Is POYM the best strategy for everyone?

Dithering_Dad

I hope people don't mind me starting this thread in this forum, but I just can't think of a more appropriate place to put it. I know this is a support forum for people paying off their mortgages, but I think there are plenty of people who visit it are in the same position as myself.

I am soon going to reach the point where my credit card debts will be paid off and I will be looking around for my next "project". I considered my mortage to be another debt and was really keen to eliminate it. However I have been made aware from the "Don't POYM" thread that, in certain circumstances, this may not be the best strategy.

Like many people, I really enjoyed the "Don't pay your mortgage off" thread and found many of the early posts extremely informative. That it descended into chaos and personal sniping was really dissappointing and so I'm hoping to ressurrect the discussion but with adult reasoning and discussion. Basically I want to know all the pros and cons of POYM for people in my circumstances.

[STRIKE]With this in mind, could people who have already paid their mortgage off please refrain from posting. I hate to generalise, but I do feel that many of the people who have already paid off their mortgages probably bought them before the property boom and so are not in the same situation as myself and other potential "Newbie POYMers" where we have relatively modest houses with disproportionately high mortages, which will take a long-term commitment to pay off. .[/STRIKE]

[STRIKE]The other group I would ask not to post are extremely high-earners who may have a high mortgage, but who have a hefty disposable income and so can afford to throw pots of cash at their mortgage as well as other investments, without really impacting their lifestyles[/STRIKE].

EDIT (28-02-2007 ): Please ignore these earlier comments, they were meant well at the time, but in retrospect, not very fair. Sincere apologies to anyone who felt excluded - I just didn't want the argie-bargie of the DPOYM to spill over into here

[STRIKE]I hope people don't mind being excluded, but I just want a non-biased discussion with people who are in a similar position as me - ditherers who don't have a great deal of spare money and want to make sure they use it to the maximum effect! [/STRIKE]

I do realise that many of the points in this thread will have already been expressed in DPOYM, but much of the sense was lost in the nonsense of personal attacks and the "white noise" of daft comments. If this discussion works out, then maybe it'll help me and people like me to decide which way to go, because whatever I decide will take about a 10 year commitment and I cannot comit to anything over that length of time without a lot of consideration (and dithering!)

EDIT (25/03/2007): Funnily enough, not long after making this initial post where I asked "High-Earners" not to post because the "rest of us" will be struggling along for decades pay our mortgages off, I decided to set up my own business and now seem to be heading towards being a "high-earner" myself. My original plan that I arrived at within this message thread was to get a fixed 10 yr mortgage and use that duration as my POYM goal. I've now remortgaged with a 3 year discount and am now using that as my POYM duration. Whether it's achievable or not is unclear, but just thought I'd put this caveat in here in case people read this thread and the new "POYM Quest" thread and wonder how I've gone from struggling to pay my mortgage off over 10 years to struggling to pay it off in 3 years. It's a marvel how your life can change with just one decision (in my case, starting my own business).

SloppySaver

You're a braver man than I, Gungadad, trying to restart this thread, but in the manner of a good christian I will forgive those who have sinned against me and will have a go at participating. If the trolls descend on this thread I'll make a hasty retreat so that hopfully they don't ruin this one like they did the DPOYM one.

I am sure that my views have been made clear enough but just in case. I think that you have to put in financial foundations before you make any financial commitment. These foundations are No debt, Emergency saving of 3 - 6 months of your net salary (time length dependant on your circumstances, i.e. family and job prospects) and retirement planning. Once you have all that in place, if you have any spare cash and the real desire to pay down your mortgage then go ahead.

I understand though (as we are basing this on people like yourself with high mortgage payments and possibly low-ish income) that there may not be much cash spare, but once you have completed your emergency savings you don't need to add to these and so the money could then be channelled onto the mortgage. This will mean a delay, perhaps upto a year in starting your mortgage overpayments, but better a delay than financial ruin.

There, that's a nice civil post to start you off. Maybe the trolls will follow suit...

Floxxie

Hi DD,

I think the best place for you to go to discuss your next steps would be an IFA; every person has different circumstances and objectives in life. I fall within your target responders but I took advice before I started trying to pay off my mortgage.

I am not going to get into a discussion on what I have and what others think I should have because I have an adviser to do that for me. The advice given to me in my circumstances was to treat the mortgage as a debt and to get rid of it within a reasonable time. To do that I was told to extend the terms as long as possible, set the monthly payment at a level that my finances allowed and make sure that I could take back any overpayments.

As you mentioned, this board is about paying off your mortgage. You are at the inbetween stage where there are a number of options available to you but you need to take professional advice on your way forward.

Good luck!

alanobrien

I think you are going to need to define some boundaries a little tighter. Such as what do you define as a high earner ?

To me all that matters is the level of income/outgoings vs target duration to get rid of the mortgage.

My target is 10 years tops which i know in my case is doable without huge life adjustments (130k mortgage) currently 2 years in.

Good luck with the thread, i will watch its progress with interest.

Dithering_Dad

Floxxie wrote:

I think the best place for you to go to discuss your next steps would be an IFA; every person has different circumstances and objectives in life. I fall within your target responders but I took advice before I started trying to pay off my mortgage.

Hi Floxxie, thanks for this. The last time I went to see an IFA, I came away with an endowment, as we can see from my Sig, how well that turned out

I think it's a good idea though to get a financial 'health check' from an expert before heading down a long and winding road. I also think that it's a good idea to be as clued up as possible before seeing an IFA so would still hope for pros and cons from my MSE chums.

Dithering_Dad

alanobrien wrote:

I think you are going to need to define some boundaries a little tighter. Such as what do you define as a high earner ?

To me all that matters is the level of income/outgoings vs target duration to get rid of the mortgage.

My target is 10 years tops which i know in my case is doable without huge life adjustments (130k mortgage) currently 2 years in.

Good luck with the thread, i will watch its progress with interest.

Hi alan,

I guess I did leave the boundaries a little loose. I don't want to offend anyone or stop people posting from any sort of standpoint if it will add to the discussion, but I think it's got to be relevent to the majority of people. I just think advice from someone who can pay off their mortgage with £2000 monthly overpayments won't help me! (Unless I take up bank robbery)

Your 10 year plan sounds within my strict demographics though, so welcome!

Floxxie

Dithering_Dad wrote:

Hi Floxxie, thanks for this. The last time I went to see an IFA, I came away with an endowment, as we can see from my Sig, how well that turned out

I think it's a good idea though to get a financial 'health check' from an expert before heading down a long and winding road. I also think that it's a good idea to be as clued up as possible before seeing an IFA so would still hope for pros and cons from my MSE chums.

Hi DD,

The problems with pros and cons is that they are very subjective; my reasons for wanting to clear my mortgage are going to be very different to somebody else's as other threads on this board have proved.

For me, I like to keep it very simple; my mortgage is a debt and I would like it gone. I want to make sure that the family do not go without the essentials and the little treats so I am not pushing to get it paid to the detriment of our sanity. Whether I decide to pay it off or not, the mortgage is still an enormous amount of our income and like any other debt, it needs to be reduced and eventually got rid of.

I have set myself a target to pay off £13500k per year (including normal payments) on my £99k mortgage which means finding an extra £3k on top of my regular payments. If I do this, the mortgage should be paid off within 10 years.

southern_chick

Hi DD

hope you don't mind me joining in this thread, i'm on a relatively low income (single, working mum) and although my mortgage isn't huge compaired to a lot of people, its just under 62K it is a huge amount of my monthly income. i have got no other debts and am now planning on putting every spare penny into paying off my mortgage. everyone has obviously got different opinions into the pro's and con's of doing this and it depends on personal circumstances. i just want to security of knowing that i "own" my home and i can then live in it technically for free. good luck with what ever you decide to do

SC xx

Dithering_Dad

Hi SC,

I guess Alan was right, I didn't define the boundaries at all well

You're in the same situation as me. Disproportionate sized mortgage in relation to income. Our mortgages are mount everests and I think we may be hanging around base camp for a wee while

However, I reckon that it was good advice to build up a little nest egg or 'emergency money' as Sloppy calls it. What I don't want to do is spend the best part of a year saving it away and not touching the mortgage. I'd really like to offset it against the mortage but I've heard that these are quite expensive - though my rate isn't so great at the moment anyway. I think Catowen mentioned in the DPOYM thread that she had northern rock pension that she could pay into and get her money back without strings attached if she needed it. Does anyone know if this the case? (the strings attached, not if Catowen said it)

I think our next step (we're a team now, "The Disproportionates") we should all check out inexpensive mortages that give us overpayment facilities and easy access to our money if required. Anyone want to join the team and meet us back here tomorrow night with a selection of good mortgages?

The one who finds the best rate with the most flexible terms wins! (wins a better mortgage).

p.s. keep watching my signature, something wonderful is going to happen

IFA

Words are so ugly gimme numbers

nearlyrich

I have to say that this is a public board on an internet forum and you can't really stop anyone posting if they want to, I understand where you are coming from but I don't want to spend the rest of the evening refereeing the thread so please everyone keep it nice!