The Goal Mortgage free at 40

murdayg

Hi all thought I would jump on the band wagon and get this debt paid off earlier .
Current situation I am 32 years old and currently have a mortgage outstanding of just over 129k on my 210k house.

ideally i want to be mortgage free before I turn the big 40 which I know would be extremely difficult

Current mortgage details: Remaining term 26 years 9 month . interest rate 2.58% locked in till 31/07/2023

I have never shipped around for my mortgage deal as my previous credit history was horrendous . So I stayed direct with my bank as I thought I would get a better chance of approval.

So far in the last 4 months I have over paid on my mortgage £2,800 , with my deal I can over pay annually by 10% .

My main question is , I have managed to save a decent amount of money , I have no outstanding debt accept my mortgage . if I was to over my full 10% annual allowance in one go would I save more now than just paying over payments each month ?

stevenhp1987

murdayg wrote: »

My main question is , I have managed to save a decent amount of money , I have no outstanding debt accept my mortgage . if I was to over my full 10% annual allowance in one go would I save more now than just paying over payments each month ?

That really depends on how your interest is calculated & applied.

If it's calculated and applied daily, then any money you throw at it will immediately lower the amount of interest you pay going forward. So paying, say, £12k now will save you more over the course of the year than if you simply paid £1k each month due to how interest is calculated.

If interest is calculated, say yearly, then it's better to pay it off a day or so before it's calculated so it can earn interest in a savings account.

Check your mortgage contract for how interest is calculated.