That won’t take long surely?
Do you save money every month?
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Since our youngest went to nursery and my wife picked up work again part time, I pay for more or less everything, and her wage goes more or less entirely towards savings. I put 7% in to my pension, employer does 3%. Most of our savings (except emergency fund) are about to be wiped out by a house extension and new kitchen, so that's going to be a bit gutting to see the bank balance drop, but hopefully a much nicer standard of living downstairs. We had to borrow on the mortgage to do it as well, so as soon as we work out what our new outgoings are, and the construction is complete, I'll be looking to pay it all down as much as possible before the fixed rate ends.
I've got a S&S ISA, but pay in to it ad-hoc, mainly when markets drop.
I've got a S&S ISA, but pay in to it ad-hoc, mainly when markets drop.
it is in general a bad idea overpaying mortgage, investing on a tracker fund will give far better returns.I guess what surprised me, the way people recommend it as a good investment, I expected it to work a little like compound interest, so if I pay a bunch off, the overall amount I would be paying back would drop significantly as I'd pay less in interest... but no, it just comes down by the amount I pay early...
Paying into an ISA seems like a better idea for a long term (15+ year) plan then (aside how the market is at the moment!)
The long term average of most index funds is about 7%, unless your mortgage rate is close to that you are just throwing money away
Don't use the 'monthly amount' field, use the interest rate field with your mortgage interest rate. It'll display the right figures then. Probably a bug in the calculator.
Yeah I get it in terms of making the most of your money. I can’t shake that warm feeling of getting rid of the mortgage though (when it eventually happens).
What's the plan if markets don't recover and your ISA drops in value by the time your mortgage fix ends, and the mortgage rates rise substantially (in theory)? Would you then empty your S&S ISA in to your mortgage if the rate went above 7%?
depends on a few factors. Markets usually recover within about 6-12 months snd the chancesnof 7% mortgage rates is quite rare. Moreover, the markets might be temporarily fown on their previous peak but of ypu hsve invested for some years it is likely you are already financial ahead, so you should think nore in terms of pro-rated returns than the immediate market decline.
But if you cannot afford the new mortgage there isn't much choice
if you don't like the feeling of devt then renting is the way to go IMO.
I will likely die with a high 6 figure (chf) mortgage. literally zero point in paying anything more than the minimum, and even if i wanted to there is no easy way
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I spend it all. I have multiple trust funds for now and retirement, so it’s all good. Anything unexpected can come out of my monthly income.
Yes, I save every month and have done so sense i cleared all our consumer debt. We have a rainy fund what has at least 3 months worth of bills and fuel. I put money into a saving account that use as a car fund and I also invest some into a fund what is a longterm thing.
But sense our monthly energy bill doubled we don’t save as much. I am luckily enough that we can absorb those bills.
But sense our monthly energy bill doubled we don’t save as much. I am luckily enough that we can absorb those bills.
I shove a few hundred here a few hundred there.
Pension is a good place for me as itll give me 40% rebate.
I pay off a bit more of the mortgage each month. Basically rounding it down a hundred or 2.
I earn well. Wife doesn't work. 1 kid.
Mortgage will be paid as the lad hopefully leaves home.
I won't be paying for uni for him. I dont believe in it, so if he has mad ideas of doing it it's in his dime.
Pension is a good place for me as itll give me 40% rebate.
I pay off a bit more of the mortgage each month. Basically rounding it down a hundred or 2.
I earn well. Wife doesn't work. 1 kid.
Mortgage will be paid as the lad hopefully leaves home.
I won't be paying for uni for him. I dont believe in it, so if he has mad ideas of doing it it's in his dime.
Soldato
Don't know about @Worthy, but for me I don't care about the debt: I'm just looking forward to not having to pay £1200 a month any more when the mortgage clears! That's going to be ******* sweet!
No chance. When I’m retired I want the roof over my head to be bought and paid for. I don’t want to have to worry about paying for someone else‘s mortgage out of my pension.
Well if its free I'm more than willing to give a few inches away for free to even it out
Do you have the same attitude for things like utility bills, insurance, food? Going to live off subsistence farming? Rental and mortgages are no different to any other cost. Owning a house then means you are liable on maintain and upkeep costs , as well as depreciation risks. This is why it is quite common to sell houses when you retire so living costs can be better predicted.
Yep, only recently started though. A combination of windfalls, paying debt off and other factors meant last month I put my first savings away ever, £5k. I'll be putting about £1.5k-£2k away every month until we purchase a house, hopefully in the next year or two.
Well, no I don’t have the same attitude for those because I don’t own an oil field/processing station so I have to pay for those. I’m not sure what point it is that you’re trying to make here. Rent is an ongoing cost forever, a mortgage isn’t. I think the place would have to fall down for maintenance costs to be the same as my mortgage, and depreciation in the housing market, has that ever happened over a long enough period? Ignoring the fact that dips in the market are only an issue if you want to sell, which I won’t.
I also don’t personally know anyone in my family, extended family, friends, anyone I can think of who has sold their house after retirement and gone back to renting. Some may have sold and downsized, but continued to own.
True, but there's a much greater risk. I used the mortgage calculator linked above and a compound interest calculator to compare.
If I paid an extra £200/month off my mortgage, I'd be mortgage free in 22 years rather than 30, saving £19,926 in interest (based on % interest never changing);
If I paid in £200/month to an ISA and averaged 7% gains, after 22 years I'd have paid in £52,800 but have a balance of £121,387, so a gain of £68,587.
Just out of curiosity, leaving it the full 30 year term of the mortgage I'd have paid in £72,000 but have a balance of £233,979, so a gain of £161,979. Take away the £19,926 I wouldn't have saved in interest and I'd still have made £142,053.
The end of year 19 of the ISA is the time I'd have more than the outstanding mortgage balance, but obviously leaving it in for the full 30 years gives the benefit of compound interest.
Huge risk though, despite how attractive those numbers look.
Man of Honour
Everything has got a little disorganised lately with bank accounts in different countries, but yes, I generally try to save £500 - £1500 a month depending on what's been going on that month.
Doing both, I'm not a higher tax bracket earner so the salary sacrifice is of less benefit? From from what i read a LISA was a good idea, probably wouldn't want to listen to me on pension advice though.
Salary sacrifice saves you (only) NI contributions, circa 12%, on top of the 20% basic rate tax relief. Which is of course worth having.
For a WPP/SIPP basic rate tax relief, 20%, is given at source, if contributions are made from net pay. Higher rate tax relief (40%, so the balance of 20%) needs to be claimed by Self-Assessment but is not complicated.
So the reality is, £4k in to a WPP or SIPP via Salary Sacrifice, receives at least 32% (20%+12%) on top by way of 'bonus'. Where as a LISA is 25%.
You could factor the opportunity cost of when the 25% bonus is paid in to the LISA too, as WPP/SIPP tax relief is usually added the following month vs. (perhaps) a LISA of once annually etc.
(I'm aware NI % has changed from 1st April but using 12% as an example)
I welcome correction if I'm not quite right here.