I want to be mortgage free in 8 years but...

mrbadexample

Ok, I'm starting a new thread because I'm hoping some mathematician will help me!

I have read Thefunkygibbons' post (congratulations!), and overpaying my mortgage is something I've been considering for a while. I'm not in the same league salarywise, but I have a bit spare each month.

I am 2 years into a 25-year 70k mortgage, with current repayments on a 3-year fixed rate of 4.79% at about 400k pm. I reckon (mostly due to savings made from information on this site :T ) that I could probably repay about £600 pm. How long would it take to repay, and how much could I save? I can overpay without penalty. I'm not looking for exact figures, just an approximation.

If I haven't given enough information, please let me know. The whole mortgage thing baffles me somewhat - I just know I don't like it!

Cheers,
MBE

stevem01

mrbadexample,

If you've made 2 years worth of payments at £405 per month on a repayment mortgage charging annual interst at a rate of 4.79% (£405 per month is the required payment for this mortgage over 25 years) then the outstanding amount of your mortgage will be around £66,900.

If you can fix the interest rate for the remainder of your mortgage at 4.79% and continue to pay £400 per month then it will take another 23 years to pay off the mortgage.

If you can fix the interest rate for the remainder of your mortgage at 4.79% and can increase the monthly payment to £600 per month, then it will take only another 12.5 years to pay off the mortgage.

Note that if the interest rate on your mortgage is charged ANNUALLY then you would be better off making the required monthly payment of £405 and saving the extra £195 per month in a savings account and making a single additional capital payment of £2340 (i.e. 12 x £195) just before the annual interest charge is made on your mortgage. This way you get to keep the interest on the "overpayment" instead of your mortgage provider.

regards
Steve

polarbearit

Some figures for you...

Based on 4.79% APR and £67k outstanding as above...
£400 = 23years
£600 = 12years 5months
£800 = 8years 7 months

And if you want to pay back in 8 years then - £842 apparently!

mrbadexample

Thank you both! I reckon I can have a good shot at being mortgage free by the time I'm 50 then! That'd be nice! :beer:

And I'd save about 30k, from the figures given above! Kerching!

Thefunkygibbons

This may help

http://www.channel4.com/4money/mortgages/features/overpayment_calculator.html

Sardlife

Sorry,
Sardlife has been a bit thich and posted the wrong link, I meant to put this one up,
http://www.skipton.co.uk/mortgages/calculators/flexible_mortgage_calculator.asp
This might actualy help!!!!!