours to a work/life balance for your kids DO IT! or at least like debt reduction, start now, being debt free is one thing and that includes a mortgage. It pays more to ethic to childmind your grandkids and ensure you & your kids have a work/life balance than anything, corporations are not there for you as a priority as a employee nor as your creditor.


I'm going all out to buy a cheap apartment OUTRIGHT in Spain in 2016 for the future to remain debt free for life, the pound is too strong a currency to work too hard in life at the expense of time with those you love.

Enrich yourself/yourselves, not corporations - humanity - we got this far looking after each other until the late 1800's when commercialism became priority over loved ones.

Is a mortgage and assets to leave your adult kids really that important over regret/s or are we sold on vanity...to corporation$ advantage$.

Keep swimming Nemo's



DEBT FREE DIAMONDS ^_~

gzoom

diamonds wrote: »

Enrich yourself/yourselves, not corporations

We're expecting our first child next year, and my view points on debut - mortgage debut in particular is starting to come round to echo what your saying.

My parents are fanatical about saving, they worked hard all their lives, and have now retired. But after a life long habit of saving, they just break the mould of detaching £££ away from life experiences. No matter how many times I tell them I don't need a single £ of inherence, all they still want to do is save up their pension.....what for, I'm not sure. Having a massive lump of saving when death is banning on the door isn't going to make anyone feel more comfortable.

Similarly up-untill recently we've been obsessives about paying off the mortgage, and now we are in a position to do it....But than I realise, what's the point?? Our mortgage is small, but regardless, £££ is there to enable to you to enjoy life, provide for your family. As long as your monthly out-goings isn't more than your income, who really cares....

Ofcourse part of my newly found thought process is to enable us to justify spending £50K on a car rather than clearing the mortgage :rotfl:

Jonnypilgrim

Hi, I'm 55 years old, having taken out a £120k repayment mortgage with my partner 4 years ago with the Nat West on a 5 year fixed deal at 3.79% interest. Our property is currently valued approx £250k. We have been making over payments on top of the monthly payments and owe £96k. I have various pension pots worth about £220k and am wondering whether it's worth drawing down 25% of my pensions to pay off part of the outstanding mortgage next April when the early repayment penalty of £960 ends. The reason why we are considering this is because I'm currently earning a good salary and a higher tax band payer but my job is not looking secure and I'm unlikely to be able to earn as much as I do now if I have to change jobs. We do not have any other debts.

Any advice will be greatly appreciated.

adon30

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