Stick or twist? Obsessed with overpaying but do I stop to get a bigger house?

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Hi all
I'm slightly obsessed with overpaying our mortgage! I'm glad to read I am not the only one and have thoroughly enjoyed reading some of your blogs. It's what got me through the night feeds in the early days after my baby was born last October.:rotfl:

So a little about my situation:

I was made redundant whilst pregnant with my first child. I am currently relying on hubby's income for now until I can look for work.

In August 2012 we took out a 25 year mortgage with nationwide borrowing £70,000 having put down a deposit of £38,500. We agreed to a 5 year fixed term mortgage deal of 3.89% which was great at the time and for a few years after. The exit fees were too high to warrant changing mortgage provider. However, with interest rates falling we have not had the benefit. :mad: Thankfully, we can renegotiate next month.

I started off overpaying the mortgage in the first month by £155.25. Since then I have overpaid by £500 per month which is the maximum Nationwide allows. We are now on month 37 of overpayments taking the total to £18,655.25! :money: By the time we renegotiate on 3rd June we will have approximley £40,500 left to pay on our mortgage.

This is our starter home and I anticipate us moving in the next few years. We may end up having to borrow another £150,000 to get the home we would like. We do have savings of about £40,000. Realistically, I'd need to save a large chunk of that for emergency and to replace our 10 year old car eventually.

As I'm so obsessed with paying off this mortgage, part of me wants to pay a big lump sum next month. Im trying to decide if I am I better off keeping it in the bank and put towards the next big house? That's my big dilemma at the moment. I'm always thinking of new ways to save money. I'm hoping to share my journey with you all on this blog.

I'm hoping for your support, thoughts and shared experiences as I start to document my way to being mortgage free.

Little_Miss_Uni-Debt

So currently your mortgage debt & savings balance out. Do you have an idea of what emergency fund and & car savings you would like to keep to one side? What is left over after those things could go towards clearing the mortgage.


I would probably keep paying the mortgage and overpaying until your free savings (excluding emergency & car funds) equal what is owed. Then you can pay it off in full and still have cash on hand.

enjoyyourshoes

If you are considering moving to larger house, now may be an opportune time.

House prices are not racing ahead and mortgage interest is in a competitive streak.

Look at what you can afford, mortgage, do the maths on what you overpay and what additionally you may need to borrow and plan how long you anticipate staying in next home. Look at some of the 5 year deals (HSBC and Atom bank)

Good luck with the decision !

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I realise the savings could clear the mortgage but we would literally have nothing left in savings. We recently saw a mortgage advisor to see what we could borrow. She estimated we would need £14,500 alone in moving costs, stamp duty, solicitors, estate agent and mortgage fees. As we are down to one income I feel we need a large safety net in case my husband loses his job. We dont have any other loans, I have a credit card which is paid in full monthly. I also have a full student loan to repay. £ 8,000 is a good sum to keep to one side. I also want an emergency fund for the house and cars of about £2,000. I'm fortunate we don't have any car finance on either of the 2 cars we have. Depending on whether we were to get one on finance or not I'd have to put £10,000 to one side. This equates to £34,500. I either use £5,500 to overpay the mortgage or save it to put towards the next house.

I know now is a good time to be borrowing more. I'm torn, if we stay put we can enjoy low repayments which might take the pressure off whilst I'm not working. The next house is hopefully going to be our 20 year big family home. I don't want to move again if I can help it.