Mortgage free advice and tips

NOVAMET21

Hi experts

So, bought a house and got a mortgage of over £300k over 30 years.

I'm planning to make overpayments over the years so that I will be mortgage free within less than 20 years.

I have read, heard and seen that people are mortgage free within 10 years. Realistically, it may not be possible for me to achieve to be mortgage free within 10 years unless I win a lottery or get a huge salary boost.

How do people pay off their mortgage so quickly. I understand if they are borrowing low amount and make huge overpayments to reduce the term. My mortgage currently stands over £300k .

Any advice and tips will be appreciated.

Thanks

julicorn

I think a lot of us benefit from the relatively low interest rates at the moment.

When my partner and I bought our flat, the bank would only lend us around £200,000, because they stress test affordability based on potentially much higher interest rates. Let's say our interest rate is 1.5% on a 25 year term, that would be £800 per month. The lender tests affordability in the case of much higher interest rates, maybe around 8%. If they rose that much, we'd be looking at almost double the monthly charge (around £1,600), so that's about as much as the lender thinks we can pay each month if need be. If you now manage to squeeze out another £200 in the budget (maybe by earning a little bit of money on the side), you're at £1,800 you can throw at the mortgage, so potentially £1,000 per month, which in my example would get the term down to 10 years.

(This is not to say that everyone needs to pay off their mortgage asap or that paying off the mortgage is always the best financial decision.)

zcrat41

We don't have 300k mortgages. I bought my house away from the London commuter belt with an £82k mortgage 10 years ago!

Lomcevak

ANMOLAG wrote: »

I have read, heard and seen that people are mortgage free within 10 years. ... How do people pay off their mortgage so quickly. I understand if they are borrowing low amount and make huge overpayments to reduce the term. My mortgage currently stands over £300k .

I'm not quite in that league, but we're a few months away from having paid off £190k in 7 years, so there or thereabouts.

As julicorn says, low interest rates help, but apart from that it's mostly a balance of income vs. lifestyle - we're both on good (but not huge) incomes, but are happy with a relatively modest lifestyle, so as our incomes have gone up, our outgoings have remained constant and over time you find yourself with a fair amount of spare cash. That's the best advice I can give really, it's very easy for your lifestyle to grow as your salary rises, and I have friends who earn much more than me and spend it all each month.

(This is not to say that everyone needs to pay off their mortgage asap or that paying off the mortgage is always the best financial decision.)

I agree - we max out pension and ISA allowances first, so mortgage overpayments soak up what's left. However, getting rid of the large mortgage payment (repayment + monthly OP) is a key part of our financial independence plan.

Zero_Sum

How to pay off morygage fast - Buy a house up north.

Mortgage_Minimiser

You say that but my mortgage was initially £243,750 (plus a second element) - and with a deposit of over £100k from the last house.... depends where in the north, like a lot of places really.

All areas have cheaper and more expensive parts.

Zola.

A smaller, easy milestone to start with is to consider adding 10% of your monthly mortgage amount to direct debit every month. After 1 year you will have made another payment...

e.g. if you pay 600 a month, add 60 quid to that... starting small can get you started and really motivated.

If you are in a fixed rate deal like ours, you can put the monthly direct debit up pretty much by as much as you want, and lower it of course - as long as it they at least get the contracted amount... takes the pressure off.

Play with the mortgage overpayment calculator here:
https://www.moneysavingexpert.com/mortgages/mortgage-overpayment-calculator/

Personally speaking, we are a little into year 4 of a 5 year fixed... so far we have paid off more than 5k extra, slashing 16 months off the mortgage standard time.

After a recent pay rise I have put our rate up by another £100 until the end of the deal in the new year. This will knock the LTV down more and hopefully puts us in a stronger position come renewal to get a lower interest rate than the one we are on currently (3.09%).

lindens

read peoples mortgage free diaries on here - very inspirational