My Mortgage Overpayment Journey

ChipAway

Hello,

I'm a long time lurker across all the MSE forums but it's this wanna be mortgage free which really appeals to me. I find other people's stories quite motivating so I thought I would give it a go.

Initial situation...

I have two mortgages (original mortgage on my flat then an extension to this when we bought our forever home)

£140,774.14 (2.24% fixed expires Oct 2019)
£123,874.60 (3.09% fixed expires Oct 2018)
TOTAL = £264,648.77

This seems on the relatively large size (no prizes for guessing we live in a London suburb) but it's perfectly serviceable for us at the moment.

I'm keen to overpay as much as possible now while my other outgoings are fairly modest and I have 6 months worth of savings. So I'm going to crack on now while I can whilst also saving up a larger cash/investments pot.

Overpayments so far: £400 (£100 a month direct debit)

What I'm going to do: Up direct debit overpayment to £500 per month (on the smaller but pricier part of the mortgage). This would mean paying off the remaining 23 year term across the two in about 15 years. I'm a bit worried about the prospect of interest rates going up in the medium term, but when the time comes to remortgage we'll be in the best LTV bracket available.

Any tips, advice and encouragement are most welcome. Thank you!

Trixysticks

Hi Chipaway!

Just started my journey too so I'll subscribe to you to keep me motivated!

I'm in the same position- dual income and no kids means we really must overpay now while we can (easier said than done!)

Wishing you lots of luck on your journey x:beer:

louloubelle79

Good luck on your MF journey, I'm 10 months in...9 years to go !!

pawlala

welcome, I look forward to hearing of your progress!

ChipAway

Thanks for the replies!

I just set up the overpay direct debit, which is good. It'll be a little tight next month as I have £1,700 going out to clear my credit cards then of course it's December, never cheap!

I'm keen to keep the £500 a month overpay though... £6,000 a year would be great for us. Normal payments are £1283 a month so even after one year that puts us over 4 months ahead of the game.

Although I don't have any problems paying the mortgage, this size of it is quite intimidating some days. All the more reason to crack on with the overpayments while the sun is shining I guess.

Betterthanever

Whatever you can overpay now will give you more flexibility in the future so it's got to be good! I did the opposite....had interest only payments for the best part of 20 years, then a massive wake up call when I got divorced and took over the house and mortgage and started to actually repay capital!!. I'd certainly go down the route you're taking if I had my time again!

Good luck!

michelle09

Make hay while the sun shines and all that. We are a double income, no kids in a London suburb as well so get where you're coming from.

Good luck!

ChipAway

So it's payday tomorrow which is great. The current account is +£1,300 from where it was this time last month. I'm going to stick with £500 p/m OP for now because I know the next couple of months are going to be relatively expensive clearing the credit card and then Christmas. Also I'm going to need to buy a new (new to me, not new-new!) next year so I'm building up some money for that separately.

I'm genuinely excited to see the first big OP going out next week!

My initial OP goals are as follows:

£1,283
£3,849
£7,698
£15,396

This would represent 1, 3, 6 and 12 months of standard mortgage payments. I like the thought of being that far ahead of the game at each stage

ChipAway

So I started this thread with the best intentions last October, but since then I've decided it doesn't actually make sense to pay off the mortgage as quickly as possible when I can make my money work harder in other ways.

I do however keep paying in (direct debit) an overpayment totaling £300 a month to help reduce the overall figure just a bit. I actually now prefer the thought of being "Mortgage Neutral" so I have started investing in a Stocks & Shares ISA and I've been making some steady (and in some cases impressive +20% on a number of stocks) returns on my investments. Of course this is not guaranteed growth, hence me hedging my bets a bit with the mortgage overpayments.

My emergency fund is capped where it needs to be as well (6 months living expenses)

Anyway since I started I'm up to £2,550 in overpayments and the total capital owed is now down to £257,620. I still enjoy reading the other London-sized mortgage totals threads though which I feel I can relate to the most!

In July I think I can remortgage the smaller part and I will be able to get the interest down on that by 0.5%-1% which will be nice too