I paid off my mortgage today

[redrabbit29]

Tyre Tread said:

Overpay as much as you possibly can during the next 3 years, that way the amount you'll need to refinance will be reduced as much as possible and will help the future you. Even if it's only £20 a month it all helps to bring the capital down on which you'll be paying that potential 4%-5%.

I did look at this and may still do it as I have more disposable income due to a recent job change.

I did look at the difference per month in three years if I paid off £20k extra. It was barely anything, in fact it made no real tangible difference. I know there is a long term impact on interest, but that's 25-30 years away.

I am saving hard into pension and into long term tracker fund so need to work out what to put towards mortgage if anything

[Rob_125]

Tyre Tread said:

redrabbit29 said:

This makes me concerned about the 31 years I have left. £350k of debt. 3 more years at 1.7% and then god knows what

Our monthly payment is £1270. So if it does go up to 4-5% it will be quite a bit more to cover each month

Overpay as much as you possibly can during the next 3 years, that way the amount you'll need to refinance will be reduced as much as possible and will help the future you. Even if it's only £20 a month it all helps to bring the capital down on which you'll be paying that potential 4%-5%.

Best thing I ever did was keep upping my mortgage payments instead of having new cars or fancy holidays. I was mortgage free by the age of 45 and I didn't buy my first house until I was 25.

I sort of messed it all up when we relocated 8 years ago so after being mortgage free for almost 10 years we took on the largest mortgage we had ever had. However, we have been fortunate in that the house price increase where we live has meant it was a good investment and as we look to relocate back and downsize, we'll end up with no mortgage in a nice pot towards the pension years.

Always, always overpay your repayment mortgage if/when you can afford to. You can always liberate equity at a later date if needed and it will save a lot in interest charges.

Well done OP.

In my opinion I would not overpay, on a mortgage costing 1.7%. When current accounts are paying 3.5% interest. I would save the cash (bear in mind possible tax implications depending on tax bands), and pay off a lump at the end of the term.

[Tyre Tread]

Rob_125 said:

In my opinion I would not overpay, on a mortgage costing 1.7%. When current accounts are paying 3.5% interest. I would save the cash (bear in mind possible tax implications depending on tax bands), and pay off a lump at the end of the term.

Good point, if you can be disciplined enough to do that and not splurge the saving from time to time on holidays or depreciating assets.

[bhippy]

GT3Manthey said:

Nice work .

Hopefully be seeing you on the ‘Enjoying Retirement’ thread soon

I lurk in that thread several times a day! One of my favourite PH threads to read through. Trying to put things in place so that I can join you all in happy retirement!

[anonymous-user]

Rob_125 said:

In my opinion I would not overpay, on a mortgage costing 1.7%. When current accounts are paying 3.5% interest. I would save the cash (bear in mind possible tax implications depending on tax bands), and pay off a lump at the end of the term.

The problem with this is as soon as you get to the end of the term you are on the variable rate (which could easily be 8% at the moment). Is the plan to pay off a lump sum on the day the fix ends, then start on a new fixed rate mortgage as soon as possible?

If so then this relies on some decent timing and a hope that the mortgage companies don't mess up the timing.

My current mortgage is 2.84% and I am overpaying by 10% a year (the maximum you can pay without early redemption penalties). My reasoning is it is easily to reduce the term this way and arrange a new mortgage as soon as the fixed term is over, rather than waiting until the fix is over, paying off a lump sum and then relying on the above scenario.

Plus we don't actually know what rates will be like when the fixed term is over, I am pretty sure the BoE will keep raising rates despite it having zero effect on inflation.

[Rob_125]

Joey Deacon said:

The problem with this is as soon as you get to the end of the term you are on the variable rate (which could easily be 8% at the moment). Is the plan to pay off a lump sum on the day the fix ends, then start on a new fixed rate mortgage as soon as possible?

If so then this relies on some decent timing and a hope that the mortgage companies don't mess up the timing.

My current mortgage is 2.84% and I am overpaying by 10% a year (the maximum you can pay without early redemption penalties). My reasoning is it is easily to reduce the term this way and arrange a new mortgage as soon as the fixed term is over, rather than waiting until the fix is over, paying off a lump sum and then relying on the above scenario.

Plus we don't actually know what rates will be like when the fixed term is over, I am pretty sure the BoE will keep raising rates despite it having zero effect on inflation.

Yeah, so I recently did a product transfer.

Initial mortgage balance £248k. They split the mortgage into two products, one fixed rate (3.86%)and one on the svr (7.99% now!) where there were no erc.

I had a substantial sum from a previous property sale (long story, but bought the current house before selling the previous). So had 120k mortgage put into a sub account at 3.86 and the remaining balance 128k put into a mortgage sub account on the svr. This all started on the 1/06/23. So over the past few days have payed off lumps as cash has come in from various places ie premium bonds. And made the final redemption payment today.

So yes, if you know the figures you are working with it can be done. This was all through the Halifax (no fancy broker involved) as a standard thing.

It basically gave me the flexibility to arrange the mortgage 6 months early, although it was amended several times as rates decreased. Yes I have paid 8% apr on 128k for a few days, but it's fairly negligible given the security this setup gave me in the current mortgage market.

Product transfer meant no setup fees, and no erc charges for the portion on the svr. Winner.

Edited by Rob_125 on Tuesday 6th June 16:22

[soupdragon1]

Joey Deacon said:

soupdragon1 said:

Can't you have a nice house in a council estate?

I am probably biased as I lived on a council estate for the first 23 years of my life. The first thing I said to the Estate Agent when I was looking to buy my first property in 2000? "Don't send me any ex council houses"

No way am I working for 25+ years to pay the mortgage so I can live next door to someone who was given it for free.

That is the reason they are 80% more expensive, and despite what you think there is definitely a stigma for living on a Council Estate.

Same here, although it was only my early years on a council estate.

I'm just being contrary for the sake of discussion, rather than having a firm opinion. My mind wanders when I'm out walking my dog and while I've never bought a house in a council estate, I often think some of the owners of these houses are probably pretty savvy when it comes to finding the right balance in life.

I fully understand the 80% premium people pay to live in a non council area and why they pay it, but it's hard to reconcile whos getting the best value for money and who's enjoying life the most.

I think there is an argument at that end of the market to say buying a cheaper council house opens the door for a better balanced lifestyle if compared to someone in the private semi detached who can afford the mortgage but doesn't have an awful lot left over.

Anyway, I'm just rambling out loud rather than questioning anyone's decisions

[FiF]

Congrats OP, in one sense it's like a weight being lifted off your shoulders, but in other ways it opens up possibilities that were never considered before, which can be just as good but also complicating dependant on situation.

Never looked back in our case.

[Harry Flashman]

Rob_125 said:

Tyre Tread said:

redrabbit29 said:

This makes me concerned about the 31 years I have left. £350k of debt. 3 more years at 1.7% and then god knows what

Our monthly payment is £1270. So if it does go up to 4-5% it will be quite a bit more to cover each month

Overpay as much as you possibly can during the next 3 years, that way the amount you'll need to refinance will be reduced as much as possible and will help the future you. Even if it's only £20 a month it all helps to bring the capital down on which you'll be paying that potential 4%-5%.

Best thing I ever did was keep upping my mortgage payments instead of having new cars or fancy holidays. I was mortgage free by the age of 45 and I didn't buy my first house until I was 25.

I sort of messed it all up when we relocated 8 years ago so after being mortgage free for almost 10 years we took on the largest mortgage we had ever had. However, we have been fortunate in that the house price increase where we live has meant it was a good investment and as we look to relocate back and downsize, we'll end up with no mortgage in a nice pot towards the pension years.

Always, always overpay your repayment mortgage if/when you can afford to. You can always liberate equity at a later date if needed and it will save a lot in interest charges.

Well done OP.

In my opinion I would not overpay, on a mortgage costing 1.7%. When current accounts are paying 3.5% interest. I would save the cash (bear in mind possible tax implications depending on tax bands), and pay off a lump at the end of the term.

Not so good if you have to pay higher rate or additional tax on those savings account interest, by the way. So be wary of that.

[s-x-i]

Congratulation OP! Must be a great feeling to know the roof over your head is yours no matter what happens. I can't wait for the day that we can say the same.

Tyre Tread said:

Overpay as much as you possibly can during the next 3 years, that way the amount you'll need to refinance will be reduced as much as possible and will help the future you. Even if it's only £20 a month it all helps to bring the capital down on which you'll be paying that potential 4%-5%.

Best thing I ever did was keep upping my mortgage payments instead of having new cars or fancy holidays. I was mortgage free by the age of 45 and I didn't buy my first house until I was 25.

This is my plan at present given the current and ever rising interest rates. We are thankfully fixed at a low rate until January 2026 but are heavily overpaying in order to get our total amount owed as low as possible come renewal time. Even with doing this it looks like our monthly payment will increase or at best stay the same give the interest rates.

Yes, saving accounts and S/S investments may be giving better returns but currently the savings on interest and becoming mortgage free is more important to us.

redrabbit29 said:

I did look at this and may still do it as I have more disposable income due to a recent job change.

I did look at the difference per month in three years if I paid off £20k extra. It was barely anything, in fact it made no real tangible difference. I know there is a long term impact on interest, but that's 25-30 years away.

I would have a look at this again, by looking at current rates overpaying my £20k should offer a decent saving.

So you have £350k left over 31 years. Currently monthly payment of £1270.
1 - Current payments would see that at £304k after 3 years.
2 - Overpayments would being it down to £284k after 3 years.

Using the above figures and renewing at current rates (Halifax mortgage calculator) on a 28 year term. Guessing the home value of £500k?
1 - £1590 new monthly cost.
2 - £1480 new monthly cost.

So saving you £110 each month going forward which over your theoretical remaining term (28 years) is £36960, minus your overpayment (£20k), is a £16960 saving. (Roughly)

Please someone correct me if the above is incorrect.

[Puzzles]

Joey Deacon said:

soupdragon1 said:

Can't you have a nice house in a council estate?

I am probably biased as I lived on a council estate for the first 23 years of my life. The first thing I said to the Estate Agent when I was looking to buy my first property in 2000? "Don't send me any ex council houses"

No way am I working for 25+ years to pay the mortgage so I can live next door to someone who was given it for free.

That is the reason they are 80% more expensive, and despite what you think there is definitely a stigma for living on a Council Estate.

Where my mother lives, small village, the ex council houses without parking or even a road are more expensive than the “executive” estate that was built around the corner a few years ago.

As an example an ex council 3bed semi is 20% more expensive than a 3 bed detached house with a drive and garage on the new estate.

Near where I live now there are some council houses in prime locations, probably some of the best locations. Sadly some of the residents don’t seem to appreciate that though.

[rossub]

Puzzles said:

Joey Deacon said:

soupdragon1 said:

Can't you have a nice house in a council estate?

I am probably biased as I lived on a council estate for the first 23 years of my life. The first thing I said to the Estate Agent when I was looking to buy my first property in 2000? "Don't send me any ex council houses"

No way am I working for 25+ years to pay the mortgage so I can live next door to someone who was given it for free.

That is the reason they are 80% more expensive, and despite what you think there is definitely a stigma for living on a Council Estate.

Where my mother lives, small village, the ex council houses without parking or even a road are more expensive than the “executive” estate that was built around the corner a few years ago.

As an example an ex council 3bed semi is 20% more expensive than a 3 bed detached house with a drive and garage on the new estate.

Near where I live now there are some council houses in prime locations, probably some of the best locations. Sadly some of the residents don’t seem to appreciate that though.

The problem with ex Council housing is that there’s a very high chance you’ll be living beside some properly nasty people that don’t own theirs. Obviously plenty of decent people live there as well, but I’d rather live in a 1 bed flat in a decent area than an ex council house on an estate I’m afraid.

Scummy teenagers tearing past your house all night on illegal bikes isn’t my idea of a place to live.

[Puzzles]

rossub said:

The problem with ex Council housing is that there’s a very high chance you’ll be living beside some properly nasty people that don’t own theirs. Obviously plenty of decent people live there as well, but I’d rather live in a 1 bed flat in a decent area than an ex council house on an estate I’m afraid.

Scummy teenagers tearing past your house all night on illegal bikes isn’t my idea of a place to live.

It depends on the area, in the village I mentioned earlier there would be no problem, and you'd more likely have issues in the new build estate. Which is why the ex council houses are worth more.

However, where I live the council houses have the prime locations but I wouldn't want to live there as it's a little run down. Such a waste. Although it isnt bad enough to have teenagers on illegal bikes.

Edited by Puzzles on Tuesday 6th June 20:38

[tinytim123]

s-x-i said:

I would have a look at this again, by looking at current rates overpaying my £20k should offer a decent saving.

So you have £350k left over 31 years. Currently monthly payment of £1270.
1 - Current payments would see that at £304k after 3 years.
2 - Overpayments would being it down to £284k after 3 years.

Using the above figures and renewing at current rates (Halifax mortgage calculator) on a 28 year term. Guessing the home value of £500k?
1 - £1590 new monthly cost.
2 - £1480 new monthly cost.

So saving you £110 each month going forward which over your theoretical remaining term (28 years) is £36960, minus your overpayment (£20k), is a £16960 saving. (Roughly)

Please someone correct me if the above is incorrect.

There is also the fact that based on these figures the LTV on renewal is more likely to be <60%, unlocking a better rate.

Think many forget to factor this in. And yes, you'd hope the bank gives an appreciating value on renewal, further increasing chances of better LTV but the way things are going it's not a given

[IJWS15]

Congrats to OP

Mine has 7 years to run but to put his into perspective this was taken out at the age of 44 when we moved into a bigger house. Have had a mortgage since I was 23, 40 years ago and to those who think rates are high now - they aren't.

We have overpaid significantly and the balance is less than £1k, if bonus is paid this year I may take another £500 off it. I now get letters from Barclays when the rate changes telling me my monthly payment isn't going to rise . It is nice to know I could pay it off a any time if I chose to without affecting our finances.

If I pay it off they will want a termination fee from me and as they won't discount it they can have it in 7 years, meanwhile the fee value is sat generating money for me.

[a311]

Congrats Op we did this in 2021 only to get another mortgage in Feb 22 to fund some home improvements........

It was nice while it lasted, weird as I don't really recall feeling too much richer we overpaid for years and were paying 1K a month. When this one gets paid off (it's only relatively small so should clear in 5-10 years-will be on the shorter end depending where interest rates are as would pay it off with savings if high) I'll most likely in my own head using it for additional retirement planning but there'll always be the chance of other stuff cropping up I guess-kids education and so on.

[Harry Flashman]

My attitude has been that my property is an asset, that is illiquid. So putting money into it depends on its cost and long term capital appreciation/yield if applicable.

Obviously, on a main home, there is a risk element too: what happens if your household income disappears, and how would you then deal with the debt, as you can't just sell the house conveniently.

Up to now, it has been very easy to use overpayment money elsewhere to get better performance. The maths is different in the normalized interest rate environment, but it's still maths that I will try to do.

Being mortgage free would be a big psychological win. But knowing my money was sitting in an illiquid and stagnant asset would be a lose. Basically, I can't win!!

[mikey_b]

Congratulations to OP - must be a great feeling

I have just under 15 years to go, but by virtue of some fortuitous timing I'm locked into a 1.44% until the end of November 2025. Though I'll still have over £150k to go even then, and unlikely to be able to do more than nibble at the outstanding capital with savings.

One day...

[Wololo]

ChocolateFrog said:

Paid mine off 3 or 4 years ago.

Totally pointless when you could get 10 year fixed rates for well under 2% but I didn't care.

I absolutely hated jumping through the banks hoops, having them question my statements down to individual purchases.

It felt like a massive 2 fingers to the system to pay it off.

They want you on 40 year interest only mortgages, I'm sure they'd up it to whole life mortgages if they could.

fk em, my house, my land.

Yes it feels great.

It doesn't sound like it was pointless! Perhaps "mathematically sub-optimal"...

[xerawh]

Harry Flashman said:

My attitude has been that my property is an asset, that is illiquid. So putting money into it depends on its cost and long term capital appreciation/yield if applicable.

Obviously, on a main home, there is a risk element too: what happens if your household income disappears, and how would you then deal with the debt, as you can't just sell the house conveniently.

Up to now, it has been very easy to use overpayment money elsewhere to get better performance. The maths is different in the normalized interest rate environment, but it's still maths that I will try to do.

Being mortgage free would be a big psychological win. But knowing my money was sitting in an illiquid and stagnant asset would be a lose. Basically, I can't win!!

Congrats OP that must be a great position to be in.

Harry, I took a similar mental approach to you and tried to analyse it this way. However given my fix ended earlier this year, new fixes were more than savings account, and the investment environment has been volatile, I took the view that the cash in the house is as good/bad as sitting in an investment for now.

What you also need to add to the mix is that whilst potentially illiquid to sell (depending on area and house), it's fairly easy to raise some equity quickly via a new mortgage even if it is not at the lowest rates given the last 10 years.

So on that basis I took some savings and paid off the mortgage when it hit SVR at 7%+ with fixes all over 5%. So for now I'm mortgage free.

However if I get more confidence in the investment market and rates are below what I think I can achieve with my cash elsewhere I may or may not take out a mortgage as its definitely a very cheap and service able form of debt relative to other methods.