billythekid

With the current climate etc just wondering what peoples response to this is and also what your thoughts on it are. Mine are to pay it off as fast as possible and never get another if I can!

davegtt

That was my plan when I/we had 2 incomes, be mortgage free by 40ish, since being single and taking on a larger mortgage to pay the other one off I cant contribute to paying extra off and living a party lifestyle at the same time

davyboy

I'd suggest the last option will be most popular. In the same way as people will say "I'm thinking about joining a gym".

stilover

When I got my Mortage out 5 years ago at a fixed rate, I made sure I was able to pay extra each month. Could have payed an extra £500 each month, but didn't. New cars saw to that.

I've just changed my mortgage in November to a Offset mortgage. So savings will allow me to pay off the mortgage off early. Current deal is 20 years. With savings as they are, I should pay it off 8 years early while still having the savings pot left.

Doesn't suit everybody but deffo worth looking into.

Devildog

How can you pay off more than 100%?

AndyC_772

iTrader: (2)

I'd recommend to anybody who has a mortgage, to draw themselves up a spreadsheet showing regular monthly payments, the proportion of each payment which is interest and which is capital, and the cumulative interest paid over the term of the mortgage.

I have quite a complex one which lets me enter details of my payments every month, changes in interest rate, overpayments, additional borrowing and so on, and which calculates both what I still owe and the cumulative interest I've paid (or should expect to pay in future). It's great for keeping track and doing 'what if?' calculations.

If anybody's interested I'll post a generic version that'll let you put in your own figures. It can be quite an eye-opener...

AndyC_772

iTrader: (2)

Presumably, actual payment each month = more than 2x the required payment.

Devildog

Ah..I read it as mortgage rather than monthly payment

Been a long day

billythekid

An interesting response, I think mortgages are one of the biggest rip offs going and the more people that pay off extra the better. I guess it would crush the economy though! I was shocked when I first looked into it - even a small extra payment of 5 to 10% cuts it down by years! For most people thats an extra £50 to £100 a month!

There is a handy calculator (not that detailed though) here:
Overpayments Calculator - Homebuying - 4Money from channel4.com

logiclee

First vote for over 100%.

It's not a massive motgage so many will be paying far more off.

I've paid as much as I can from the beginning.

Minimum payment is now £187 a month and I pay between £600-£1000 a month. Two to three years should have it finished and I still have an endowment that will mature in 9 years time.

Cheers
Lee

judgejules

I've thought about this. Isnt the money you're paying extra at the moment "worth" more than still paying for those extra few years?

System 1) You pay 100 extra on top of your monthly 500 payments. You pay it off 5 years early.

System 2) You pay 500 a month for 5 years extra. But 500 a month in 20 years is bugger all anyway. You put 100 a month into savings for 25 years.

Obviously my figures are out of whack as I've not really sat down and worked it out. Has anyone here run the numbers, or is my idea of option 2 just silly?

J

vindaloo

Buzzwords are "be flexible", I think. Banks MUST sell mortgages. If they don't, their competitors will.

Once (or if) the outstanding capital is below say 70% of the assessed value, it should be easy to re-mortgage elsewhere.

At the moment valuations are high because realistically, mortgage lending rates will remain low. (or lower than historical high fluctuations). My SVR was 15.4% when I first bought in 1990. Discounted by 2% to 13.4% for the first 6 months!

Part of the problem is that the "old rules" describing how much you could borrow were never updated to take account of predicted stability of lending rates. Rather, when they needed to be competitive, they scrunched them into a ball and threw them away. Hence, you can or could "self cert" your income to obtain a mortgage.

J.

GazTheHat

Bit of a daft question for members of this forum.

Have you seen the group buys and for sale section recently.

logiclee

But say you don't pay the £100 extra this month, you will be paying interest on that £100 and interest on the interest every year until you mortgage is paid off.
Look at the amount you borrowed and the total amount you pay back to put your mind at ease.
Also look at the mortagage interest rate and your average wage increase and the interest you could get on savings. Paying off as much as you can as soon as you can is the way to go if your mortgage is flexible enough.

Cheers
Lee

corradoboy

I'm on a flexible repayment, anything I earn comes off it, anything I spend is added. Hoping to kill it in 7-9 years. Cleared £12k off it since getting rid of the Scoob

Diesel

Life's too short to sacrifice holidays/cars/toys for and prioritise your mortgage instead. It may be logical but its no fun - and you could get run over by a bus tomorr! D

logiclee

It's not a question of doing without it's just that it's better to pay more off than put it in the bank or some investment scheme.

I dont have any other finance so spare monthly money goes off the mortgage and saves more money than it would make if invested.

Cheers
Lee

Diesel

Agree with that Lee - no point having savings when you have a massive debt! D

AndyC_772

iTrader: (2)

Agreed - you have to strike a balance. Personally I'm trying to pay off the house early so I can treat myself to a proper toy when I turn 40. (If it were this year I'd have my name down for a Nissan GT-R, in black please - and don't bother to wrap it!).

As promised, I've put together a spreadsheet that works out monthly payments, cumulative interest paid and other interesting figures over the course of a long-term loan. If anyone's interested, PM me your email address and I'll send it over.

Suresh

If I paid my mortgage off I'd have to pay an extra 12 grand a year in income tax. Not bloody likely! :

I have (conservatively) projected that the initial sum borrowed will be the equivalent of around 6 month's income by the time it needs to be paid back.

billythekid

Income tax V mortgage - how does that work?

Suresh

Still have MIRAS where I live.

molko

Andyc, YEAH man i would like a copy of this if you don't mind. Can you PM is to me ? Cheers

Diesel

I remember that! Still you only save on a portion of the interest 'money wasted'... Where are you Sursh - like the sound of a nice friendly government!

D

Suresh

NL. The net mortgage rate I pay is considerably less than what I receive on my savings account.



- sorry about the ***** waving!

FriarTook

Best thing I ever did was to take out a Flexible Mortgage ..... I paid every spare penny off the debt - it disappeared within 7 years rather than the planned 25 years!!!!

18 Years of no payments anymore! That is a lot of money saved - I think the interest was £435 a month ..... a saving of 18 x 12 x £435 = £93,960!!!!!

The savings are quite staggering! It's only when you do the Maths that it becomes a no-brainer .....

AndyC_772

iTrader: (2)

Reminder: if anyone would like a copy of my spreadsheet that works it out for you, I need your email address!

Diesel

I take it the savings account is in a different country with - if not you need to write one of those 'how to get rich quick' books, and I'm coming over!

D

Deep Singh

The initial sum maybe, but how about the initial sum + interest?

Suresh

Deep, the interest payment side has positive carry for me: Say if my mortgage is 50k and I am lucky enough to have 50k in savings in the bank. I would pay no more that 850 in net interest annually on the mortgage but receive at least 1500 on the savings account. This is an unusual situation to say the least.