Opinions please!

Mumto3cheekymonkeys

Hi all,

I have been reading some of the posts on here and I am really impressed with what some people are doing.

After reading them I have thought to myself shall I over pay my mortgage to cut it the years in half?


My mortgage is due to be paid off in 34 years ( I will be 58). We own about 40% of our home atm and our monthly payments are very low at just £356.


We have 3 children under the age 5 my OH works full time and I work pt. Our yearly income (including any benefits) is around £26000.

We are selling another property we own and after all expences and clearing some debt we will be left with roughly £20000 from that.
We have planned to spend this money on our current house updating it as it needs alot of updating (new bathroom, shower room, kitchen) and we also would like to use the money to have a wedding.

Once everything is cleared we have worked out that each month after setting aside £800 (for pensions and savings) we will have roughly £100 per week spare money, of course we wont spend all this but we want to save as much as possible.


Now I have said all this Im asking for some constructive advice about whether to pay more towards our mortgage each month or to enjoy the money while we have our children and to make sure they have a good quality of life.

When my youngest is at full time school I will be going to work full time and it was our plan to pay double maybe triple when our children had grown up and flown the nest.

What do you think?

Many Thanks.

joedenise

Why not split the "spare" money? Say save half or use for children and half to overpay the mortgage.

It doesn't have to be all or nothing, does it?

Denise

greent

I'm another who goes for a balance - we have holidays and treats (although holidays this year are mainly camping) and OP the mortgage. The children (aged 3-14) do activities (tumble tots/ beavers/ scouts/ drama classes/ musical theatre) and don't feel like they're missing out. We're not having expensive foreign hols for a few years and the small two mainly wear hand me downs, but life is pretty good overall.

All or nothing is often not the best way. If you put it all on the mtge you may end up resenting working hard and not ever having any fun/ treats. Conversely, spending all the spare cash means you are tied in to your long mortgage term - a middle ground can be the best approach

Mumto3cheekymonkeys

I was thinking of meeting in the middle to. I was thinking to pay double on the mortgage and then just save the £400 my two youngest boys will be ok to wear the hand me downs as the clothes seem to be of pretty good quality so I wont be spending much on that sort of thing its everything else that I worry about. Days out, Holidays (abroad occasionaly) we could do with a new car too as our car is not big enough.

also maybe I should clear my mortgage and once its clear start paying into a pension?

There is so much to think about.

Many thanks so far for the replies keep them coming.

financialbliss

@MT3CM,

I'm nearing the end of my own personal mortgage challenge - should be mortgage free in a few months. It's not been easy at times. I've two little 'uns - now 8 and 5, and am constantly torn between family spending and throwing money at the mortgage.

I've not had a foreign holiday in 10 years (a personal decision) , but I'm hoping for a big Florida holiday next year once we're free of the mortgage. Moving forwards, lots more foreign holidays too!

No answer you get here will be right or wrong - just what you feel suits your own needs and aspirations.

Bear in mind that if your mortgage rate is low, you may be better off skipping overpaying on the mortgage at all and throwing it all into a savings account until the rates change.

Best of luck!

FB.

Mumto3cheekymonkeys

Thank you FB. I think the reason we are torn is because we have never had anything. I grew up with out any extras and I suppose we want to enjoy our lives now. For us our mortgage is not like a noose around our neck. It is an affordable expense that we apply to our budget each month. Everyone keeps telling us to pay it off early but my OH is not fussed as we can afford it and our plan is to clear it later on when we are both working full time and our kids have grown up.

Jock_Tight

34 years left on the mortgage is a long time, any OP you make now will make a big difference in overall interest paid and also reduce the term. Also you could find yourself getting better rates as your LTV improves and you lower the impact if interest rates rise.

If you look at your expenditure I am sure there will be areas you can economise, get better deals and then you can use that money to overpay your mortgage. We saved over £100 a month after looking into our utility bills, insurances etc.

All the best on your journey,
Jock.

Ayeshalush

I agree that balance is needed if you are going to keep it up long term. It takes a very strong person to be committed enough to throw every spare money at the mortgage, definitely a stronger person than me.

It might be worth having a look at one of the mortgage calculators (think there are links at the top of the MFW board) to see how much interest you could save. I bet you'll be amazed at just how much of a difference small overpayments could make, especially with your current term of 34 years.

I'm no expert on pensions, etc but I think I might be inclined to split the spare cash into 3 - treats (hols, days out, etc), mortgage overpayments and pension. I know I left it until my 30s to start paying into my pension and I really regret it now.

HTH

A
xx

Mumto3cheekymonkeys

Thank you for your comments. JT i appreciate your comments and agree with you to a point, we have recently done all this (cut 30 quid per month off our water bill) so we have done loads on that.
our contacts are due to end and we will have 20 quid a month on them and we are also going over from virgin to sky saving us another 20 quid per month. I know what your thinking sky tv is a luxury and your right it is its one that I enjoy as im often at home and enjoy my "quiet nights" in with the tv.

I am thinking maybe paying an extra £200 pm on the mortgage what do you think?

Jock_Tight

£200 a month is excellent and will make a big difference, as Ayeshalush mentioned try one of the mortgage calculators to see the impact, you will be suprised.

When we started overpaying it was only by about £60 per month, several years later when we saved a bit here, a bit there we increased it. Then any pay rise we got we added to the mortgage, if you didn't have it in the first place you dont miss it we are currently up to £500 OP per month.

Also make sure you are getting the best rates for any savings, cash ISA's etc and have a look around for freebies etc from banks, we make £10 a month / £120 a year from two Halifax reward accounts just by moving money in-out each month......it all adds up.

We didn't cut back completely, we still go holidays, nights out, Virgin package etc, its a balance. The earlier you start the better you will be, our mortgage free journey started 5 years ago.

Mumto3cheekymonkeys

How old will you be JT when your mortgage free (im so nosey!)