View Poll Results: What's the approach to your mortgage?

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  • Forget it until remortgage time

    15 32.61%
  • Overpay

    14 30.43%
  • Invest / save

    3 6.52%
  • Balance overpaying and investing

    3 6.52%
  • Offset

    5 10.87%
  • Mortgage free and luvin' it

    6 13.04%
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Thread: Mortgages: Pay down / Save / Offset?

  1. #51
    I'm on a variable rate, total ****ing con, I called them every time the interest rate fell and asked what they were doing. "Our board of directors have decided no change will be made" Despite the new rate of mortgages they offer going down. You can bet your bollocks the first time it goes up by 1/4 of a % they stick it up. Their advice change to one of their new mortgages. That no doubt involves a large amount of "charges and costs"

    Thankfully I have no charges for early repayment or over payments so I can over pay or pay it off in full and change to a different mortgage company as and when required.

    Similar to what Nick said above I could have borrowed about £250K and moved myself into a fancy house ( This is the North) , Instead I bought a house for £125K and that means I have enough cash to live life. I'm not playing the whole I'll borrow everything I can and crippling myself because my aim is to owe nothing to those bent ****ing banker wankers ASAP. This is why we're all ****ed.
    Last edited by Weeman; 13-03-2017 at 10:48 AM.
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  2. #52
    Quote Originally Posted by Steve C View Post
    We moved my in-laws house into my wife's name a couple of years' ago for this very reason.

    IIRC different local authorities have different time spans they will look back through but 7-10 yrs is the norm.
    Look back for what purpose?

    You can give your property away. So that it's an arm's length transaction, the parents should pay rent to the new owner (be it the trust, or kids)

    If you just transfer the house, and it's deemed to have been done to avoid social care costs, then they can come back and screw you for it


    From an inheritance tax perspective, a gift of property is chargeable for up to 7 years


    Slightly OT but what annoys me the most is that people don't have a choice. Say you get sick and want to end your own life in your own time... you can't

    So someone deems you to have to live in a home and the quality of life lowers as time progresses, with the money you have saved and may want to give to your loved ones being sucked up and generating profits

    All because we can't agree on a sensible way for people to control their own ways of passing on

  3. #53
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    Quote Originally Posted by Steve C View Post
    We moved my in-laws house into my wife's name a couple of years' ago for this very reason.

    IIRC different local authorities have different time spans they will look back through but 7-10 yrs is the norm.
    The homework for my area shows the time span as three years for social care and seven years for inheritance tax.
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  4. #54
    Has Laura looked at putting you in a home already? I thought you'd have been good for a few more years TBH, Must be all the tweed.
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  5. #55
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    Quote Originally Posted by Ollie_247 View Post
    Interesting thread this.


    Our Fix 2 year deal ends this June, We did intend of paying money in when we could but have enjoy our self to much so we are looking to fix for 5 years, But I've just got wind that our next door neighbour will be selling up and moving north to retire.


    Now there house is same size as ours but is detached and has land on the side to build an extension on.


    I've got a mad idea of buying and keeping our current house as well. To do this means asked dad for some help.


    I'm extremely lucky to be able to ask for help from him but as a family we worked hard to get mum and dad back to comfortable after property deal fell though and cost dad a lot of money a few years ago.


    The house we have just finished was a hard slog but loved every minute of it.
    funny my dad was on about doing this with his next door. He was about to look into buying it and making a larger space for both houses, also removing the idiots who rent it and treat the whole road as a car dumping ground while they are not taxed or insured.

    Sadly never happened but maybe worth it in the long run
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  6. #56
    Quote Originally Posted by leavingeasy View Post
    The homework for my area shows the time span as three years for social care and seven years for inheritance tax.
    7 years IHT is correct, but not sure on the 3 year thing... assuming we're talking about the same clause, which is "deliberate deprivation of capital"

    https://www.health-ni.gov.uk/sites/d...-crag-2015.pdf

    Can't be bothered reading it all but the timing thing seems to be less of a rule and more about a judgement based on a number of factors ?

  7. #57
    Quote Originally Posted by Weeman View Post
    I'm on a variable rate, total ****ing con, I called them every time the interest rate fell and asked what they were doing. "Our board of directors have decided no change will be made" Despite the new rate of mortgages they offer going down. You can bet your bollocks the first time it goes up by 1/4 of a % they stick it up. Their advice change to one of their new mortgages. That no doubt involves a large amount of "charges and costs"

    Thankfully I have no charges for early repayment or over payments so I can over pay or pay it off in full and change to a different mortgage company as and when required.

    Similar to what Nick said above I could have borrowed about £250K and moved myself into a fancy house ( This is the North) , Instead I bought a house for £125K and that means I have enough cash to live life. I'm not playing the whole I'll borrow everything I can and crippling myself because my aim is to owe nothing to those bent ****ing banker wankers ASAP. This is why we're all ****ed.
    You want a tracker mortgage.

  8. #58
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    I was talking about the deliberate deprivation of assets, per the Care Act 2014.

    I can't see a specific time frame mentioned in the Act - it just says that the local authority can reinstate assets for your financial assessment, if it considers they were given away with an intention for it to help you avoid or reduce paying care fees.

    The only guidance I can see is that if you give away assets whilst you are in good health you should be okay but otherwise the longer the gap between depriving yourself of the assets and the need for a care home, the better.
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  9. #59
    When I went through it a couple of months back the question was always asked.....

    'Who owns the house'?

    'My mother, but it is trusted to her son - my brother'

    'How long ago did this occur?'

    'Close to 20 years'

    'Ok, no problem'.

    So they do look at this stuff. The early you get it in place the more chance you have of it not being investigated, or taken. That's my take on it anyway
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  10. #60
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    Just got our mortgage info back from our mortgage broker and looking to reduce out years we are currently at 33 and looking at it we are able to get it down to 27 without a massive cost works out about £80 a month extra.


    Now do we fix to 5 years or 3 years.


    I would say we would look to move in the next 5 years to jump but if something in the village came up sooner I would go for that. seeing it that will cause me a issues.
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  11. #61
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    ^^^
    As long as you are going up the ladder then you should be able to keep the existing mortgage & just borrow the extra needed on a new agreement with the lender.

    Also, can't you just overpay (if mortgage allows) the £80/month & then you gave flexibility to increase / decrease as needed. Term still comes down the same (this is what we do)
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  12. #62
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    Found this really helpful when comparing, Ollie - https://www.drcalculator.com/mortgage/ - Lets you see the interest curves and what overpayments vs. shorter term looks like.

    If you have a reasonable cash buffer / emergency savings I'd be inclined to shorten the term as much as possible. The savings, even with low-interest rates, at the start of the re-mortgage will be worth it. Where you draw the line is obviously a personal decision based on a million and one confusing factors they don't prepare you for in school. You either study, learn the hardway, get lucky, get a good broker, or combine any of the aforementioned.

    Edit: Keeping the interest line below the principal at the start is where the saving is. The problems are opportunity or over committing. Could the overpayment / money being used to clear the mortgage make more money doing other things. Flexibility is expensive, as Simon says keeping a longer term and overpaying is a cheap way to get flexibility. To cover all sides of the argument and help less :D.
    Last edited by Brando; 27-03-2017 at 02:20 PM.
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  13. #63
    Quote Originally Posted by Ollie_247 View Post
    Just got our mortgage info back from our mortgage broker and looking to reduce out years we are currently at 33 and looking at it we are able to get it down to 27 without a massive cost works out about £80 a month extra.


    Now do we fix to 5 years or 3 years.


    I would say we would look to move in the next 5 years to jump but if something in the village came up sooner I would go for that. seeing it that will cause me a issues.
    Watch out for early repayment fees if you go for five years and want out early. Ours are about £7k but we have no intention of moving. Of course if you stay with the same mortgage company you may be ok. We would be with Santander.
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  14. #64
    Regular Floyd's Avatar
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    Santander charge for early repayment as Gary says. They also charge you to overpay monthly - they say you are changing the terms and you have to pay a one of arrangement fee. You can pay off up to 10% per year without cost, to reduce term or monthly amount.
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  15. #65
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    1 year in! Time for a review...

    Slightly gutted we missed the 1.29% 5-year deals. However, we couldn't afford to hang on any longer. Each month on the old mortgage would have cost and the rates were never guaranteed to drop (even if it did look most likely to occur). Overall, pleased we moved and fixed for 5 years. 1.29% would have been amazing! 1.97% has helped a lot, not ungrateful for it.

    I've failed to add much to the emergency fund. Fern arrived, babies cost, and I took the decision pension & investments were doing better than expected. Therefore, it was more 'effective' to put 'free cash' into them than our emergency fund. This is all automated and therefore stops it ever appearing as 'real' money in our accounts.

    Same for overpayment; 5%+ returns for low-risk pension & investments vs. saving 1.97% by overpaying, not including discounts and tax advantages that further sway the argument (and are harder to calculate).

    The above may bite me in the backside. There is a chance of some more lucrative crapitalist investing at a higher risk in 2018. A small emergency fund makes that feel a lot more stressful and therefore harder to do/less likely/riskier. Time will tell. I don't want to be caught swimming naked...

    "Only when the tide goes out do you discover who's been swimming naked." - Warren Buffett

    For LISA/Nutmeg, the money is there but I can't quite bring myself to do it, yet. It's nearly a year since I've bought a car (I'm clucking, the 5 series is feeling old + lack of Caterham ownership is troubling me) vs. keeping the money closer to hand in our emergency fund vs. Cash LISA vs. Nutmeg LISA vs. Nutmeg ISA vs. spend it on the house and accelerate all the things that need doing. Nowhere near as stressful as sorting the mortgage! TBC...

    In other financially bad news: The Garden requires some attention, more snagging and general fixing needs to occur, and Fern's arrival means we need to bring forward our kitchen improvement plans. The current setup doesn't have enough storage for open plan living with kids #FirstWorldProblems. I should finish the build blog and update my build thread!!!!!! D'oh :(

    In the balance, I can just about afford track days and maybe the odd race. Trying to balance the "you're a long time dead" argument with living, and this is my one expensive vice. Paraphrasing Karan; car related hobbies are an expensive curse. Crossing everything 2018 is kind and things keep progressing/wheels keep turning. This being an adult shiz isn't as fun as spending monies on cars and going racing #WhyDidn'tIGoRacingSooner!!!!!!!!!! #WhyDidn'tIDoMoreDNDays!!!!!!!

    Things would be easier and less stressful without Brexit and the uncertainty hanging over us. There will always be something and that's far out of my control. It's helping by keeping me cautious and doing my best to avoid over-committing. Acutely aware that we can't just sell our place. It's irreplaceable and that comes with additional responsibility/pressure as well as the benefits.
    Last edited by Brando; 08-01-2018 at 03:35 PM.
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  16. #66
    We've just fixed for 5 years as well. I resisted the 10 year fix as the cost against peace of mind wasn't there. That said, with 3 kids (2 of which go full time in nursery shortly) I needed the guarantee of the same payment for the foreseeable. I wasn't brave enough for a 2 or 3 year fixed. I can't remember the rate but it's cheaper p/month than the outgoing 2 yr fixed we were on.

    Regarding savings, my VX is there for an emergency. It's a fairly stable investment and it's value is creeping up slowly. Should anything happen that requires a lump sum, it'll be the first thing to go. I always figure you can have money in the bank that sits there earning a little bit, or a toy at home that you can get some enjoyment out of. As long as you buy sensibly it's fairly safe.

    (#manmaths)

  17. #67
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    Quote Originally Posted by jon_r View Post
    We've just fixed for 5 years as well. I resisted the 10 year fix as the cost against peace of mind wasn't there. That said, with 3 kids (2 of which go full time in nursery shortly) I needed the guarantee of the same payment for the foreseeable. I wasn't brave enough for a 2 or 3 year fixed. I can't remember the rate but it's cheaper p/month than the outgoing 2 yr fixed we were on.

    Regarding savings, my VX is there for an emergency. It's a fairly stable investment and it's value is creeping up slowly. Should anything happen that requires a lump sum, it'll be the first thing to go. I always figure you can have money in the bank that sits there earning a little bit, or a toy at home that you can get some enjoyment out of. As long as you buy sensibly it's fairly safe.

    (#manmaths)

    #manmaths alert: I was thinking the same with the Caterham idea. Well, I wasn't, I was lying to myself that it makes sense so I can just get one. When the last crash occurred the pound was hit harder than the euro and lots of tidy S1 Elises went to France/Europe, which kept their pound value high. It's a much harder sell to SC when bits of the house 'need' attention :(.
    Last edited by Brando; 08-01-2018 at 03:40 PM.
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  18. #68
    Luckily, with a new build, I don't have to worry about that too much. There's always the dreaded credit card should anything need sorting immediately. Life is too short to worry about a boiler going wrong in my opinion, though I can appreciate others (probably sensibly) think different.

    We're having to budget £1200 - £1600 a month for nursery bills come April. I'm dreading that.

  19. #69
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    I canít remember what I want for in the end, either term or rate. From memory the term was longer than my normal 2 years and the rate a bit lower than before. Fixed rate capital repayment.

    I did the maths on an offset mortgage. What threw it off was our plan to do the extension and having that gobble our savings. With that money gone, the offset looked more expensive. Next time will probably be different.

    My wife is really keen to get us mortgage free. I think I have a plan to make that happen for my mid-40s. Or I can do it by the time Iím 50 and have a nice Porsche.

  20. #70
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    I've just taken out a cheap mortgage (1.85%, 5 yrs).....and bought a Porsche. 😆
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  21. #71
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    Quote Originally Posted by jon_r View Post

    We're having to budget £1200 - £1600 a month for nursery bills come April. I'm dreading that.
    Bloody hell


    Whilst the current low interest rates are fantastic for mortgages they bloody useless for saving.

    I know, it's a very fortunate position to be in and at times overpaying had to be throttled back a little but overall it was absolutely worth it.


    Like many things, it's always a balance between living for today and planning for the future.

    I now find myself focusing on pensions and my plans for retirement in 6 years. But that's not really for discussion in this thread.

  22. #72
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    Quote Originally Posted by Nige View Post
    Like many things, it's always a balance between living for today and planning for the future.
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  23. #73
    We fixed for 10 years last year. It was all about stability of monthly payments for us. We may win, we may lose, but we won't be worrying about an increase, which was the biggest factor when we made our decision.
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  24. #74
    Regular Tim in Yorkshire's Avatar
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    I need to remortgage myself by the end of Feb, so just looking into options now...

    Edit: the mortgage isn't against me, it's against the house.
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  25. #75
    I'm beginning to think you are considering selling yourself
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  26. #76
    Quote Originally Posted by Brando View Post
    Same for overpayment; 5%+ returns for low-risk pension & investments vs. saving 1.97% by overpaying, not including discounts and tax advantages that further sway the argument (and are harder to calculate).
    Just remember itís not 1.97% you save... itís all the potential future increases youíre protected against

    If rates went to 8% in 10 years, every bit youíve reduced from the principal will suddenly make a much bigger difference

  27. #77
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    Only 10%. Pffft. My first mortgage was 15%.

  28. #78
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    Quote Originally Posted by hobbit View Post
    Just remember it’s not 1.97% you save... it’s all the potential future increases you’re protected against

    If rates went to 8% in 10 years, every bit you’ve reduced from the principal will suddenly make a much bigger difference
    Agreed, but this was a primary driver in getting a fixed mortgage. While inflation is > 2% having a 1.97% mortgage sees us benefiting from inflation. And, the way we've invested we could pull some money out of the 5% saving to reduce the principal when we remortgage. If our mortgage rate switches to be > inflation and > ROI. The only reasons I see to reduce the principal, in the present market, are:

    1) Emotional; I'd be happier with it less than a certain figure for no other reason that lack of financial maturity. In this present climate the bigger the mortgage the bigger the win. However, that's offset by the risk you mention, that it can't stay this way forever.

    2) Earnings mulitplyer; at renewal in 4 years time, I can just afford the remortgage solo. That means a minimum of 4 years pressure to keep earning at the rate I do, or more.


    Quote Originally Posted by Nige View Post
    Only 10%. Pffft. My first mortgage was 15%.
    I've stress tested to 9%, after that things get pretty shitty, fast. My parents paid 18%. We'd have to reduce the principal to stand any chance of eating anything other than beans on toast. As shitty as it sounds reading it back, I figure a lot of people would be in a far worse state and therefore worrying past 9% has diminishing returns on my sanity.
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  29. #79
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    Out of interest what type of product are you using for the 5% secure(ish) saving? This has got me thinking...
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  30. #80
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    I think there would be huge problems if the rates even hit 5% in the near future, for a lot of people.

    I remember 15% mortgage interest rates. Eye watering.
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  31. #81
    Quote Originally Posted by Floyd View Post
    I think there would be huge problems if the rates even hit 5% in the near future, for a lot of people.

    I remember 15% mortgage interest rates. Eye watering.
    Me too, it stung a bit for sure. Even with a small sub £100k mortgage it seemed like my payments were going up by £50 every month or two.

    Hence a ten year fixed for me.
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  32. #82
    Quote Originally Posted by Brando View Post
    Agreed, but this was a primary driver in getting a fixed mortgage. While inflation is > 2% having a 1.97% mortgage sees us benefiting from inflation.
    Does it? :-s

    Inflation can be cut multiple ways, and is simply a figure to try and calculate the general cost of day to day living

    So if inflation is higher, a lower mortgage sees you benefit from it... how? Earnings don't track inflation, for example, so it's not like you're out-earning the interest

    Unless you mean that with high inflation, interest rates should stay low. Which is generally true, except has no bearing on what I was saying - which is simply that the higher the principal, the more interest you'll be paying irrespective of the rate....


    As a rule of thumb, on a 30 year mortgage period and an average of 5%, you pay back twice the original debt

    (I fully appreciate 5% hasn't been representative of recent interest rates, but this illustrates the point I'm making because interest and savings is all relative)

    So paying off an extra £500 per month means you're saving yourself an extra £500 in the long run

    There's no investment product out there that provides a 100% return...


    In my mind it's always better to pay off a mortgage because, by definition, there should be nothing better than you can invest in that allows you to earn more interest in the *long* term. It may be possible, for example, to have fixed for a long period at 2% on your mortgage, and at some point in that period you could get a savings product that would give you more than 2% (after tax)... so your interest on debt is lower than interest on savings

    However..

    If you have a mortgage that you can overpay, it's better to reduce the principal as much as possible and save on compound interest at a later point, on a lower figure

  33. #83
    Regular Tim in Yorkshire's Avatar
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    I've just realized that overpaying vs increasing pension contributions (in the 40%tax bracket) is an interesting question.

    E.g pay off £3k pa extra of the mortgage (at ~2%)

    or

    additional £5k pa into the pension pot (growing at ??%)

    Access to funds, present and future interest rates and investment return rates all makes this a little interesting, and something I've only just started to pay some attention to...
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  34. #84
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    Quote Originally Posted by Tim in Yorkshire View Post
    I've just realized that overpaying vs increasing pension contributions (in the 40%tax bracket) is an interesting question.

    E.g pay off £3k pa extra of the mortgage (at ~2%)

    or

    additional £5k pa into the pension pot (growing at ??%)

    Access to funds, present and future interest rates and investment return rates all makes this a little interesting, and something I've only just started to pay some attention to...
    Also bear in mind pension payments are before tax, so you do save in that respect.

    It certainly isn`t a black or white decision.

  35. #85
    Regular Tim in Yorkshire's Avatar
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    That was the £3k (after tax) for the mortgage vs £5k (before 40% tax) for the pension. So same amount from gross salary roughly (although with salary sacrifice there's some NIC advantages too).
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  36. #86
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    Neil, Yes/No... Inflation is a relative thing that erodes value in line with the increased cost of living: thanks to things like increased import costs, increased taxes, increased labour costs, quantitative easing etc, etc, etc.

    If you have £0 savings, 3% inflation has no effect on £0. You'll only feel its effects in the increased cost of living.

    If you have £300,000 under a mattress, 3% inflation means the relative value becomes £291k next year.

    If you have £300,000 in a 1% interest bank account, 3% inflation means the relative value of that next year becomes £294k.

    If you have -£300,000 on a 2% mortgage, then 3% inflation means your debt's relative value becomes -£291k and your cost is £6k (less inflation's impact and however your mortgage interest is calculated [daily, monthly, yearly...] with your repayments).

    Inflation > Interest isn't good for governments or savers, it's not a long-term move for anyone. People quickly tire of their hard-earned achieving less and their wealth eroding. However, for people with big mortgages it's not the end of the world. As the above kind of proves.

    Ok so, the above uses a simplified point in time model, applying interest and inflation yearly (not realistic). But you know all of that, and your point is that clearing money off a mortgage factually saves you actual money. While investing in something that beats inflation, while keeping a debt that benefits from inflation>interest, is speculating and relative. 300k is 300k regardless of inflation. The mortgage interest cost is also the cost. Which I agree with, but still feel like my strategy is the right level of risk vs. reward for us. The risk being a higher principal and egg on my face if investments fail VS. a point in time where our investments will earn more than our mortgage interest costs and we net gain. That's the dream.

    Edit: Ideally inflation will revert to being lower than interest rates when I have my assets > my mortgage :D (not including the value of the house itself because we need somewhere to live and it has a mortgage against it)
    Last edited by Brando; 10-01-2018 at 04:59 PM.
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  37. #87
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    If I pay more into my work pension through salary sacrifice, then it is worth more. There is also tax relief for higher rate tax payers via tax returns or something.

    I too am in a quandary over clearing mortgage vs additional pension contributions.
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  38. #88
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    Quote Originally Posted by hobbit View Post
    If you have a mortgage that you can overpay, it's better to reduce the principal as much as possible and save on compound interest at a later point, on a lower figure
    Which is exactly what Maddie and I are attempting to do.

    That and restore some 205's and hope I can sell them on again
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  39. #89
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    Tim, paying attention is key. As is sorting your priorities and tolerance to risk. A good IFA is ideal if you don't know where to start. It's interesting seeing different tolerances to risk and ideas.

    There is an opportunity cost to paying a mortgage down and locking money away in a pension. But there are upside to both: Mortgage free sooner, less risk, less interest cost, tax advantages of pensions + additional contributions from employers...

    There isn't a right or wrong, just lots of options with different compromises and paths to reach retirement. If we make it that far :D.

    Edit: There are restrictions and pitfalls to avoid too e.g. early repayment charges, pension limits (after which you get HAMMERED for tax).
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  40. #90
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    Quote Originally Posted by Darren Langeveld View Post
    Which is exactly what Maddie and I are attempting to do.

    That and restore some 205's and hope I can sell them on again
    At 25+ years old when they can all go to the US, you're going to make a killing. I wish I was braver and had more storage :D.
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  41. #91
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    Sorry, Tim. That sounded patronising. I didnít mean it that way! Iím learning on this topic and still feel ill informed. A good IFA can offer advice, I canít/am not advising anyone to do anything. My prattlings are only meant as discussion and airing my thoughts / worries. Ideally, getting others to share theirs and discuss.
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  42. #92
    What about mortgaging as means of investment? The right property might appreciate more per annum than a net take home salary while being a ďhomeĒ. If I could be mortgage free I think I would still trade up as an investment.

  43. #93
    Regular Tim in Yorkshire's Avatar
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    Quote Originally Posted by Brando View Post
    Sorry, Tim. That sounded patronising. I didnít mean it that way!
    Don't worry it wasn't taken that way. It's just I've only started to think through the pros and cons. All decisions will be made with a full regard to the roll of the dice.
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  44. #94
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    By all accounts the housing market is about to have a pause. On paper many of us have done well but how do we benefit from the gain without downsizing or moving to Norfolk?
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  45. #95
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    Sandringham is expensive too

  46. #96
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    Given how cheap mortgages currently are, I don't know why anyone would pay off their mortgage early, apart from for emotional reasons.

    If you don't mind taking an average amount of risk, there are products out there that return 7-10% with 3-6 yr maturities. And that's before you look at the tax efficient products such as pension, VCT, EIS. Up the risk and 15% returns are typical. The only caveat I see with this stuff is making sure you invest at the right time - which arguably isn't now. So, in the meantime, you can invest in some low risk products such as peer-to-peer mortgage lending, as below.

    Rather than paying £20k off your mortgage (saving you £400 pa @ 2%) why not chuck the funds into an ISA peer-to-peer mortgage product which will make you £850 pa tax-free. This is low risk stuff imo because it is investing in UK bricks and mortar and spread across multiple properties with a max loan-to-value of 65%.

    PS, this is not investment advice.
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    When rates were 5-6% then I always used to pay extra each month, as savings ISA's and such were always 1-2% below what I was paying. Helped me pay off my first 3 houses many years early.

    However once rates dropped to their historic lows I saw little point in paying off early, when there's so many investments that can out perform mortgage rates. Currently paying base rate + 1.3% for the duration of the mortgage (30 years) can always get out and go to a fixed rate if I see things creeping up. However after 18 years on tracker mortgages I've found I've been paying a fair bit less overall than typical fixed rates. You pay for that peace of mind for fixing rates. I've been a risk taker and I think it's paid off.

    Currently stashing any spare cash into buy to let flats to help towards an early retirement plan.

  48. #98
    Quote Originally Posted by Floyd View Post
    By all accounts the housing market is about to have a pause. On paper many of us have done well but how do we benefit from the gain without downsizing or moving to Norfolk?
    We do if we need paid care in later life and we don't want what the NHS has to offer.

    Or the kids want to sell up and go and live in Thailand.
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  49. #99
    Quote Originally Posted by Brando View Post
    Neil, Yes/No... Inflation is a relative thing that erodes value in line with the increased cost of living: thanks to things like increased import costs, increased taxes, increased labour costs, quantitative easing etc, etc, etc.

    If you have £0 savings, 3% inflation has no effect on £0. You'll only feel its effects in the increased cost of living.

    If you have £300,000 under a mattress, 3% inflation means the relative value becomes £291k next year.

    If you have £300,000 in a 1% interest bank account, 3% inflation means the relative value of that next year becomes £294k.

    If you have -£300,000 on a 2% mortgage, then 3% inflation means your debt's relative value becomes -£291k and your cost is £6k (less inflation's impact and however your mortgage interest is calculated [daily, monthly, yearly...] with your repayments).
    Um.... no lol

    You canít revalue a debt based on inflation. And actually itís the opposite

    Liabilities increase under inflation, because the value of the underlying currency paying it back has reduced

    I donít mean this in a patronising manner, but basing any decision based on how you think inflation works is totally invalid because youíre trying to evaluate the future based on an historical measure ... and getting it wrong :wink

    Steve - you are also looking at it the wrong way round. So youíre saying if interest rates were 10% you would pay the mortgage off early?

    The logic behind your thinking is totally flawed in economic terms... interest rates are used as a way of manipulating disposable income and spending

    If interest rates are low theyíre low to encourage spending

    Thatís the EXACT time you pay down your debts

    If interest rates are higher you, by the very economic definition, wouldnít have the money to pay it down


    Mortgage debt = high because rates are low

    Do you think the:

    - debt available
    - value of underlying assets

    Would be the same if rates were 10%?

    Nooooooo.... asset values would tumble and thus mortgages would be lower

    The reason we are all utterly ****ed - and I mean utterly, utterly ****ed - is because mortgages are once again at a multiple of earnings that is ridiculous. They are being inflated because they are being secured against houses parents / grandparents etc own

    Itís a very sensitive economy at the moment

    So thatís why you pay the mortgage down when rates are lower

  50. #100
    Quote Originally Posted by Rich. View Post
    Currently stashing any spare cash into buy to let flats to help towards an early retirement plan.
    Whatís the LTV of your portfolio if i wipe 30% off the value of your assets?

    Iíd be careful about investing in property right now... though I have been saying that for years

    Thereís a reason why speculative stuff like bitcoins is occurring... investors are running out of places to make stupid gains and the fact theyíre speculating on crypto currency should have us more concerned than we seemingly at

    I think the next downward dip in the economic cycle could be more severe than many people can ride

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