Has anyone paid off their mortgage quickly?

Has anyone here worked hard at paying their mortgage off early and if so have you any advice on how you did it? I hate the thought of all the interest building over 35years and would prefer to be frugal and get it paid off as soon as we can or at least make a good dent in it. We are on two average salaries so maybe 70k between the two of us max yearly income.

tedpan

julie101 wrote:

Has anyone here worked hard at paying their mortgage off early and if so have you any advice on how you did it? I hate the thought of all the interest building over 35years and would prefer to be frugal and get it paid off as soon as we can or at least make a good dent in it. We are on two average salaries so maybe 70k between the two of us max yearly income.

Definitely switch down to a 20 year. The interest on 35 is just nuts.

tedpan

tedpan wrote: »

Definitely switch down to a 20 year. The interest on 35 is just nuts.

Ok thank you great advice these are the common sense things I need help with thank you. We are working on getting house finished first so can afford to bring down from 35 years in about 2/3 years time once we have house to a liveable standard.

Mrs OBumble

Yes.

By using a revolving credit mortgage. Not available here unfortunately.

tedpan

tedpan wrote: »

Definitely switch down to a 20 year. The interest on 35 is just nuts.

Definitely don't switch to a 20 year. Keep the 35 year and over pay on it at the rate of a 20 year mortgage but if something unforeseen happens you can always fall back to the lower repayment of the 35 year mortgage.

Always take a mortgage for the longest term they will give but overpay on it at what every amount you can comfortabley do.

tedpan

Caroline Attractive Goat wrote:

Definitely don't switch to a 20 year. Keep the 35 year and over pay on it at the rate of a 20 year mortgage but if something unforeseen happens you can always fall back to the lower repayment of the 35 year mortgage.

You can change the term during the mortgage if you face issues. The difference in the 15 years is usually not as large on a monthly basis than people think. And the difference in interest is usually well over 50k

how.gareth

Kaiya Victorious Unicorn wrote: »

Definitely don't switch to a 20 year. Keep the 35 year and over pay on it at the rate of a 20 year mortgage but if something unforeseen happens you can always fall back to the lower repayment of the 35 year mortgage.

Always take a mortgage for the longest term they will give but overpay on it at what every amount you can comfortabley do.

Sorry for the thread hijak! If I was paying a thousand a month for a 30 year mortgage how much extra would I need to pay per month to reduce it by 5 years?

Kaiya Victorious Unicorn

Kaiya Victorious Unicorn wrote: »

Definitely don't switch to a 20 year. Keep the 35 year and over pay on it at the rate of a 20 year mortgage but if something unforeseen happens you can always fall back to the lower repayment of the 35 year mortgage.

Always take a mortgage for the longest term they will give but overpay on it at what every amount you can comfortabley do.

Ok does this work out better than reducing to 35 year? And if we reduced to 20 year and tried to overpay would that be better again? I'm really bad with money just want to get a handle on things as it's stressful not having a plan for someone like me who worries!

tedpan

julie101 wrote:

Ok does this work out better than reducing to 35 year? And if we reduced to 20 year and tried to overpay would that be better again? I'm really bad with money just want to get a handle on things as it's stressful not having a plan for someone like me who worries!

I'd suggest speaking to the bank. Arrange a meeting to look at options. They will confirm whether or not you can change the term and how they receive additional payments. It won't take long to weigh up the options.

tedpan

tedpan wrote: »

I'd suggest speaking to the bank. Arrange a meeting to look at options. They will confirm whether or not you can change the term and how they receive additional payments. It won't take long to weigh up the options.

We definitely won't be able to make any more payments for the next 2/3 years until house is fully finished but I know when we got mortgage they said would be no issue with changing term or overpaying.

Sausage dog

Be careful if changing term from 35 to 20 years. Don't assume it will be just as easy to revert to a longer term in the future if needed.

Sausage dog

Sausage dog wrote: »

Be careful if changing term from 35 to 20 years. Don't assume it will be just as easy to revert to a longer term in the future if needed.

Thanks sausage dog. Keeping the longer term and overpaying might be the safest option. Now just to figure out how to save money so that we can overpay!!

bmwguy

Would you consider building a fund through saving? If you can get a return in excess of the mortgage rate and don't mind investing it's an option. I have one going now a few years and it's returning well in excess of the 3% interest rate I have on the mortgage. So I think my money is better off going there. I reckon in 12/15 years time it will be enough to clear my mortgage if the markets go well meaning a 35 year mortgage will be cleared in 18 years or so.

brendan86

how.gareth wrote: »

Sorry for the thread hijak! If I was paying a thousand a month for a 30 year mortgage how much extra would I need to pay per month to reduce it by 5 years?

Its hard to do calculations without your interest rate and mortgage value but I've put together one for a example

200,000 mortgage @ 3.5% over 30 years

Your payment is 900euro per month

Now if you want to reduce mortgage by 5 years you have 200,000 mortgage @ 3.5% over 25 years

Your payment is 1,000 per month

You save 23,000euro interest over the term of your mortgage by paying the extra 100per month for 25 years

Mickiemcfist

bmwguy wrote: »

Would you consider building a fund through saving? If you can get a return in excess of the mortgage rate and don't mind investing it's an option. I have one going now a few years and it's returning well in excess of the 3% interest rate I have on the mortgage. So I think my money is better off going there. I reckon in 12/15 years time it will be enough to clear my mortgage if the markets go well meaning a 35 year mortgage will be cleared in 18 years or so.

Depends on your attitude to risk, I'd advise only investing what you can afford to lose. A lot of ifs & buts in your assumption.

randomname2005

Sausage dog wrote: »

Be careful if changing term from 35 to 20 years. Don't assume it will be just as easy to revert to a longer term in the future if needed.

This.

Also, depending on institution and mortgage type you may have a penalty if you change. For example, some institutions offering a percentage back in cash locked in a time before you could change. If you are on a fixed rate you will pay a penalty for paying off early.

You can also do lump sum and monthly overpayment contributions on some mortgages. See which works best for you.

We were in the same boat, long mortgage, don't want to be paying for every and had work to do on the house. Once settled we added a little to the monthly payment. Won't reduce the term massively but every little helps.

https://m.drcalculator.com/mortgage/

Is a good resource and will show you what even a few quid now will do later

Magilla Gorilla

Deleted User wrote: »

Has anyone here worked hard at paying their mortgage off early and if so have you any advice on how you did it? I hate the thought of all the interest building over 35years and would prefer to be frugal and get it paid off as soon as we can or at least make a good dent in it. We are on two average salaries so maybe 70k between the two of us max yearly income.

Enter your current arrangements in to one of the many mortgage calculators
available. Then have a go at varying some or all of the variables (interest rate, extra payments, shorter term etc.). It's a real eye-opener....

wordofwarning

bmwguy wrote: »

Would you consider building a fund through saving? If you can get a return in excess of the mortgage rate and don't mind investing it's an option. I have one going now a few years and it's returning well in excess of the 3% interest rate I have on the mortgage. So I think my money is better off going there. I reckon in 12/15 years time it will be enough to clear my mortgage if the markets go well meaning a 35 year mortgage will be cleared in 18 years or so.

Except CGT is 33%. If your mortgage is 4%, you need to be returning 5.32% per year to make it on par with overpaying your mortgage. There is the risk the market tanks like in 2008 and there is several years of your investment being significantly less if you choose to pay off your mortgage.

Look at this way, paying off your mortgage is 5.32% risk free return.

LimeFruitGum

Once the house is done up, do you plan to rent out a room for a year and put that money towards the overpayment fund? (But keep paying your mortgage as usual)

I would have gone for a 10 year mortgage if I could, but I didn't qualify at the time. I'm on a 15 year term instead.
I started to save a monthly sum into a savings account last summer and the plan is to push that into the mortgage once a year, as I want to keep the breakage fees down. My annual saving lump sum should equal 6+/- months mortgage payments.

I would question with the bank if there is some clause about having to stick to the length of the agreed term, even if you're paying tiny monthly amounts for the last remaining years. IIRC, I have such a clause with my mortgage.

James Forde

Is it better to over pay monthly or save up a lump sum and pay a large amount off the mortgage?

CelticRambler

Paid mine off (really) early, but that was accompanied by a complete change of lifestyle - sold a charming but totally unsuitable-for-family house in a rising market, paid off the 27 years remaining in full, then bought another much more suitable house for cash ... in a completely different country.

Now fifteen years mortgage-free and it's been great.

brendan86

James Forde wrote: »

Is it better to over pay monthly or save up a lump sum and pay a large amount off the mortgage?

Pay monthly, the sooner you pay them the less interest your charged.. Considering you have enough in savings for a rainy day keep putting the extra to mortgage monthly what your comfortable with.

There is no point paying extra to a mortgage if you have other loans, you should pay off any personal loans, car loans, credit cards, credit union first as all them are a higher %

tedpan

Sausage dog wrote:

Be careful if changing term from 35 to 20 years. Don't assume it will be just as easy to revert to a longer term in the future if needed.

As I said, just confirm the implications with the lender. Simple

Ok all excellent advice. For anyone who did pay it off early they either overpaid/had a short term. Any other advice? Were you very frugal paying it intensively for the first while or is it possible to do with an ok standard of living? I hate feeling weighed down by debt so want to make good choices.

PokeHerKing

tedpan wrote:

As I said, just confirm the implications with the lender. Simple

You can't confirm that with them. They'll reduce it no bother.

Then in 5 years time if you wanted to increase the term it would be a new mortgage application.

Never reduce the term. It makes zero sense. There is literally no upside to it.

Tigger

bmwguy wrote: »

Would you consider building a fund through saving? If you can get a return in excess of the mortgage rate and don't mind investing it's an option. I have one going now a few years and it's returning well in excess of the 3% interest rate I have on the mortgage. So I think my money is better off going there. I reckon in 12/15 years time it will be enough to clear my mortgage if the markets go well meaning a 35 year mortgage will be cleared in 18 years or so.

Even after dirt ? What percentage are you getting ?

Beanybabog

Those cashback deals that tie you into not moving bank were deemed contrary to some EU competition regulation. I don't know the ins and out of the case but I know its unenforceable because I got one last year with PTSB at 4.2% and when I saw the article in the paper about the bank of Ireland cashback clawback being unenforceable we decide to try move. We paid a bit off to get us to 80% LTV (were nearly there anyway with CB rules) and got a 3.1% rate elsewhere. We remortgaged within the first year and knocked 5 years and €200 a month off by moving.

Edit- sorry I should have quoted! I was referring to randomname2005's post

Samuel T. Cogley

PokeHerKing wrote: »

You can't confirm that with them. They'll reduce it no bother.

Then in 5 years time if you wanted to increase the term it would be a new mortgage application.

Never reduce the term. It makes zero sense. There is literally no upside to it.

+1 on this and what been said above, you never know what's down the line, keep the longer term and simply over pay. I don't see it happening but it's not unimaginable that attitudes to repossessions might change and policies regarding terms can certainly change. What happens if you're on a 20 year term and the interest rates jumps to 10% and you're refused an increase in term. Okay granted if that happens we're all fecked but I just don't see the upside to a reduced term, other than forcing you to pay each month - which you can do yourself.

tedpan

tedpan wrote: »

You can change the term during the mortgage if you face issues. The difference in the 15 years is usually not as large on a monthly basis than people think. And the difference in interest is usually well over 50k

Overpaying on the 35 year mortgage is the same as reducing the term without the risk of being stuck on the higher repayment.

Shapey Fiend

Everybody is forgetting to mention the most crucial aspect of paying off a mortgage.

You must never, ever, eat smashed avocado toast or drink takeaway coffees.

Shapey Fiend

Shapey Fiend wrote: »

Everybody is forgetting to mention the most crucial aspect of paying off a mortgage.

You must never, ever, eat smashed avocado toast or drink takeaway coffees.

Sorted I'll have it paid off in no time if I cut back on those!!