What made you want to pay off your mortgage?

jammerr

Hello,

I really like reading this forum and i'm impressed with how many people are kicking their mortgage into shape.

I just wondered with mortgage rates so low at the moment, why you are choosing to lower your mortgage instead of putting the money elsewhere.. for example, a stocks and shares ISA or Santandars 123, or an investment portfolio of somekind.

This isn't a criticism on anyone, purely curiosity. Is it because you enjoy seeing the numbers fall and hate paying interest? If so, why does it trump the above.

Obviously, if your mortgage rate is above average this thread isn't aimed at you :money:

JimLad

It may be low now...but it wont be forever. Making more payments now will cause you to pay less interest when rates go up.

System

My mortgage has an interest-rate of 3.1%, so not the lowest, however even if it was super low I'd still want to overpay.

For me, I hate debt, so want to pay any debt off ASAP. Also, our mortgage is currently due to end when my OH is 69, so we want to shed as many years off as we can. The other thing is I hate paying interest, so the less I pay the happier I am

Once we've paid it off we will have a lot more choices

kitjos

Think a few years ago we looked at where all our wages go, and our mortgage debit was the biggest amount at £820 pm. We thought of how nice it would be to actually have that money ourselves, we work bloody hard so would like to enjoy our wages. We looked into overpaying and started when our mortgage cost dropped to £630pm, we now pay £600 pm and interest rate of 3.69. If we hit 60% ltv our payments go to £400pm. Half of what we started on!

We just now want to keep pushing till we own our home outright and we earn our money for us & our family, not the bank x

egoode

I'm doing a bit of everything. I got my first mortgage in August and always said once I had a mortgage I would start looking at sorting out my finances for longer term planning as until recently the focus was on building a deposit.

I'm an IT contractor so always have a fair chunk of cash set aside in case I have a long gap between contracts and also for my tax bill each year. So I got an offset mortgage as it helps reduce the interest I pay on my mortgage but I still have quick access to the money if I need it.

I just opened a S&S ISA today and will put the full allowance in it each year.

I also started paying into a pension a couple of months ago.

Any other extra cash I get at the moment is currently going into my offset account as I want to redo my kitchen and the loft in my flat.

Hopefully with all this and a focus on trying to reduce my spending a bit I'll be able to retire comfortably one day in a place I fully own

globalds

If I didn't overpay ..I would convince myself I had enough spare cash for a bigger TV and a holiday.

Better I overpay and feel broke ..At least the debt is going down , even though it has low rates.

Happytravelling

We bought in 2011 when it felt like everyone was on the precipice of redundancy, so we wanted to get to a position where we could get our payments recalculated and have a better chance of surviving on 1 wage if needed.

Next was the target to less than 65% loan to value.

We're at a point where we want as much equity as we can so our next mortgage doesn't have to be huge but we've also started diverting some to stocks and shares for the longer term.

I think its difficult to move towards the thought that your investments can go up or down... with the mortgage it only goes down, the more you throw at it!

originalmiscellany

I did it for my family - at the time I was in a job which I didn't enjoy but I was aware that being able to not have to pay a chunk of money, say £700 a month to just the mortgage would take a lot of pressure off, which when I achieved it was a great weight off my mind. It meant that we could be flexible in our work patterns, and has allowed us some breathing space to enjoy the growing family.

mrsninja

I just don't like the idea that the house still isn't mine or that I'm borrowing 90k and ending up paying back a heck of a lot more.

singhini

jammerr you mention stocks and shares / ISA / Santander (im assuming your referring to their 123 account earning 3%)


1 - Stocks and shares can go down as well as up so some people don't like to take this risk
2 - ISA paying anything like 3% is hard to find (while average mortgage interest rates are 3% - 4%)
3 - Santander 123 account actually only pays 2.4% if you are a 20% tax payer (1.8% if you are 40% tax payer). if someone is a 40% tax payer its worth noting that banks only take a standard 20% interest rate and you are supposed to declare the savings to HMRC to pay the remaining 20% (failure to do so is actually tax evasion).


I make overpayments and its simply down to the fact that a mortgage is generally with you for 25 years and the quicker you can get rid of it, the better (gives you more freedom and less pressure in life). There's no guarantee you will be in work for 25 years. but you can bet your last £ that if you fault on your mortgage they will come knocking
I worked out that my £150,000 mortgage would actually cost me nearly £285,000 by the time id pay it off.


Finally, we sometimes think that a mortgage rate of 5% is quite high, however the average rate over the past 25 years is more like 7% (and that's an average - I remember my dad paying 15% back in the 1980's)

sportage1kia

jammerr wrote: »

Hello,

I really like reading this forum and i'm impressed with how many people are kicking their mortgage into shape.

I just wondered with mortgage rates so low at the moment, why you are choosing to lower your mortgage instead of putting the money elsewhere.. for example, a stocks and shares ISA or Santandars 123, or an investment portfolio of somekind.

This isn't a criticism on anyone, purely curiosity. Is it because you enjoy seeing the numbers fall and hate paying interest? If so, why does it trump the above.

Obviously, if your mortgage rate is above average this thread isn't aimed at you :money:

Hi when I purchased my house in 86 the interest rate was 13%, it is 3.89 now, and will be paid off this year, that final payment will be brill.