No hurry to pay off the mortgage
Discussion
Welshbeef said:
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. 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.
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.
Until she files for divorce and then you end up living in a bedsit while the ex-wife lives for free.*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.
- Your experience may differ from the empty nesters thread however.
Edited by AndStilliRise on Wednesday 31st May 11:03
Jockman said:
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.
You can also increase your termto pay less per month go from 20 - 25 years. I overpay my mortgage every month but I have no intention of ever paying it off. Debt focuses my mind.
Personally I think now is the time to get as much cleared as fast as possible as rates are only going to go one way then we will all feel it.
Just another perspective on this.
I could overpay my mortage, but prefer to invest in other ways where the potential return is greater than the 1.5% I am paying on my mortage debt.
Of course, this is riskier than just overpaying, but I have enough in cash for emergencies, which means it's unlikely I would ever be a forced seller of my investments if my circumstances changed for the worse.
So far this approach has worked very well for me, although appreciate the last few years has been a great time to hold investments and borrowing has been very cheap.
Just trying to point out that paying off your mortage isn't automatically the best way to build up your capital and acheive financial security.
I could overpay my mortage, but prefer to invest in other ways where the potential return is greater than the 1.5% I am paying on my mortage debt.
Of course, this is riskier than just overpaying, but I have enough in cash for emergencies, which means it's unlikely I would ever be a forced seller of my investments if my circumstances changed for the worse.
So far this approach has worked very well for me, although appreciate the last few years has been a great time to hold investments and borrowing has been very cheap.
Just trying to point out that paying off your mortage isn't automatically the best way to build up your capital and acheive financial security.
CaptainSensib1e said:
Just another perspective on this.
I could overpay my mortage, but prefer to invest in other ways where the potential return is greater than the 1.5% I am paying on my mortage debt.
Of course, this is riskier than just overpaying, but I have enough in cash for emergencies, which means it's unlikely I would ever be a forced seller of my investments if my circumstances changed for the worse.
So far this approach has worked very well for me, although appreciate the last few years has been a great time to hold investments and borrowing has been very cheap.
Just trying to point out that paying off your mortage isn't automatically the best way to build up your capital and acheive financial security.
This is what I'm doing too. I currently hold about 50% of outstanding mortgage (itself 40% LTV) in cash and investments. I had considered buying a BTL but prefer stocks at present especially non GBP ones and dividend paying ones.I could overpay my mortage, but prefer to invest in other ways where the potential return is greater than the 1.5% I am paying on my mortage debt.
Of course, this is riskier than just overpaying, but I have enough in cash for emergencies, which means it's unlikely I would ever be a forced seller of my investments if my circumstances changed for the worse.
So far this approach has worked very well for me, although appreciate the last few years has been a great time to hold investments and borrowing has been very cheap.
Just trying to point out that paying off your mortage isn't automatically the best way to build up your capital and acheive financial security.
I have a repayment mortgage but dump as much cash as possible into SIPP using salary sacrifice to use the 25% tax-free sum to clear the mortgage early.
Making use of salary sacrifice to keep the employer/employee NI savings and duck under the child benefit withdrawal threshold mean I can avoid an effective 65% marginal tax rate.
So for every £1 given up as net income now, I get £3 in SIPP. This then grows to say £4. Withdraw 25% (£1) to pay off the mortgage at age 55 and still have £3 left in SIPP..
Compared to using that £1 net to pay off mortgage now, I end up with 3x the amount in a SIPP for free.
I guess (depending on house value) let's say you live in a house current market value £800k with a £100k mortgage.
In that situation If said house somehow is worth less than the mortgage its game over for all.
Conversly if you own a house worth £110k with £100k mortgage that's a biblically higher chance of giving negative equity.
In that situation If said house somehow is worth less than the mortgage its game over for all.
Conversly if you own a house worth £110k with £100k mortgage that's a biblically higher chance of giving negative equity.
Welshbeef said:
I guess (depending on house value) let's say you live in a house current market value £800k with a £100k mortgage.
In that situation If said house somehow is worth less than the mortgage its game over for all.
Conversly if you own a house worth £110k with £100k mortgage that's a biblically higher chance of giving negative equity.
?In that situation If said house somehow is worth less than the mortgage its game over for all.
Conversly if you own a house worth £110k with £100k mortgage that's a biblically higher chance of giving negative equity.
There are already some good points and stories so far in this thread, but the sort of tricks described (e.g. SIPP, historic MIRAS) are not really what I think the OP is getting at.
There's an implication in the OP's original statement that it's "cheap" to borrow at the moment, so why not put off paying back the debt - and instead enjoy the cash and good life that funds now.
I suspect that this view is widespread in the UK at the moment...
There's an implication in the OP's original statement that it's "cheap" to borrow at the moment, so why not put off paying back the debt - and instead enjoy the cash and good life that funds now.
I suspect that this view is widespread in the UK at the moment...
no right or wrong answer, it depends on your financial strategy for your own circumstances
We kept the payment the same as it was when we took the last mortgage out in 2007, since then we could have had an extra £1k in our pockets but chose not too. We have knocked 8 years off so far and can retire 8 years earlier if we wished.
Could have invested the £1k elsewhere
Could have spent the £1k on other "stuff"
...its up to you......a bit like the "how to fund my car purchase" threads....
We kept the payment the same as it was when we took the last mortgage out in 2007, since then we could have had an extra £1k in our pockets but chose not too. We have knocked 8 years off so far and can retire 8 years earlier if we wished.
Could have invested the £1k elsewhere
Could have spent the £1k on other "stuff"
...its up to you......a bit like the "how to fund my car purchase" threads....
We have become so used to low rates, is anyone factoring likely changes to a base rate tracker in the event Jeremy Corbyn gets elected? However likely or unlikely you think *that* is, Oxford Economics believes the base lending rate will be 2.3% under Corbyn over 5 years, compared to 0.7% under May, over a similar period. Currently 0.25%.
Calculator: http://www.thisismoney.co.uk/money/mortgageshome/a...
Calculator: http://www.thisismoney.co.uk/money/mortgageshome/a...
Beanbob said:
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?
Why not? Our household income is now comfortably over £100k (not quite at £150k yet though) and our one-bed apartment is worth around £200k.
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?
What happens if, later on, you're taken ill and can't work ?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?
BoRED S2upid said:
Jockman said:
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.
You can also increase your termto pay less per month go from 20 - 25 years. I overpay my mortgage every month but I have no intention of ever paying it off. Debt focuses my mind.
Personally I think now is the time to get as much cleared as fast as possible as rates are only going to go one way then we will all feel it.
Robertj21a said:
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?
What happens if, later on, you're taken ill and can't work ?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?
Welshbeef said:
Robertj21a said:
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?
What happens if, later on, you're taken ill and can't work ?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?
bmwmike said:
CaptainSensib1e said:
Just another perspective on this.
I could overpay my mortage, but prefer to invest in other ways where the potential return is greater than the 1.5% I am paying on my mortage debt.
Of course, this is riskier than just overpaying, but I have enough in cash for emergencies, which means it's unlikely I would ever be a forced seller of my investments if my circumstances changed for the worse.
So far this approach has worked very well for me, although appreciate the last few years has been a great time to hold investments and borrowing has been very cheap.
Just trying to point out that paying off your mortage isn't automatically the best way to build up your capital and acheive financial security.
This is what I'm doing too. I currently hold about 50% of outstanding mortgage (itself 40% LTV) in cash and investments. I had considered buying a BTL but prefer stocks at present especially non GBP ones and dividend paying ones.I could overpay my mortage, but prefer to invest in other ways where the potential return is greater than the 1.5% I am paying on my mortage debt.
Of course, this is riskier than just overpaying, but I have enough in cash for emergencies, which means it's unlikely I would ever be a forced seller of my investments if my circumstances changed for the worse.
So far this approach has worked very well for me, although appreciate the last few years has been a great time to hold investments and borrowing has been very cheap.
Just trying to point out that paying off your mortage isn't automatically the best way to build up your capital and acheive financial security.
I have overpayed the last 2 years to get my mortgage to 75% ltv.
Currently overpay around 15% of monthly payments.
Other spare cash is invested in Franklin uk managers focus fund s which I started investing in last month.
Interest rate of mortgage is 1.74%
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