Time to stop (over)thinking and time to start doing!!

Throwaway1

Due to yet more economic uncertainty, we are putting OPs on hold again and instead redirecting money into our ISAs. The company my husband works for makes websites for travel companies so his job may be in danger at some point in the near future what with the combination of this and Brexit

Throwaway1

Just a quick update! We have not been paying any OPs since lockdown began as we were unsure what might happen with our jobs and so we wanted the savings instead. As I'm a school librarian, I have been paid throughout whilst doing a lot of admin at home and going in on a rota for keyworker supervision. I do worry though that my job could be one of the first to go if the school decides to cut back (there are 3 of us, however, and as I am a qualified teacher, I'd hope that I could blag my way into keeping my job, even if I had to take on other tasks). My husband makes travel websites so the work there has pretty much dried up, everyone was furloughed apart from my husband and two other staff. They are now starting to bring some of the other staff back slowly as a bit of work has trickled in, so hopefully he has managed to avoid any financial consequences of Covid. In other news, nothing to do with mortgage at all but I wanted to log it in my diary for when I'm looking back, we had to give the guide dog we were training back on Thursday. They have decided to withdraw her from the training as she gets a bit sad/worried if routines change and so she would find being a guide dog too stressful. She has gone to live permanently with her puppy walkers (who had her for the first 12 months of her life) so she'll be very happy there.

IAMIAM

Based on your post, I just want to say I am never overpaying my mortgage, ever.
My equity/LTV has gone from 90% to 80% to 75% in 4 years. 
I pay the maximum & more into a defined benefit pension so I can retire circa 60-65 latest, I have another pension that is worth about 100k to draw at age 60, the latest. I just think with sudden deaths,  life events and current circumstances, I would rather live a little instead of waste 15 years of 'youth' scrimping and saving to pay off a mortgage and then wonder why, when I am sat mortgage free for nothing and you suddenly death is round the corner.
I have 200k life insurance and permanent income protection until age 70 too for a good sum too. 
I know this reply doesn't help, but I just think people who are soo determined to pay off a mortgage are usually brainwashed into doing what society says. ITS JUST MY OPINION, Good Luck anyway.
If I retire at 60, my mortgage balance that's left will probably be around 50-75k. I'll use some lump sum to clear it. 

Throwaway1

IAMIAM said:

Based on your post, I just want to say I am never overpaying my mortgage, ever.
My equity/LTV has gone from 90% to 80% to 75% in 4 years. 
I pay the maximum & more into a defined benefit pension so I can retire circa 60-65 latest, I have another pension that is worth about 100k to draw at age 60, the latest. I just think with sudden deaths,  life events and current circumstances, I would rather live a little instead of waste 15 years of 'youth' scrimping and saving to pay off a mortgage and then wonder why, when I am sat mortgage free for nothing and you suddenly death is round the corner.
I have 200k life insurance and permanent income protection until age 70 too for a good sum too. 
I know this reply doesn't help, but I just think people who are soo determined to pay off a mortgage are usually brainwashed into doing what society says. ITS JUST MY OPINION, Good Luck anyway.

Hi, thanks for your reply. We don't see it as wasting our youth at all. We didn't intentionally scrimp and save to buy our house, we had spent around 20k on our wedding and been on trips to America 4 times in the last 4 years whilst going out for food 2-3 times a week before we decided to buy and saw a house we liked. Somehow, despite that, we found we had over 70k saved up to go towards a deposit. I'm not too sure how, obviously our jobs were the main thing - my husband has a decent paying job and I had a teaching salary then but also we just don't care for material things. We prefer to spend on experiences such as holidays and eating out rather than on phone bills/tv subscriptions/clothes etc. plus we don't drink or smoke. That means that although we have occassional big spends, most of our salary is actually 'accidentally' saved. So, for the first 30 years we just lived however we liked, we are now going to dedicate 10 years to paying off our mortgage (which is really only like dedicating 5 years as the OPs will be low enough for us not to really notice them by then anyway) and then we will be mortgage free by 40. Hopefully, death will not be around the corner then but if it is, it is, it's not like I'll know or care if I'm dead so there'll be no regrets. We also have 200k life insurance so if one of us dies the other will be fine anyway and our pensions are plenty healthy enough for what we will need.

IAMIAM

Good to know, it is worth paying off if you are not holding off doing things you want to do. I would always max my pension, knowing full well I will HOPEFULLY end up with a decent lump sum, pay off mortgage and then use the rest as permanent salary until the end. I am planning for 60 as the absolute LATEST to retire and for that to happen I am putting nearly 20-25% of my salary into a defined benefit pension. I have 25-30 years to go! 

Throwaway1

IAMIAM said:

Good to know, it is worth paying off if you are not holding off doing things you want to do. I would always max my pension, knowing full well I will HOPEFULLY end up with a decent lump sum, pay off mortgage and then use the rest as permanent salary until the end. I am planning for 60 as the absolute LATEST to retire and for that to happen I am putting nearly 20-25% of my salary into a defined benefit pension. I have 25-30 years to go! 

I'm also hoping to retire around 60, or maybe go part time as I'm not sure I'd like to fully give it up (who knows how I will feel then?) Hopefully, you are also striking a balance of still doing things you want now otherwise your entire youth will have gone by the time you can retire and death really will be closer to you then than it will be to me at 40!

IAMIAM

Certainly! Tax is a real issue for me, I always teeter on the higher rate band, so put more into my pension. But having said that, I was/am contemplating a buy to let, which will then add more income to my salary. I then do not want to get to 60 and suddenly have to pay more tax at 65/68/70 when state pension gets added on and I find that I am back into the higher tax band again. Hence I am putting in a lot now, knowing I will reduce it once I have maxed out the most I can buy in say 5-10 years. I'll then keep looking at figure to decide when to retire/go early or reduce my days down OR emigrate!! Instead of ending up a higher rate tax payer all my life!

Throwaway1

After logging in and looking at the figures, we decided my husband would make an overpayment of £750 today. We chose this amount as this is the amount I'd overpayed more than him so far this year and also because it leaves us with exactly £8000 needed by the end of this mortgage year. We are planning on making that a few days before the deadline to allow us a safety net for if any job losses are forthcoming or if anything happens to my car. At that point, after 4 more wages each, we should both have £10k in savings so we would be happy that that would cover any emergencies such as job loss or new car (we would be looking at replacing with a 3 year old, low mileage car paid by cash so we think we may need around 8-10k for that, I'm not sure on prices these days but my current car was 6k, 9 years ago).

In total, from all our overpayments so far, we've saved £19,132.96 in interest and knocked 5 years and 7 months off of our term I'm very happy with that saving! Our daily interest rate has decreased from £11.66 when we took out the mortgage to £9.60 now.

South_coast

Amazing progress - you're right to feel pleased with yourselves!

Throwaway1

Well, I've not made any OPs for a while but we did do a bit of money management today. Our ISAs matured yesterday and the rate dropped from 1.5% to 0.5% so we've transferred those to a new bank at 0.9%. We also set both up a new regular saver at 1.85% where we can put in a maximum of £500 a month each. That might be a bit tricky with our regular OPs but as the amount we are allowed to OP drops again in November then it may be possible. If not, then I'm going to dripfeed it across from my ISA. I know you're not supposed to take money out of your ISA but there's not a chance that I could put anything like the 20k limit in it anyway and the personal tax allowance on interest is so high that I won't be paying tax on the regular saver anyway so it may as well be earning 1.85% than 0.9%. I have also put a reminder on my phone to check again when it matures in a year so I can move it to whatever is the best rate at that time.

I can't wait to start OPing again but we're going to hold off just a little while longer whilst we know what is definitely happening with our jobs, it's all just going in the ISA at the moment ready to be moved in to the mortgage just before our new OP year starts again in November.

8 years and 2 months to go until we are mortgage free if all goes well.