Clearing your mortgage early

Someday

Love to hear from people that have a plan to clear it early, around 10 years!

Also people that have completed this on 200k+ homes?

The_Morrigan

What exactly do you want to hear? This is a discussion site, some insight, opinion or a question is required from the OP.

Doom

How can anyone forcast paying something off in 10yrs....

L1011

Doom wrote: »

How can anyone forcast paying something off in 10yrs....

The first property I bid on (which then got dumped to an auction and sold for less than my bid, idiot seller thinking that rapid interest meant there was major interest) I would have had paid off in 10 years, although the bank were only willing to talk 15 year term mortgages.

There's not much you can do to plan this unless you actually have the income for it, regardless of the price. Planning doesn't get around that issue.

NIMAN

You could live like a miser, buy nothing that isn't really necessary to live, and save like a champion, and put every cent toward your mortgage, and you'll get it down that way.

Sounds like no fun though.

I have made a decent dent in my mortgage through overpayments and if things continue at the same pace, would hope to have it cleared before the end of the decade. Was meant to run until 2025.

But as someone said, things can change, so its only a hope for now.

riclad

EVEN an extra 100 euros, a month is a good idea if you can afford it,as it,ll clear the loan faster ,reduce your total interest bill.
IF you can do so without reducing your quality of life .

Someday

Yes, having no life is not worth it but as someone said an extra 100 a month can take a few years off your mortgage.

tigershould

You don't necessarily have to live like a miser if you have the disposable income.

First thing is that you need to be in a variable rate since there are normally fees for repaying a fixed early.

Secondly you need to weigh up if the extra payments could be earning more for you elsewhere (saving/shares etc).

Clearing a €250k 35yrs mortgage in 20yrs could save something like €60k in interest at current low interest rates.

pwurple

We managed it for a 25 year mortgage over ten years. Had the very good fortune of a very low tracker mortgage (ECB+0.5%), and a bank person who didn't mind us doing transfers often to bring down the term. We didn't start on that rate mind you. We had three mortgages during that time, kept moving for better rates as the LTV dropped. You have to remember as well that we bought pre-boom, so the value of the house kept rising. We used that ltv to leverage better rates every few years. Not going to be straightforward for anyone who bought at the peak.



Worked our asses off too. Took any chance at overtime, did night classes to improve career prospects and applied for every promotion going. Negotiated hard during salary reviews. Didn't have children at the time. Any salary increase went straight into mortgage. I wouldn't say we are misers, we like the nice things in life. Travel, good food, art, wine. But we combine those with ... I guess, interests that are not 'spendy'. I like to grow fruit and veg, and we love to cook. We travel, but would mostly camp on holiday with maybe one or two nights in a 5 star to break it up. We took some holidays in france and got our wine there. Never used an offy in ireland. Didn't change the car during that time. Never ran up a CC debt. Kept a sharp eye on insurance renewals and services (gas, electricity, bins).

Tl;dr
It's doable if you are lucky (keep your jobs going well, stay healthy, keep your relationship solid, have a good interest rate) and you stay focussed on it.

johndaman66

tigershould wrote: »

You don't necessarily have to live like a miser if you have the disposable income.

First thing is that you need to be in a variable rate since there are normally fees for repaying a fixed early.

Secondly you need to weigh up if the extra payments could be earning more for you elsewhere (saving/shares etc)....

To add to that list I'd say thirdly be wise about your money and how you spend it. That doesn't mean you need to live like a bum or miser but just exercise some cop on when it comes to your money/ finances.

Changing the car every year is costly, who really cares if its a 131 or 151 on the driveway.

Shop around for motor/ home insurance etc. Won't take up too much of your time and you could most likely save loads. Its probably amazing how much people are loosing because out of laziness they just stay with the same provider and are probably being fleeced as a result.

Same goes for shopping in general. I do sometimes be amazed by people with an over-flowing trolley or even 2 of groceries in Dunnes or Tesco. Would be saying to myself if they split their shopping out a bit between a number of shops and availed of their offers along the way they'd probably save big bucks (I appreciate this is not always that easy in country areas or where transport is a problem).

Same goes for the impulse buying in Centra's/ Topaz etc... €2 for the likes of a tiny carton of grapes/ pineapple/ apple slices in Centra with barely a bite in it...thats just stupid and they've most likely lost a lot of their goodness after being sliced so long by the time you get to eat them anyway.

Things like buying Christmas presents on Amazon etc as opposed to a brick and mortar shop can save a fortune too.

Loads of other ways you can save money thats just the tip of the ice-berg. Overall your quality of living need not take a hit. You just need to be smarter about your money and how you spend it.

Sorry for the bit of a rant. Its just it saddens how people are so down-right careless with their money and then wonder why they're broke.

NIMAN

The BBC had a show on a couple of years back with a few examples of folk who tried to clear their mortgage in 2 years, but it was crazy stuff.

As well as being canny with their spending, they also did stuff like sing in pubs at night to earn extra money, sign up to be artists models etc etc. Those sort of things.

Call me old fashioned, but I'd rather pay it longer and do more normal things, like just save.

Supercell

We are paying an extra 200 a month into our mortgage which should take it down from 25 years to 19 and save us a lot of interest payments.

tigershould

Another tip: if the interest rate falls (for all you tracker holders) continue paying the original amount and not the lower adjusted repayment.

And make sure any overpayments are off the principle (not the interest)

I feel there is a lot of satisfaction from paying off ones mortgage and not having any debts.

Someday

So Tips so Far

1. Shop around and use those savings to pay off the mortgage
2. If you can pay an extra amount each month do
3. If the Interest goes down, keep paying the same amount
4. When you get the LTV down, shop around for a better rate and pay the same amount
5. Live a life and don't live like a Miser!

I am getting a new Mortgage soon and Working out how I can pay it in around 15 years or less.

pwurple

There are absolutely loads of self-help type books full of tips on this Someday. Check your local library.

Should I Pay Off My Mortgage Early? - by Dale Maley

Own Your Home-Own Your Life! Beat the Bankers and Credit Card Companies at their Own Game, Pay Your Mortgage off 15 Years Early and Retire Debt Free - by Brian Mehmen, M. J. Durkin

Become Totally Debt-Free in Five Years or Less: Pay Off Your Mortgage, Car, Credit Cards - by Gwendolyn D. Gabriel, Diana Kennedy (Editor), Raphael Elizalde (Illustrator), Chandra Sparks Taylor (Editor)

Untapped Riches: Never Pay Off Your Mortgage -- and Other Surprising Secrets for Building Wealth - by Susan Cutaia, Robert Slater, Robert Slater (With), Anthony Cutaia

Your Mortgage and How to Pay It Off in 5 Years - by Anita Bell

The Wall Street Journal Guide to Understanding Personal Finance: Mortgages, Banking, Taxes, Investing, Financial Planning, Credit - by Kenneth M. Morris, Virginia B. Morris

If I have a lump sum is it better to pay off part of my mortgage in one go or use it to over pay the mortgage on a monthly basis

Zymurgist

How exactly does a person go about overpaying?

Do you have to replace the direct debit for your mortgage with a standing order for a higher value? Or do you contact the mortagage company and ask that they seek an additional 100 euro per month as part of their direct debit call?

pwurple

Zymurgist wrote: »

How exactly does a person go about overpaying?

Do you have to replace the direct debit for your mortgage with a standing order for a higher value? Or do you contact the mortagage company and ask that they seek an additional 100 euro per month as part of their direct debit call?

There's a couple of ways... you can change the DD to a higher amount. Or you can do ad-hoc transfers.

I set up the mortgage account as a beneficiary from my online banking, and transferred money into it as I had it. I made sure that the bank knew in advance though that I was going to do this, and it was to reduce the TERM not the repayment amount. What can automatically happen, is they take your overpayment off the next deduction. Got to give them the heads up in advance what you want to happen.

pwurple

Deleted User wrote: »

If I have a lump sum is it better to pay off part of my mortgage in one go or use it to over pay the mortgage on a monthly basis

Depends on what else is the money doing, your interest rate on the deposits and on the mortgage... any penalties, your terms.

tigershould

Zymurgist wrote: »

How exactly does a person go about overpaying?

Do you have to replace the direct debit for your mortgage with a standing order for a higher value? Or do you contact the mortagage company and ask that they seek an additional 100 euro per month as part of their direct debit call?

I wrote to my bank and said make my repayments x every month. They adjusted the dd amount and wrote back advising the new term based on current interest rates.

The following year I decided I wanted to save the extra an return to my original amount. Sent them another letter adn they adjuste again.

Having saved the amount for te second year I decided that after capital gains on my savings there wasnt a massive difference so I wrote back and told the bank to raise it to x again.

tigershould

Deleted User wrote: »

If I have a lump sum is it better to pay off part of my mortgage in one go or use it to over pay the mortgage on a monthly basis

IMO if you don't need the money then pay off in lump sum. It will reduce te amount of interest you are paying straight away.

Eg if you had 20k then 4% of 200k is more interest than 4% of 180k

Supercell

Zymurgist wrote: »

How exactly does a person go about overpaying?

Do you have to replace the direct debit for your mortgage with a standing order for a higher value? Or do you contact the mortagage company and ask that they seek an additional 100 euro per month as part of their direct debit call?

It depends on the bank I think.
We are with BOI and have a standard variable rate mortgage.
I emailed them and asked how to do it and if there was any fines etc for doing so.
They said its no problem.
I pay into a different holding account with my mortgage account number as the transaction reference. Its then moved automatically into the mortgage account. Why I cant pay into the mortgage account directly is beyond me, but there you go.
I could pay it as a lump sum or as I have chosen to do as a standing order which goes out the 1st of every month.
Very easy to do, I'd recommend emailing them and keeping the email so you have it in writing from them.