Why do you people bother?

chelseablue

MrsElliot wrote: »

I only started overpaying as I was heavily influenced by this site We are in our first year of paying a mortgage and I overpay a little here and there to save money in the long term and get a better rate when we come to remortage. Using the overpayment calculator just putting in an extra £25 a month will shave 2 years off our 25 year mortgage. At the moment I have a 0% credit card which will be paid off before the 0% deal ends and then any extra money I have will be half saved and put half away at the mortgage. Interest rates are unlikely to stay low forever and my savings are enough to get by for a few months if everything went wrong (also my saving rate is 0.8%! I am looking into getting a better deal!), I overpay for peace of mind and its a great feeling when you reach certain milestones.

My savings are currently getting 1.5% and the mortgage rate is 1.49% so hardly anything in it.


Last month I got £26 interest on my savings but £288 interest was added on to my mortgage :rotfl:


Important to have milestones along the way, my first is to get it below £200k but that might take a while :rotfl:

pjcox2005

I think the only actual reason is the emotional pull of owning your own house and the fact that as mentioned above it locks that money away so that it can't be wasted.


In effect, I think pretty much all would be better off saving in high interest accounts or investments (if they can hold for a lengthy period of time) as it would mean being financially better off than overpaying a low mortgage rate, but this is often misunderstood and/or the "risk" is too much for some. Not to mention it would give better liquidity if something happened to the individual.


Points such as higher equity when moving would be just the same if you had equity and an equivalent savings balance to put on the new property or at remortgage.

edinburgher

Most banks are busy slashing savings rates, OPs point is no longer quite so valid!

Tantalus86

chelseablue wrote: »

My savings are currently getting 1.5% and the mortgage rate is 1.49% so hardly anything in it.


Last month I got £26 interest on my savings but £288 interest was added on to my mortgage :rotfl:


Important to have milestones along the way, my first is to get it below £200k but that might take a while :rotfl:

Yes but when your mortgage amount is lower, the interest will be much lower as well. Similarly when your savings are higher, the interest will be higher.

EssexHebridean wrote: »

I'm 44, the OH is 42. Last week paid the final lump off our mortgage after 8 years of OP'ing. The original term was 25 years, we paid it off in 13 years. OH worked out that we saved approximately £35,000 in interest by doing this. Our mortgage was a small one - far smaller than most people would take out these days. If we could save this much, just think how much you could save on a larger sum.

Does that answer your question?

Well not really, as the question I would then have would be how much would you have had in your savings if you didn't overpay the mortgage? It's all about compound interest. Putting £200 a month into a savings account at 3% over 8 years would get more interest than you would save by putting £200 a month overpaying a 1.5% mortgage.

coopso24 wrote: »

I make overpayments so the wife can't spend it,

Believe me, if I had a large savings account she would be planning 3 holidays a year and a new car every 6 months !

This way, once HSBC has the money she cant waste it :rotfl:

Fair enough!

Tantalus86

edinburgher wrote: »

Most banks are busy slashing savings rates, OPs point is no longer quite so valid!

Mortgage rates are also falling.

User1489

i won't be mortgage free "a bit sooner", I will be mortgage free 23 years sooner.

TWENTY THREE YEARS.

Tantalus86

rasputin_thorpedo wrote: »

i won't be mortgage free "a bit sooner", I will be mortgage free 23 years sooner.

TWENTY THREE YEARS.

That's awesome :T. So you're doing it for the peace of mind and feeling of being mortgage free?

System

I'm worried that with everything I'm putting into my second pension I wouldn't satisfy the affordability come remortgage time, and that's a reason I may pay it down with anything spare, once I have filled up cash options

It can make sense if you plan to upsize in a shorter time period than it'd be safe to hold a stocks and shares isa for (I.e 5-10 years)

But long term, s&s isa gives performance and liquidity that mortgage doesn't, and beyond that sipp for a retirement income up to the 20% threshold and a lifetime isa (when they come out) for a retirement income above that

System

Can you legally use overpayments to keep savings below £6k for universal credit?

GwylimT

I'm 42 and I'm mortgage free, by over paying my wife and I saved over £23k. By over paying we cut 15 years off our mortgage.

At the time interest rates on savings were fairly poor, the amount we saved each month was less than our mortgage interest!

While over paying we also saved as we could only overpay a certain percentage each year.

If financial difficulty happened for any reason we don't have a mortgage to pay, when we move we will have enough to buy outright.