Does all your money go towards the mortgage? 15 April 2016 at 3:33PM edited 30 November -1 at 1:00AM in Mortgage-Free Wannabe 11 replies 1.3K views

chrishar

Hi, I have a question for those looking to pay their mortgage asap. Do you put all your spare money into overpayments? Or do you have other investments such as Isa's or buy to let properties?

Just wondered as I am trying to work out if it's best to pay off my own mortgage first before putting money anywhere else?

d70cw6

first is pension to reduce tax band back down to basic rate
second is regular savings at 6%
third is into current account high interest balances.
fourethed is split between stocks and share isa and mortgage overpayments.

SmlSave

Everyone does it differently.

I made sure we have £6000 (three months of living costs) in savings first
I then costed up our big spends of the year (holidays, DIY, insurances) and made sure that these were covered
I then, just recently, set up my over payment to the mortgage

ourcornercottage

I think it depends on your age/emergency fund provision/pension provision we do an average of

45% long term savings (this includes EF (this is only in a real terrible emergency) and pension)
25% short term savings (saving up for stuff, annual stuff, holidays and EF for things I haven't budgeted for I like to have a minimum of £3000 at any time)
30% to mortgage (plus anything from cashback sites, FIT payments, windfalls, unexpected income)

We are though 42 and 50 with no formal pension provision before a few years ago so we have s lot of catching up to do on that front.

Nick_C

I could clear my mortgage if I wanted to.

Instead, I am borrowing money from Santander at 2.49% and lending it back to them at 3% (and Lloyds at 4% and TSB and Nationwide at 5%). I've also got some shares yielding 5.25%.

No plans to repay my mortgage early unless mortgage interest rises above savings and investment rates.

User1489

Everyone does it differently. I have a fairly sound plan to pay mine off on my 40th birthday (I'm 33 in two weeks).

Therefore I have, as people above do, an amount (£2k) in an emergency fund that earns me monthly interest, an amount per year for annual costs (holiday, boiler, dentist etc), a monthly budget for food and fun money, then at the start of the month I fire everything else at the mortgage.

Only been at that for 1 year though, it's felt sustainable, perhaps because it is still novel - in 6 months time I might feel a need to change - life is flexible, allow your future to be flexible, allow yourself to adapt and change

And, whatever you decide, remember even £50 per month - less than £2 per day - as a mortgage overpayment can reduce your term significantly And annoy the bank (unintended but positive side affect haha)

Rasputin
Man vs Mortgage

jodles16

I overpay a set amount on the mortgage, have some savings which are in santander and soon to be paying into the 6% once I can open it next week, pay some into pension with work and the rest goes on house stuff, animal stuff, holidays etc!

Jodles

selloptape

Hi

I think the key for me is to not be too conservative and rigid with a plan. I know some people like a fixed system in place but circs and interest rates can change and even though I've not had the mortgage two years I've already changed strategy from last year.

First year - OPs were spare money from the budget/windfalls - anything scraped together from reducing grocery spend and bills.

This year - is much more planned, having lived in the house for a while I had a much better idea of costs and budget, I have set targets and want to achieve these. I'm planning to OP a set amount each month (£85) but am also budgeting to save set amounts each month to put in general savings and to safe toward hols and house renovations.

Next year - May be different again - if I can remortgage to a lower rate at end of this year then it might be better economically to invest the excess instead of OPing.

Could you get a higher return on investments than you pay on your mortgage rate?

x

lippy1923

I always OP the maximum I can each month (£500) as I can always take the money back. My OP reserve account now stands at £11k.


Anything else I put in current accounts. £20k in 123 account and the rest in 5% accounts. Great that these are now tax free for the first £1k earned in interest.

lulabelle1

When we got started, we threw everything at OP'ing the mortgage - we had a mortgage where we were able to take back the repayments we had made.

Around a year and a half ago, we took back OP's which allowed us to fund a deposit on our first B2L property.

We also took enough back to pay for an extension and new kitchen.

We'd been OP'ing for a good number of years, on the one had it was horrible seeing the balance go back up but on the other we were able to to put it to good use.

We no longer have such a flexible mortgage, so we have increased our payments to a level whereby it would see us being mortgage free in 9 years from now.

In addition, we pay in to Reg saves accounts, cash ISA's and S&S ISA's - some of it is for long term saves and some of it is to hopefully fund another B2L down the line.

Of course, this could all change overnight, but thats there plan for the time being

LadyGnome

We have a mixed approach. We have 2 school age children so can't cut costs to the bone as we want to have fun with them as well. We have built up a savings pot / rainy day fund which would cover several months. We do have a BTL as part of Mr Gnome's retirement planning as he is self employed. We save a modest amount in investments but I also have a decent company pension pot building up.


Currently we have a 3 way split for OP / Saving up (other than the above)
Mortgage - Standard OP £200 plus 1/3 of any other savings /windfalls etc.
Big Holiday Fund - 1/3 of any other savings / windfalls etc.
Education /Uni Fund - 1/3 of any other savings / windfalls etc.


I also have a monthly plan to save up for things like birthdays and days out.