I got my final annual mortgage statement and I'm like this...

[fez]

Mortgages don't typically run for 50 years. There is a time cost to money. You are essentially advocating a partial 'timing the market' strategy.

Just lol at your blunt response to the original question then.

We aren't robots and what we know or believe to be the best course of action isn't always the one we take for various reasons.

If everyone did what they know if the best thing, no one would be in loads of debt, no one would be buying cars they can't afford and we would be far healthier as we wouldn't have an obesity issue. That doesn't make the objective truth any less correct...

 

[cheesyboy]

After 15 years of paying a mortgage, I'm looking at about 12.5 years to go. Should be clear around my 52nd birthday. Tbh, it feels a long way off and, sadly, the kids will be adults by that point (around 22 and 19), so won't really see the sudden uplift in household cash.

 

[dowie]

I'm no finance expert, but I was always led to believe that overpaying is largely a waste of time depending on the interest rates, and you'd be better off investing the overpayment amount? that said I'm no expert!

You don't need to be an expert to be fair and you're right in many cases, it's just this boomer logic people seem to have inherited from years gone by when mortgage interest rates were high.

 

[Freefaller]

You don't need to be an expert to be fair and you're right in many cases, it's just this boomer logic people seem to have inherited from years gone by when mortgage interest rates were high.

Rates are really low at the moment, so I've been advised to invest instead of overpaying - but different situations / people have different goals. Not suggesting I'm right or that the approach I've been put on is the right one, even if I overpay I'm not saving a huge amount because of the low interest rates, I'm getting more from my investments (at least I have been over the last 5 or so years. )

Anyway, I didn't mean to detract the thread, it's good to celebrate being debt free

 

[D.P.]

Around 75 years left on mine. I will be dead long before it is paid off.

 

[Deleted member 651465]

Nice!

We're increasing our overpayments next year so we'll be mortgage free by 50. Hate having debts.

Make sure you specify you want the overpayment to be paid off the principle NOT the interest. Typically if you overpay, they take it off the interest of the following months payment... which you don't want.

 

[Diagro]

I'm mortgage free and have been since myself and the wife moved in 13 years ago. (When we were 20).

House has gained about £25k in value, which is a bit poo for a decade... then again its only a £250k house.

We want to move into a bigger house, but having a mortgage scares me... I don't like the idea of them.

 

[DXP55]

Well done OP -I know how you feel.

When my first mortgage interest hit 12% my income didn't pay the monthly due. When it came down I sold up and moved with a new mortgage as low as I could get putting down every penny I had in deposit.
I swore I would never be held to ransom again.
We paid it off as soon as possible paying lump sums when ever I had one.
Today I would still pay it off as there is no point in saving it at the interest rate of today -I am only talking saving accounts.
I did try the road of buying stock and shares but lost quite a bit of money.

 

[Scam]

Rates are really low at the moment, so I've been advised to invest instead of overpaying - but different situations / people have different goals. Not suggesting I'm right or that the approach I've been put on is the right one, even if I overpay I'm not saving a huge amount because of the low interest rates

There's no right answer I guess but the MSE overpayment calculator is interesting/fun. You could also compare it to the savings calculator to really dig into it.

I'm intrigued about the highlighted bit in your post though. You say you're not saving a huge amount? What does that mean? I'm also no expert but you're not really 'saving' (as in, amassing capital). You're removing debt and the interest on that. I dunno, maybe having just got our mortgage we're just super-keen on hitting it hard, especially when fixed on a low interest rate means we can really dent the term by overpaying not-that-much every month. Once we've paid for our renovations

 

[The Funktopus]

Only about £245,000 and 22 years to go on ours.

 

[Freefaller]

There's no right answer I guess but the MSE overpayment calculator is interesting/fun. You could also compare it to the savings calculator to really dig into it.

I'm intrigued about the highlighted bit in your post though. You say you're not saving a huge amount? What does that mean? I'm also no expert but you're not really 'saving' (as in, amassing capital). You're removing debt and the interest on that. I dunno, maybe having just got our mortgage we're just super-keen on hitting it hard, especially when fixed on a low interest rate means we can really dent the term by overpaying not-that-much every month. Once we've paid for our renovations

Sorry I wasn't clear, I meant I wouldn't' be saving a huge amount by overpaying (i.e. barely anything). I'm getting a lot more ROI through investments at the moment - and better retirement planning options.

i.e. if I were to overpay £200 per month, it wouldn't amount to a massive saving, (my interest rate is 1.4% fixed at the moment) whereas £200 of investments which for the past 2 years have been giving me around 7% is going to add more value. Does that make sense?

 

[shiver]

Congrats OP -

As per some other comments, I think it's all down to your personal circumstances / appetite for risk that will depend on whether overpaying your mortgage is worth it. There's no one way that is best for everyone.

We have a substantial mortgage but it's fortunately super affordable for us right now and returns from other investiments far outway the saved interest from overpaying. As we get older, we'll likely want to risk less so overpaying might seem like a better idea.

Also, when it comes to remortgaging or moving house, it may seem worthwhile to convert the investments into a bigger deposit to move the LTV ratio to the next bracket.

 

[Bobmunkhouse]

Would it not be better whacking more into pension saving 20% or 40% tax then taking the 25% tax free lump to pay off any remaining mortgage? Guess it depends how far you are from retirement....

 

[Scam]

i.e. if I were to overpay £200 per month, it wouldn't amount to a massive saving, (my interest rate is 1.4% fixed at the moment) whereas £200 of investments which for the past 2 years have been giving me around 7% is going to add more value. Does that make sense?

Sure does. 7% is a decent return, way above what most people would get on a regular savings account currently. As @shiver says, it's about your appetite for risk, I'm guessing there must be some risk to your 7% returns? In that, it's not exactly a safe ISA getting you that is it? Whereas paying off a mortgage would be deemed much safer, if in the end giving you less return.

Also, when it comes to remortgaging or moving house, it may seem worthwhile to convert the investments into a bigger deposit to move the LTV ratio to the next bracket.

But you will stil get a bigger deposit by having paid off more of the capital on your existing loan, right? Maybe not quite as much, but as above with a lot less risk than an 'investment' in the current climate (I mean, outside of safe ISAs, savings account etc.)

I'm also interested in the compound interest aspect of overpaying your mortgage and shaving time off of it. Can't remember if MSE takes that into account or not.

 

[Freefaller]

Sure does. 7% is a decent return, way above what most people would get on a regular savings account currently. As @shiver says, it's about your appetite for risk, I'm guessing there must be some risk to your 7% returns? In that, it's not exactly a safe ISA getting you that is it? Whereas paying off a mortgage would be deemed much safer, if in the end giving you less return.

.

100% right. there is more risk, and something you have to manage / keep an eye on. It's better (for me) than shoving it into even the best ISAs at the moment, and as I said from my situation / mortgage rates overpaying wouldn't be as fruitful. Had my interest rate been higher, then it does make more sense to overpay, or at least I'd split the overpayment with investment.

For your interest it's a blend of investment in International equity, north American, global equity, corporate bonds and a selection of strategically managed investments. It's considered a "medium" risk profile - but for the 5 years of my mortgage period I think it'll be more fruitful for me. I've accepted that a mortgage is just a long term loan that I'm happy to chip away at. Worse comes to the worse, I can offset some of my investments to take a chunk out of it, but for now, I'm trying to maximise my situation.

 

[Jean-F]

So can't wait for this. Trying to bring our term down under 10 years from the 18 we have remaining

I did that without trying too hard, we moved into the house we’re in now in 1985, the interest rate was I can’t remember, and the monthly repayment was whatever it was.
With successive Chancellors and budgets the interest rate went up and down, every time that it went up I adjusted the monthly payment to the bank, when it went down I left it as it was.
I do recall that at one time it should have been £160 p.m. but I was still paying £240 p.m.
I’ve no idea how much that shortened the term of the loan, it wasn’t dramatic but it suited me.

 

[Bear]

We've been on a bull run for 10 years which has made lots of internet traders "experts" because hodling the stonks has been a pretty easy strategy

Could you teach me about hodling the stonks as it sounds like a good way for me to make some money

 

[malachi]

Would it not be better whacking more into pension saving 20% or 40% tax then taking the 25% tax free lump to pay off any remaining mortgage? Guess it depends how far you are from retirement....

Depends if you ever will see a pension. I have money towards my pension but that's the last thing I think about when they keep on changing the rules like moving the retirement age up.

 

[Sho]

18 years left. But from next year il be overpaying as much as I can in the next few years.

 

[MikeTheNative]

We are only two years into a 25 year mortgage, have just started overpaying though but also when our current deal ends in 3 years hoping to cut the term time by 5 years