Overpaying is Addictive!

djbd1973

FreedomGirl wrote: »

Hi,

Have a look at the One account thread from a few months ago. Whilst you're looking at it, and all the other options (offsets etc), put the £500/month into a cash ISA. By my reckoning, it will be the end of Sept before you've run out of ISA capacity and will have four and half grand in the bank with which to start offsetting.

We've got one and I think it's been great for us, but financial discipline is a must-have with these offset accounts. The OH did get into the habit of saying "just put it on the One account" and I suspect we've spent quite a few thousands (if not more) which, if we'd been tied into a traditional mortgage, we wouldn't have done.

I think, once the balance gets to within the finishing line (like where we are) then it's a lot easier to keep the motivation up. An alternative is to overpay your current mortgage by £250/month, then save the rest in an ISA for the next few years...And look at the One account again when you're closer to the end ?

Well done on having such a good surplus.

HTH

FG

Thats a good idea Freedomgirl. Just make sure that the rate on the ISA is more than the mortgage rate because with an offset account you are not earning interest but the money in the account comes of the balance that you pay the mortgage interest on without tax deducted too.

With an offset, it pays to have a large amount to offset with.

starryeyed_2

starryeyed wrote: »

Hiya, I'm new to this site and i'm making a resolution to pay my mortgage off sooner. Can someone tell me please is it better for me to overpay on my current mortgage or switch it to The ONE account type mortgage? I'd really appreciate your advice as am so naive to all these things.
My current mortgage is for 93,000 and I pay around 600 per month. I can now afford to overpay another 500 per month on top, so want to know whats the best thing to do. thanks xxx

thanks for this, has really got me thinking now about my options, thanks a lot

starryeyed_2

thanks so much for this, you all got me thinking seriously about what to do. thanks again.
p.s. the surplus has come from a pay rise and me really thinking hard about what i need and dont need! like 3 glossy mags a month, wine, impulse buys in clothes stores, you know typical fritter stuff.

FreedomGirl

Hi starryeyed (love the name BTW),

Hmm, you sound like me a few years ago:) If you have the impulse buy/frittering habit, then the One account could be quite risky...because there is often "spare cash" available.

I have recently cut out all glossy mags (thought I allowed myself one years subscription to She at £12 to avoid going completely mad). Last time I did that was in 1993-4, when I was seriously broke and living at home, and it's a real bummer. Mind you, heat magazine is now online

I'm now doing dream shopping instead of real shopping (writing all the stuff I'm going to buy once we've paid off the mortgage).

Just in case this sounds too miserable for words, I can't overemphasise how empowering it is to be (almost) mortgage free. I'm likely to be unemployed fairly soon and am nowhere near as stressed as I would be if I had big monthly payments to worry about.

Try the halfway house approach (taking note about what djb1973 said about interest rates) to see if you can keep this saving it up long term, and have a read of some of the other posters' diaries to see their strategies. Someone posted that if you spend a pound instead of putting towards your mortgage, that pound will in fact cost you £2 (or £3) over the duration of your mortgage (can't remember the real numbers). The power of compound interest !

HTH

FG

Capricorn_One

Thanks to everyone who's kept this thread going and added some very positive vibes.

Shimrod - I'll certainly look into that. Cheers! I've got a very good deal with the Newcastle but the Barclay's/Woolwich one looks very tempting. I'll have about £32k savings against a £70k mortgage, which sounds a lot better.

setmefree2

. Someone posted that if you spend a pound instead of putting towards your mortgage, that pound will in fact cost you £2 (or £3) over the duration of your mortgage (can't remember the real numbers). The power of compound interest


Think it was £3.26:cool: