Thoughts on overpaying

Outlaw91

Hello Forums,

Would like to get some thoughts / ideas on the below situation and how the GF & I can begin to overpay our mortgage as soon as possible.

Situation:
We bought our first house in summer 2018. We paid 15% deposit and were able to get a 2 year fix at 1.7%. I am keen for us to overpay the mortgage in the remaining 18 months we have on this fix as we are in quite a strong financial position in terms of our income and have been able to re-build an emergency fund already.

The complication we have is that well over half of the deposit was paid by myself (thanks to some smart investments made by my grandparents 20 years ago!). As we are only BF/GF and not H/W, we are both keen to ensure that everything is split 50/50 and so my GF is very committed to paying the outstanding amount to me (this is non-negotiable with her). We have so far agreed to do this over an 18 month period - taking us to essentially when our 2 year fix runs out.

Now this puts me in a slightly odd situation of saving quite a lot of money each month, but not being able to use this on overpaying the mortgage (as that would just extend the period of time that my GF has to pay me off - and she wants this to be done ASAP). I am currently stuffing whatever savings I have into a Marcus account (although clearly this earns less interest than the mortgage so I am losing out).

Given the non-negotiable facts of:
- we are committed to having everything split 50/50 in terms of our finances
- my GF wants to have paid me back in 18 months MAX
- we do not want to shift from a 50/50 split once she has paid me back
what is the best way people can think of for starting to overpay the mortgage?

I should add that we have considered the scenario of my GF to pay the money into the mortgage directly, however this would halve the amount she is actually paying to me (for example, if she was paying £100 a month to me, this would equate to £200 needed for the mortgage as £100 would be covering my contribution and £100 her's which gets into unaffordable territory or doubling the repayment time). If that makes sense....

I appreciate that an "easy" answer is to move on the "red lines" mentioned above, but like our Rt Hon Prime Minister, these are non-negotiable so looking for some creative answers outside this!

Currently my best idea is to use interest earned from out joint account (1.5%) - but this is fairly small beer compared to what we could do with our incomes.

Harvic

Sounds like you need a plan B! I can see the principle but is a slightly artificial distinction. What if one of you got a large raise (or cut in salary for illness/redundancy/mat leave)?

An offset mortgage would perhaps be the best thing here, but as you have just started a fixed this is unlikely to make sense with fees and ERC etc.

julicorn

Maybe I'm missing something, but why don't you just use her money as overpayments?
Say you had put down £10k more than her for the deposit, for example, but then she makes £10k in overpayments over the following 2 years, that would make you 'even' in my books.

danm

put your 'overpayments' into a higher paying account - could ladder into an 18 month maturity... (i.e money in Marcus for 6 months, then transfer that into Atom bank 12 month product) you should get somewhere close to the 1.7% so you are effectively offsetting.


An alternative would be to manually track it on a spreadsheet....its actually pretty simple to work out within a pound or so what a mortgage payment should be and outstanding balances etc.


however; as pointed out this is artificial. As soon as you pay the mortgage company they do not care about the relationship red lines. You will still both be liable for the full debt should things become less amicable in the future - so lets say you managed to accumulate your half of mortgage balance, while paying it off may at the time seem like a huge weight lifted, you would still legally be liable for the other half.