Learning to walk before I run

South_coast

Don't forget the deadline on the LISA, Ed. Just saying....🤣!

QueenJess

edinburgher said:

@QueenJess - what are these mortgage overpayments of which you speak? Frankly the thought of trying to pay off £213k in 18 years fills me with terror We would need to find £600/mth to make that happen... I had wondered whether filling a LISA for 10 years and making our normal payments might allow us to pay it off at 60. Like the sun, it's a bit too bright a problem to look at head on

Lol.  I don't think I ever had a master plan, but when I got my mortgage the monthly payments frankly terrified me and I started overpaying right away.  I keep the term the same, but the monthly payment decreases when I overpay, so I see it as a way of controlling the escalation of monthly costs out the door.  If it gets very small, then in theory I would no longer care about it.

One of the people I used to work with didn't pay off his mortgage (although he could have).  He was down to £7.15 a month in payments

edinburgher

@South_coast Thanks for reminding me

@QueenJess I can't help but wonder if the era of ultra low interest rates will make MFW feel like a bit of a pipe dream. Assuming 70% LTV (I think we can scrape that come early 2024), the best I saw when I looked (very unscientifically at 1 lender during my afternoon walk with DD2) was 4.46% for 5 years. That will add c. £300 onto our monthly payment, I can't quite wrap my head around how we could overpay as well as that! I feel I've missed the boat somewhat but like all things, it was because I was busy catching other boats and I mustn't grumble.

We bought our first home 10 years ago with a 15% deposit. Current mortgage rates are about the same as we paid as unproven borrowers back then...

I won the lottery on Hogmany (£5 and a free go). I'll probably pay this into my SIPP.

QueenJess

edinburgher said:

@South_coast Thanks for reminding me

@QueenJess I can't help but wonder if the era of ultra low interest rates will make MFW feel like a bit of a pipe dream. Assuming 70% LTV (I think we can scrape that come early 2024), the best I saw when I looked (very unscientifically at 1 lender during my afternoon walk with DD2) was 4.46% for 5 years. That will add c. £300 onto our monthly payment, I can't quite wrap my head around how we could overpay as well as that! We bought our first home 10 years ago with a 15% deposit. Current mortgage rates are about the same as we paid as unproven borrowers back then...

It will certainly make things harder, but weirdly makes me more determined to get it down. I may not be able to put the same amount I used to, but it feels like anything will be good at these interest rates. Slow and steady wins the race?

South_coast

I think my temptation would be to go headlong at it now, before a new mortgage deal is needed, so that a) OP's make more impact as they're not eaten up covering the interest, and b) the balance at remortgage time is lower, so the increase in payments would be less. Appreciate that's difficult with a family and only one income at present though. And then there's the chance of bigger gains in the future from buying into the SIPP while everything's on sale.... It's a tricky one 🤔

greent

I'd go for OPing over SIPP - but that's how my brain works - getting rid of the mortgage was by far the bigger draw for me at the time. I do appreciate that it is not always the most sensible thing to do - but it made sense to me at the time - and looking back I still wouldn't change what I did.

edinburgher

I suppose one way to look at it is that OPs attract a guaranteed return of c. 5%, beats most savings accounts anyway, although Vanguard are forecasting better returns on equities over the next decade. 

Baileys_Babe

You mentioned earlier that come early 2024 your mortgage payment is possibly going to increase by £300 per month, where are you planning to find this? Could you and Mrs E pretend your monthly payment has already increased and overpay this each month? Then come remortgage time this is money you won't be paying the higher interest rate on.

edinburgher

@Baileys_Babe - Mrs E will be back to (nearly) f-t work by then and we'll just need to trim our budget accordingly. I'm not sure OPing £3,600 of £210k+ will save much money, I'd rather save it towards nursery fees (£6k to find over the next 2.x years). Between mortgage, nursery and energy, it's going to be a tough period for us

greent

Oof - I remember killer nursery fees when I had 2 there- I was working (after fuel and some work costs like some clothing) for around £50 a month