Many mortgage borrowers overpaying

wotsthat

A substantial minority of recent mortgage borrowers have taken advantage of low interest rates to pay off their loans more quickly, lenders say.

Research by the Council of Mortgage Lenders (CML) shows that one third of the nearly seven million new borrowers since 2005 have deliberately overpaid.

The CML says the extra payments have amounted to £31bn.

http://www.bbc.co.uk/news/business-20701746

Don't know how true this is (the BoE don't agree) but it's always seemed clear to me that there are a number of avid mortgage overpayers working towards being mortgage free.

I was a keen overpayer with a 5.45% mortgage and was always chasing 0% credit card deals (without fees - they were the days) but now at 2.5% there seems little point as the return is negative. I'm sure that there are plenty on the MFW board with great mortgage deals still trying to pay it off early - maybe it's the feeling of freedom they seek rather than worrying about the absolute best financial course to take?

PaulF81

wotsthat wrote: »

http://www.bbc.co.uk/news/business-20701746

Don't know how true this is (the BoE don't agree) but it's always seemed clear to me that there are a number of avid mortgage overpayers working towards being mortgage free.

I was a keen overpayer with a 5.45% mortgage and was always chasing 0% credit card deals (without fees - they were the days) but now at 2.5% there seems little point as the return is negative. I'm sure that there are plenty on the MFW board with great mortgage deals still trying to pay it off early - maybe it's the feeling of freedom they seek rather than worrying about the absolute best financial course to take?

The return may be negative now, it won't be in the future. People would spend money if they saved it, you can't spend it if you had overplayed your mortgage.

bugslet

Always overpaid mine, for two reasons. Partially because I can take a 6 month payment holiday if something were to happen to me and money was tight and as PaulF81 says, for security. My father lost the house when I was a teenager and I tend to see having no mortgage on it as a good thing, even if there is a case for a different approach form a financial perspective.

quantic

Have been overpaying since the day I took out my mortgage 2 years ago. Started off with rounding it up to an even number, now overpay by about 35% every month. Its amazing how much time it can slash off your mortgage. Think we have already taken a full year off ours already.

Wheezy_2

wotsthat wrote: »

I was a keen overpayer with a 5.45% mortgage and was always chasing 0% credit card deals (without fees - they were the days) but now at 2.5% there seems little point as the return is negative. I'm sure that there are plenty on the MFW board with great mortgage deals still trying to pay it off early - maybe it's the feeling of freedom they seek rather than worrying about the absolute best financial course to take?

We are keen overpayers also, coming early out of a 4.99% 5-year fix (yes I know, bad decision with hindsight) into a 2.79% new 5-year fix, with 10% of balance yearly overpayment allowed (co-op)
Even at 2.79%, I expect us to still overpay.
As you said, the feeling of freedom. The idea that x % of your house still belongs to the bank just doesn't appeal, even when a different approach would be financially more astute.

quantic

Even at 2.79%, I expect us to still overpay.

We're on 4.29%, best I could get at the time, being first time buyer.

exarmydreamer

I pay off 1K every month (after interest deduction), with the intention of paying off mortgage in 6 yrs, (will increase to 2K every month during next yr). Leaving us mortgage free by 50 with tax and tax free army/private work pensions. wages from work and shares from work schemes to provide for old age and help for children's futures.

Also by overpaying, you reduce the amount of interest paid to the bank, mine works out at a saving of almost 30K. This whilst on a SVR of 3.94%, not the best rate but I can fix very quickly if necessary. Not to be sniffed at, see my sig.:)

moneyinmypocket

Fantastic to see people over paying and securing their homes. The HPC chain gang will be fumming

exarmydreamer

Probably should have said as well that we bought our house in 2005, had a 5 yr fixed rate at 5.86% but still overpaid from the start 10%. This was the maximum over payment on the fixed rate. Now on lower SVR, we really see the difference and the daily interest is coming down nicely.

You really don't miss the money, once you budget for it. I always wonder what I used to spend the money on. I agree with moneyinmypocket, the banks must be fuming.

foreversummer

I think there are even more people overpaying their mortgages than the CML figures show. Their figures don't include those on very low mortgage rates who rather than overpaying are saving their 'overpayments' into savings accounts with higher interest rates.

roswell

I used to over pay but iv given up now I was aiming to get it paid off ASAP so it was term reducing but as of last month Iv changed it to payment reducing.

Im happy to pay the outstanding balance over 10 years fully offset ;-)