Which mortgage to overpay?

kg1448

Thanks! Is there any argument that with inflation, by the time the second mortgage runs out in 24 years, the amount of mortgage left in relation to the value of the house will be less significant perhaps?!! I think I may be clutching at straws here but still like the idea of having to work less/retire sooner?!:rotfl:

[Deleted User]

It's unlikely that your debt is going to undercut inflation, certainly over a longer term.

But the way to work less and retire early remains the same - reduce your more expensive debts, rather than focusing on the cheap ones.

Look to maximise the money you have, not deliberately flush it down the toilet.

getmore4less

The glory days when inflating debt away was a no brainer.

There is still scope to wage inflate your debt if pay will rise.

The cost of borrowing can still be less than the benefits from spending it.

getmore4less

What's inflation been for the last 2 years?

Thrugelmir

kg1448 wrote: »

Thanks! Is there any argument that with inflation, by the time the second mortgage runs out in 24 years, the amount of mortgage left in relation to the value of the house will be less significant perhaps?!! I think I may be clutching at straws here but still like the idea of having to work less/retire sooner?!:rotfl:

Have you considered that interest rates may well rise in that timeframe. If you manage your personal finances well and use the money saved to overpay your mortgage. Then anything is possible. Debt only has to be repaid once.

getmore4less

Savings interest rates have been higher than good mortgage rates for some time.

It takes a bit if work for lots of extra cash but for many with relatively small overpayments it is easy

With rising rates fix the debt and following the savings rates up.

If rates turn against you, overpay..

AnotherJoe

kg1448 wrote: »

Thanks! Is there any argument that with inflation, by the time the second mortgage runs out in 24 years, the amount of mortgage left in relation to the value of the house will be less significant perhaps?!! I think I may be clutching at straws here but still like the idea of having to work less/retire sooner?!:rotfl:

This is a general argument for not rrushing to overpay and doing something else with those overpayments such as putting it into a pension*. . Eg Better to pay it off with money that's been devalued by inflation in 30 years time, than now. The unknown is interest rates. But at present they are generally a bit below inflation.

* especially if you can get high rate tax relief.

kg1448

Thanks, that is helpful