No hurry to pay off the mortgage

No hurry to pay off the mortgage

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SkinnyPete

Original Poster:

1,411 posts

148 months

Tuesday 30th May 2017
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Took a 35 year mortgage out 5 years ago, sounds like an awful idea on paper but while mortgages are so cheap and I'm in my prime I thought id keep the payments down and enjoy the cash in the here and now.

Plus I can always pay more, I can never pay less.

As soon as rates increase I'll make paying it off more of a priority.

Anyone else?

bearman68

4,642 posts

131 months

Tuesday 30th May 2017
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Not me. 20 year mortgage, flexible with payment holidays etc. Overpaid by at least treble every month, and got rid of it in 4 years. Now I have no mortgage, and have spare money, and financial security.
Each to their own though.

Sarnie

8,025 posts

208 months

Tuesday 30th May 2017
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bearman68 said:
Not me. 20 year mortgage, flexible with payment holidays etc. Overpaid by at least treble every month, and got rid of it in 4 years. Now I have no mortgage, and have spare money, and financial security.
Each to their own though.
+1

With rates so low, even more of your money is capital now.............when rates go up, so will the payments, so will the interest and so will the additional then required to overpay the mortgage..........

Jockman

17,912 posts

159 months

Tuesday 30th May 2017
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SkinnyPete said:
Took a 35 year mortgage out 5 years ago, sounds like an awful idea on paper but while mortgages are so cheap and I'm in my prime I thought id keep the payments down and enjoy the cash in the here and now.

Plus I can always pay more, I can never pay less.

As soon as rates increase I'll make paying it off more of a priority.

Anyone else?
You can pay less. You can potentially take payment holidays after overpayments??

I overpay my mortgage every month but I have no intention of ever paying it off. Debt focuses my mind.

Prohibiting

1,734 posts

117 months

Tuesday 30th May 2017
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Another mortgage thread where we'll undoubtly have people who worked their fingers to the bone and survived on grass for 5 years in order to overpay their mortgage and will tell everyone that this is what you must do.

Nah not me. I'm happy to work of course but I'm also more than happy to stick to the monthly payments and go with the flow probably like most other people.

MrJuice

3,297 posts

155 months

Wednesday 31st May 2017
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No hurry here either. We haven't even moved in yet!

Saving for an extension at the moment. If there are no neighbour objections, approx 80 metres of space will be added and in addition, rest of the house will go back to brick for a renovation. So my capacity to overpay for the next few years is zero. I'd be happy with keeping up with payments and bills alone!

SeanST150

74 posts

83 months

Wednesday 31st May 2017
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I also have a 35 year mortgage, well 33 years left. I'm of the same opinion that it is easier to tell the lender you need to pay more than agreed rather than less.

That said I am currently overpaying. This will bring the mortgage close to 25 years. Now is the time to bring debt down!

It might be worth running a mortgage calculator with interest rates at just 3%. I think you'll be surprised how much higher the repayments are.

There's​ a lot to be said for living for now and enjoying the money you are earning today, but I think it's prudent to try and keep your mortgage to a minimum.

Type R Tom

3,859 posts

148 months

Wednesday 31st May 2017
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bearman68 said:
Not me. 20 year mortgage, flexible with payment holidays etc. Overpaid by at least treble every month, and got rid of it in 4 years. Now I have no mortgage, and have spare money, and financial security.
Each to their own though.
I have to ask, really small mortgage or huge salary? I can't get my head around how that is feasible?

Welshbeef

49,633 posts

197 months

Wednesday 31st May 2017
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Type R Tom said:
I have to ask, really small mortgage or huge salary? I can't get my head around how that is feasible?
Let's say he had a mortgage of £200k(?) to pay that off outright in 4 years off the bat would mean monthly payments in excess of £5,000.

If that is the case clearly he and his partner (he or she) didn't really stretch much on purchase or had a whopping promotions post purchase.


I chose £200k as a mortgage value due to average house prices.

Type R Tom

3,859 posts

148 months

Wednesday 31st May 2017
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Welshbeef said:
Type R Tom said:
I have to ask, really small mortgage or huge salary? I can't get my head around how that is feasible?
Let's say he had a mortgage of £200k(?) to pay that off outright in 4 years off the bat would mean monthly payments in excess of £5,000.

If that is the case clearly he and his partner (he or she) didn't really stretch much on purchase or had a whopping promotions post purchase.


I chose £200k as a mortgage value due to average house prices.
That's kind of what I mean, why live in a £200,000 house with a house hold income of what £150,000 gross per year?

SkinnyPete

Original Poster:

1,411 posts

148 months

Wednesday 31st May 2017
quotequote all
Some interesting replies!

You see for me I spent my younger years saving and being a boring when I should have really been partying. This allowed me to buy my house aged 23 (back when you needed a massive deposit) and now I'm 28 I just want to make up for lost time.

Maybe when I hit 30 I'll put some effort into paying it off faster.

The house is worth £170k and I owe £90k on it.

Welshbeef

49,633 posts

197 months

Wednesday 31st May 2017
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Type R Tom said:
That's kind of what I mean, why live in a £200,000 house with a house hold income of what £150,000 gross per year?
Maybe he got a stunning deal his ideal home?
Maybe he bought a starter home cleared his mortgage and will have to do it again as he /she steps up the ladder possibly to his/her forever home.

Maybe he is a dr earning £90k in an area (say N Wales) where a 6 bed is barely £200k with acres of land.

Maybe he/she bought a fixer upper and either hasn't done any work to it yet or simply fix the low cost items and used his labour to do it.

Maybe he simply didn't want to leverage too high

Welshbeef

49,633 posts

197 months

Wednesday 31st May 2017
quotequote all
SkinnyPete said:
Some interesting replies!

You see for me I spent my younger years saving and being a boring when I should have really been partying. This allowed me to buy my house aged 23 (back when you needed a massive deposit) and now I'm 28 I just want to make up for lost time.

Maybe when I hit 30 I'll put some effort into paying it off faster.

The house is worth £170k and I owe £90k on it.
You could clear that before 40yo. Worth considering if your planning a family when that sucks up cash v you have a roof over your head and nothing can be done to take it away

SkinnyPete

Original Poster:

1,411 posts

148 months

Wednesday 31st May 2017
quotequote all
Welshbeef said:
SkinnyPete said:
Some interesting replies!

You see for me I spent my younger years saving and being a boring when I should have really been partying. This allowed me to buy my house aged 23 (back when you needed a massive deposit) and now I'm 28 I just want to make up for lost time.

Maybe when I hit 30 I'll put some effort into paying it off faster.

The house is worth £170k and I owe £90k on it.
You could clear that before 40yo. Worth considering if your planning a family when that sucks up cash v you have a roof over your head and nothing can be done to take it away
While I agree, there is another reason why I (rightly or wrongly) am avoiding paying off the mortgage, which is when my parents die I should inherit £100k which will clear the remainder of my mortgage.

This is where in 20 years I find they have removed me from their will laugh

bearman68

4,642 posts

131 months

Wednesday 31st May 2017
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Just to say - small terraced house in S Wales. It was only me at the time, so 3 beds was absolutely fine (huge in fact). Just under £100k on the house, and chucked all my spare salary at it every month. I was in a position where I was also on overtime, car allowance, occasional bonus etc, so every spare penny went into the house in some way or another. I played loads of sport back then, so I was out on most evenings and weekends doing some kind of sport, and while I rarely ate in the pub, didn't drink (much) or smoke, it never felt like I was missing out. In fact spending little money can be very liberating in some respects.
When I met my Mrs, it turned out she had done almost the same, with a similar value house - so we sold both, and bought a 5 bed detached, in a lovely village, close to the pub, with a garden, and small workshop. We bought that with a 50k mortgage as a bit of a fixer upper, and paid that off in short order. (Actually we paid off 49k of it, and left the 1k being paid over 25 years as a possibility of cheap lending if we ever needed it). So strictly speaking we do have and pay a mortgage, but it's about £3 a month or something.

Now we have kids, and life has gone in a completely different direction to what we had both thought, but our home is paid off, and I feel we have some security. I'm not saying it's the way everyone has to play the game, it's just what I felt comfortable doing.

Welshbeef

49,633 posts

197 months

Wednesday 31st May 2017
quotequote all
bearman68 said:
Just to say - small terraced house in S Wales. It was only me at the time, so 3 beds was absolutely fine (huge in fact). Just under £100k on the house, and chucked all my spare salary at it every month. I was in a position where I was also on overtime, car allowance, occasional bonus etc, so every spare penny went into the house in some way or another. I played loads of sport back then, so I was out on most evenings and weekends doing some kind of sport, and while I rarely ate in the pub, didn't drink (much) or smoke, it never felt like I was missing out. In fact spending little money can be very liberating in some respects.
When I met my Mrs, it turned out she had done almost the same, with a similar value house - so we sold both, and bought a 5 bed detached, in a lovely village, close to the pub, with a garden, and small workshop. We bought that with a 50k mortgage as a bit of a fixer upper, and paid that off in short order. (Actually we paid off 49k of it, and left the 1k being paid over 25 years as a possibility of cheap lending if we ever needed it). So strictly speaking we do have and pay a mortgage, but it's about £3 a month or something.

Now we have kids, and life has gone in a completely different direction to what we had both thought, but our home is paid off, and I feel we have some security. I'm not saying it's the way everyone has to play the game, it's just what I felt comfortable doing.
Well played.

PostHeads123

1,042 posts

134 months

Wednesday 31st May 2017
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Why don't you get the best of both worlds and have an 'offset' mortgage, gives you the freedom to use the cash if you so please but if you don't and just leave it in the account you wont get charged mortgage interest for that amount, though you get no interest on your savings but if your morg is say 2.5% and saving rate is 0.25% and your a higher rate tax payer it makes sense. So say mortgage is £100k you had £25k savings, you would only be paying interest on the £75k mortgage, you can still access your £25k as you want but you wont get paid interest on it but with saving rates so low its not an issue.

I've offset don't know why more people don't do it.

Edited by PostHeads123 on Wednesday 31st May 10:49

brrapp

3,701 posts

161 months

Wednesday 31st May 2017
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I'm lucky enough to remember MIRAS, where the government 'paid' your mortgage for you. If you and a friend bought a house together with an interest only mortgage of £60000 (nice house for that in the eighties), you got tax relief on the full amount. A big incentive if you were on higher rate tax.
Lots of people who could afford to buy a house outright didn't just because of this.

beerexpressman

240 posts

136 months

Wednesday 31st May 2017
quotequote all
PostHeads123 said:
Why don't you get the best of both worlds and have an 'offset' mortgage, gives you the freedom to use the cash if you so please but if you don't and just leave it in the account you wont get charged mortgage interest for that amount, though you get no interest on your savings but if your morg is say 2.5% and saving rate is 0.25% and your a higher rate tax payer it makes sense.

I've offset don't know why more people don't do it.
+1

Offset mortgage - paid off after 9 years. Still young enough to enjoy life, and have the cash to pay for the holidays and toys etc..

Welshbeef

49,633 posts

197 months

Wednesday 31st May 2017
quotequote all
PostHeads123 said:
Why don't you get the best of both worlds and have an 'offset' mortgage, gives you the freedom to use the cash if you so please but if you don't and just leave it in the account you wont get charged mortgage interest for that amount, though you get no interest on your savings but if your morg is say 2.5% and saving rate is 0.25% and your a higher rate tax payer it makes sense. So say mortgage is £100k you had £25k savings, you would only be paying interest on the £75k mortgage, you can still access your £25k as you want but you wont get paid interest on it but with saving rates so low its not an issue.

I've offset don't know why more people don't do it.

Edited by PostHeads123 on Wednesday 31st May 10:49
I always go with offset it works for me.