No hurry to pay off the mortgage
Discussion
All about personal perspective really.
You say £700 a month isn’t life changing. As an aside, I assure you, to a hell of a lot of the UK population, it very much is life changing. £700/month after tax is somewhere around £1,000 gross, which is something like 30-40% of an average wage.
Anyways, £700/month no longer needing paid is £8,500 less you need to have in your slush fund, if you’re the type who wants to have a year’s worth of outgoings saved, just in case.
The lower monthly outgoing might also facilitate sacking off the job you do, which makes you miserable, for a lower paying job that you may actually enjoy.
You say £700 a month isn’t life changing. As an aside, I assure you, to a hell of a lot of the UK population, it very much is life changing. £700/month after tax is somewhere around £1,000 gross, which is something like 30-40% of an average wage.
Anyways, £700/month no longer needing paid is £8,500 less you need to have in your slush fund, if you’re the type who wants to have a year’s worth of outgoings saved, just in case.
The lower monthly outgoing might also facilitate sacking off the job you do, which makes you miserable, for a lower paying job that you may actually enjoy.
cholo said:
I personally think the thought of having your mortgage paid off is overrated.
I see it as a monthly expense, just like anything else.
The house or your life won't change once the mortgage has gone,
Say your mortgage is £700 per month. Once paid off you will be £700 a month better off.
Obviously, very nice but not a life changer and i have much more exciting things to look forward to in life.
Once paid it effectively like having a £700 a month pay rise. Nice, but not a game changer.
Having said that, then if you are going to overpay, then the best time to do it is now.
I don't quite get the people who say they will do it when interest rates rise? If you wait until then, any overpayment will have a much smaller effect on the mortgage and will take longer to pay off.
It’s only overrated when you have a job and can afford it.I see it as a monthly expense, just like anything else.
The house or your life won't change once the mortgage has gone,
Say your mortgage is £700 per month. Once paid off you will be £700 a month better off.
Obviously, very nice but not a life changer and i have much more exciting things to look forward to in life.
Once paid it effectively like having a £700 a month pay rise. Nice, but not a game changer.
Having said that, then if you are going to overpay, then the best time to do it is now.
I don't quite get the people who say they will do it when interest rates rise? If you wait until then, any overpayment will have a much smaller effect on the mortgage and will take longer to pay off.
emicen said:
All about personal perspective really.
You say £700 a month isn’t life changing. As an aside, I assure you, to a hell of a lot of the UK population, it very much is life changing. £700/month after tax is somewhere around £1,000 gross, which is something like 30-40% of an average wage.
Anyways, £700/month no longer needing paid is £8,500 less you need to have in your slush fund, if you’re the type who wants to have a year’s worth of outgoings saved, just in case.
The lower monthly outgoing might also facilitate sacking off the job you do, which makes you miserable, for a lower paying job that you may actually enjoy.
That was my thoughts exactly. I earn an OK salary but you'd never hear me saying a £700 per month increase in income wasn't significant.You say £700 a month isn’t life changing. As an aside, I assure you, to a hell of a lot of the UK population, it very much is life changing. £700/month after tax is somewhere around £1,000 gross, which is something like 30-40% of an average wage.
Anyways, £700/month no longer needing paid is £8,500 less you need to have in your slush fund, if you’re the type who wants to have a year’s worth of outgoings saved, just in case.
The lower monthly outgoing might also facilitate sacking off the job you do, which makes you miserable, for a lower paying job that you may actually enjoy.
Anyone being a bit meh about £700pcm isn’t really representative of the U.K. population - also kind of means that you’ve not then pushed too hard to buy what you have
Putting that £700pcm extra into say a pension in addition to existing would be a very useful additional pension pot in later years.
Or a nice PCP
Or coke and hookers - not sure how far that would stretch to but still suppose it’s a couple of tricks a month.
Putting that £700pcm extra into say a pension in addition to existing would be a very useful additional pension pot in later years.
Or a nice PCP
Or coke and hookers - not sure how far that would stretch to but still suppose it’s a couple of tricks a month.
Welshbeef said:
Anyone being a bit meh about £700pcm isn’t really representative of the U.K. population - also kind of means that you’ve not then pushed too hard to buy what you have
Putting that £700pcm extra into say a pension in addition to existing would be a very useful additional pension pot in later years.
Or a nice PCP
Or coke and hookers - not sure how far that would stretch to but still suppose it’s a couple of tricks a month.
Very much this, we paid our off, £400 a month but that money now goes in to a saving account. Putting that £700pcm extra into say a pension in addition to existing would be a very useful additional pension pot in later years.
Or a nice PCP
Or coke and hookers - not sure how far that would stretch to but still suppose it’s a couple of tricks a month.
I personally think that if people didnt wake up when we were in lockdown and pay down as much as they could in the event of even more s
t hitting the fan then they were quite silly. Again just my POV.
Its easy to say it ll never happen to me, i iknow a few whilst this has gone on and they lost there jobs and been up the creak as they say, cars gone houses for sale as they are maxed out.
Of course not everyone is the same and a few that i know worked from home maxxed all there targets and are sitting pretty for a very nice bonus aswell as not losing any money through it all but saving a s
t load on lunch and travel costs. cossy400 said:
Very much this, we paid our off, £400 a month but that money now goes in to a saving account.
I personally think that if people didnt wake up when we were in lockdown and pay down as much as they could in the event of even more st hitting the fan then they were quite silly.
Again just my POV.
Its easy to say it ll never happen to me, i iknow a few whilst this has gone on and they lost there jobs and been up the creak as they say, cars gone houses for sale as they are maxed out.
Of course not everyone is the same and a few that i know worked from home maxxed all there targets and are sitting pretty for a very nice bonus aswell as not losing any money through it all but saving a st load on lunch and travel costs.
It’s balance there is no right answer I personally think that if people didnt wake up when we were in lockdown and pay down as much as they could in the event of even more s
t hitting the fan then they were quite silly. Again just my POV.
Its easy to say it ll never happen to me, i iknow a few whilst this has gone on and they lost there jobs and been up the creak as they say, cars gone houses for sale as they are maxed out.
Of course not everyone is the same and a few that i know worked from home maxxed all there targets and are sitting pretty for a very nice bonus aswell as not losing any money through it all but saving a s
t load on lunch and travel costs. However I think GCSE in basic finance should be mandatory. The life benefit that will give so many vs the way things are now people maxing out credit not appreciating jam today vs save up either in part of fully for what you need. How to budget what life insurance is what’s a mortgage a pension borrowing unsecured and the safety net.
Martin Lewis has no doubt helped or made plenty aware but we could do so much more
The point about mortgages broadly (exceptions apply) is that the bank never gives you enough rope to hang yourself, so no matter if your mortgage is 700 or 2700 it will still feel relatively like the same size stone as if you've borrowed the reasonable max of what you can then the percentage of take home is always going to be broadly similar.
I tend to agree with the bloke who said what's the big deal? But then in London perhaps it's never on the roadmap for most people to clear their mortgage so I think of it differently.
I tend to agree with the bloke who said what's the big deal? But then in London perhaps it's never on the roadmap for most people to clear their mortgage so I think of it differently.
The thing about mortgage free is (aside from the monthly payment) is that it’s yours lock stock.
All you have to worry about is council tax, gas electric, tv licence internet water food.
In reality if the worst would ever happen then your outgoings would/could be managed down extremely hard.
All you have to worry about is council tax, gas electric, tv licence internet water food.
In reality if the worst would ever happen then your outgoings would/could be managed down extremely hard.
cossy400 said:
I personally think that if people didnt wake up when we were in lockdown and pay down as much as they could in the event of even more st hitting the fan then they were quite silly.
I agree completely. We paid off the 10% extra we were allowed to without penalty last year and this year. Not a huge mortgage but considering savings rate versus mortgage rate it made sense to put the money we weren't spending on commuting and going out into the mortgage overpayment fund.t hitting the fan then they were quite silly. We have the safety net that should we need the money back we can get it.
ro250 said:
cossy400 said:
I personally think that if people didnt wake up when we were in lockdown and pay down as much as they could in the event of even more st hitting the fan then they were quite silly.
I agree completely. We paid off the 10% extra we were allowed to without penalty last year and this year. Not a huge mortgage but considering savings rate versus mortgage rate it made sense to put the money we weren't spending on commuting and going out into the mortgage overpayment fund.t hitting the fan then they were quite silly. We have the safety net that should we need the money back we can get it.
ro250 said:
I agree completely. We paid off the 10% extra we were allowed to without penalty last year and this year. Not a huge mortgage but considering savings rate versus mortgage rate it made sense to put the money we weren't spending on commuting and going out into the mortgage overpayment fund.
We have the safety net that should we need the money back we can get it.
How can you get it back? Unless it's remortgage time, which is on the banks timeline, not yours...We have the safety net that should we need the money back we can get it.
Even in the last 2 months most equity funds (certainly LifeStrategy Vanguard and Fundsmith) have returned more than what a reasonable mortgage costs in a year, and its almost instant access (obviously has the risk of going down, but so does your house)...I don't get what paying a lump off a cheap mortgage achieves apart from hugely reducing your flexibility, and also costing you money assuming you look beyond an instant access savings account.
okgo said:
ro250 said:
I agree completely. We paid off the 10% extra we were allowed to without penalty last year and this year. Not a huge mortgage but considering savings rate versus mortgage rate it made sense to put the money we weren't spending on commuting and going out into the mortgage overpayment fund.
We have the safety net that should we need the money back we can get it.
How can you get it back? Unless it's remortgage time, which is on the banks timeline, not yours...We have the safety net that should we need the money back we can get it.
Even in the last 2 months most equity funds (certainly LifeStrategy Vanguard and Fundsmith) have returned more than what a reasonable mortgage costs in a year, and its almost instant access (obviously has the risk of going down, but so does your house)...I don't get what paying a lump off a cheap mortgage achieves apart from hugely reducing your flexibility, and also costing you money assuming you look beyond an instant access savings account.
I'm certainly risk averse so my savings are in an instant access account which a couple of years ago was OK. So for me the comparison is get less than half a percent in savings against paying 2% on mortgage.
ro250 said:
Our mortgage overpayments go into an overpayment fund which I thought was quite common? My understanding was we can take money back from that fund whenever we want.
That's certainly the case for an offset mortgage. On regular mortgages I think the way it usually works is that you can take future payment holidays up to the value of past overpayments. If, say, you dump £10k in, you can only get that back £1k at a time (or whatever your monthly payment is).NickCQ said:
ro250 said:
Our mortgage overpayments go into an overpayment fund which I thought was quite common? My understanding was we can take money back from that fund whenever we want.
That's certainly the case for an offset mortgage. On regular mortgages I think the way it usually works is that you can take future payment holidays up to the value of past overpayments. If, say, you dump £10k in, you can only get that back £1k at a time (or whatever your monthly payment is).When our current fixed deal ends we'll have the option to use the overpayment fund against the outstanding balance (and then won't be able to withdraw it).
ro250 said:
It's a repayment mortgage with Co-operative and I'm pretty sure, having had a conversation with them last year, that I can access my overpayment fund at any time. When our current fixed deal ends we'll have the option to use the overpayment fund against the outstanding balance (and then won't be able to withdraw it).
Interesting, just looked this up and as you say Co-op appears to have some option where you can pay into what appears to be an offset account sitting alongside the mortgage, even if you don't have an "offset mortgage". AFAIK that's not the case for the majority of High St mortgages unless you specifically opt for an offset.NickCQ said:
ro250 said:
It's a repayment mortgage with Co-operative and I'm pretty sure, having had a conversation with them last year, that I can access my overpayment fund at any time. When our current fixed deal ends we'll have the option to use the overpayment fund against the outstanding balance (and then won't be able to withdraw it).
Interesting, just looked this up and as you say Co-op appears to have some option where you can pay into what appears to be an offset account sitting alongside the mortgage, even if you don't have an "offset mortgage". AFAIK that's not the case for the majority of High St mortgages unless you specifically opt for an offset.okgo said:
How can you get it back? Unless it's remortgage time, which is on the banks timeline, not yours...
Even in the last 2 months most equity funds (certainly LifeStrategy Vanguard and Fundsmith) have returned more than what a reasonable mortgage costs in a year, and its almost instant access (obviously has the risk of going down, but so does your house)...I don't get what paying a lump off a cheap mortgage achieves apart from hugely reducing your flexibility, and also costing you money assuming you look beyond an instant access savings account.
Well my first ever S&S payment went in this month and so far, I’d have been marginally better putting it into the mortgage.Even in the last 2 months most equity funds (certainly LifeStrategy Vanguard and Fundsmith) have returned more than what a reasonable mortgage costs in a year, and its almost instant access (obviously has the risk of going down, but so does your house)...I don't get what paying a lump off a cheap mortgage achieves apart from hugely reducing your flexibility, and also costing you money assuming you look beyond an instant access savings account.
It’s about time there was a crash to make people realise things can go down as well as up.
In relation to all of the comments above saying that i was wrong to say that £700/m isn't life changing...
Firstly, i can assure you that i am not particularly wealthy and yes, i agree for anyone (including us) it is a substantial amount of money, but i stil stand by my comment that it isn't life changing.
As some people have mentioned above, yes, you might be able to go on a couple of extra flash holidays per year, or you might be able to put the extra into a savings account, but in both of these situations, your life is relatively the same. You will still do the same things day in, day out and still go to work etc, or you might have a bit more cash saved in the bank (which will be eroded over time by inflation), but life will generally be the same.
Yes, in theory some people could quit work when they have paid there mortgage off, however, there are some people out there (like me )who actually enjoy what they do.
We lost more than that per month when we had kids and one of us had to finish work, we initially had to make a few changes but i would say our life is broadly the same.
It's more about money management.
Firstly, i can assure you that i am not particularly wealthy and yes, i agree for anyone (including us) it is a substantial amount of money, but i stil stand by my comment that it isn't life changing.
As some people have mentioned above, yes, you might be able to go on a couple of extra flash holidays per year, or you might be able to put the extra into a savings account, but in both of these situations, your life is relatively the same. You will still do the same things day in, day out and still go to work etc, or you might have a bit more cash saved in the bank (which will be eroded over time by inflation), but life will generally be the same.
Yes, in theory some people could quit work when they have paid there mortgage off, however, there are some people out there (like me )who actually enjoy what they do.
We lost more than that per month when we had kids and one of us had to finish work, we initially had to make a few changes but i would say our life is broadly the same.
It's more about money management.
NickCQ said:
For a non-offset mortgage, if you are worried about cashflow it is better to keep the cash rather than dump it into a mortgage where you can't get it back. In March and April last year we advised businesses in our portfolio to draw down on any available liquidity rather than repay, the logic being that the extra few % of interest is a cheap insurance policy against a cashflow crisis.
Not the same thought process for a business as an individual...especially when you're talking about the roof over their family's head.Gassing Station | Finance | Top of Page | What's New | My Stuff