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

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  • Forget it until remortgage time

    18 33.33%
  • Overpay

    17 31.48%
  • Invest / save

    3 5.56%
  • Balance overpaying and investing

    3 5.56%
  • Offset

    5 9.26%
  • Mortgage free and luvin' it

    8 14.81%
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Thread: Mortgages: Pay down / Save / Offset?

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  1. #1
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    Mortgages: Pay down / Save / Offset?

    Nosey post :D... A little premature in asking but... Wondering what the NL massive's general opinions are on their mortgage. Thanks to the build ours is bigger than I'd like which makes me more risk adverse (and think about it more than I'd like). Next year we'll remortgage, off the build-mortgage to a regular mortgage and am starting to look at figures and scenarios for what best to do:

    Forget it - Look at it when it's time to re-mortage and try to forget it until then

    Overpay - Reduce interest costs and exposure to interest rate rises.

    Save / Invest - Flexible and longer term could work out better (e.g keep ISA allowance long after the mortgage is done + compound interest). However, requires taking risks which may mean losing money and then still having to pay a higher level of interest on the mortgage than if simply overpaying.

    Balance Overpay and Investing - Save 50%, overpay 50%.

    Offset - In theory the best of both worlds. In reality a flexible way to reduce interest payments shorter term if you can't commit to overpaying or saving. Others love this, not sure it's for me.
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  2. #2
    Regular Nige's Avatar
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    I`m a big believer in paying off my loans wherever possible. I don`t owe anything apart from my Mortgage. That`s now down to just under 4,000. I`ve always overpaid and with the interest rates being so low, it made a lot of sense to do that for me.

    I`m sure there could be some other long term financial investments I could look at, but I had a mortgage when the interest rates were at 15% (Yes I`m that old ) and ever since have avoided loans / credit wherever possible. Obviously this isn`t possible with a house for most of us and as mine was a self build, finances were tight after the we moved in but once we sorted ourselves out we started overpaying and it`ll be paid of in under a year now.

    Then no matter what happens, the house is ours to sell if necessary. Perhaps it`s a somewhat old fashioned approach, but it`s what we`ve done and I`m very happy to have gone that route

  3. #3
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    Unless you can pretty much guarantee your investments will outperform paying down your debts, just pay down you debts.

    Like Nige, I have very little personal debt. My mortgage, which I'm more than halfway to paying off. Should be gone in less than 5 years, which will mean we're debt free when I'm 45.
    I have one other personal loan I took out to start a business, which will be paid off in the next 6 months.
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  4. #4
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    I am thinking of taking out a mortgage (at 2%) in order to invest the funds (currently getting 7-10% on my investments). In theory it's the right thing to do but psychologically it is nice to not have a mortgage.

    In your position I would forget it until it's time to do something and then I'd go for an offset which gives you maximum flexibility to both enjoy life and be risk adverse as and when you feel like it.
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  5. #5
    Regular Kev_G's Avatar
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    My dad over paid his mortgage and once he finally cleared it many moons ago kept putting the same money away each month then went and bought there place in france cash. My parents sacrificed a fair bit saving and yes we have had a great lifestyle with recent events you never know whats around the corner you still need to have a comfortable happy life and not worry about mortgages etc.

    I was saving since I was 16 for my mortgage every spare penny went into a account, birthday money, xmas money etc and never touched it regardless but thats all ill say on the matter
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  6. #6
    Regular Rich Bernard's Avatar
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    We overpay and offset on our current mortgage, gives us the best of both worlds, in that we can access some cash quickly if we need to.

    Because of the way I work, it suits me that the bank should always have the first charge over our main house. Saves a potential business venture being secured on the house.

    At some point in the next 18 months we'll remortgage, draw down a chuck of equity and drop it straight into some residential and commercial properties. Our house will hit its maximum value for location at that point, and we may as well make the money work for us in other ways.
    tbc

  7. #7
    Regular simonsaunders's Avatar
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    I like fixed rate, repayment mortgages. Personal thing.

    We keep ours very manageable, but choose to over pay by monthly standing order. Works for us!

    The only advice I have is to play the game when remortgaging. Don't assume a valuation, see what they suggest. We were pleasantly surprised and that helps improve the LTV. We also paid a chunk down (an extra 2k from memory) when remortgaging to push us into the next LTV catagory. I think between the higher valuation and the extra payment, we knocked 0.5% off the interest rate.

    Locked in for 3 years, I think.
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  8. #8
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    If you can offset, at a decent value, do that. You keep any overpayments available for anything going wrong, but they're still acting to reduce your mortgage. Then when you remortgage the funds are there to reduce the value.
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  9. #9
    as long as your mortgage company recalculates over repayments instantly over paying is worth doing always adjust term not payment too, if not, pay into an ISA / savings and then use that to pay annually just before the recalculation, that way you gain some meagre interest instead of letting your mortgage company have the benefit.

  10. #10
    Regular Andrewt's Avatar
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    I think its best to reduce the biggest loan in your life as quickly as possible, therefore have overpaid any spare finances i have in the last 6 years. I go to quite extreme measures in that whatever is left in the account at the end of the month I overpay on top of the monthly overpayment i've already made. Sometimes its hundreds sometimes its tens of pounds, however do that monthly for 5 years at 20 per month in loose change and it amounts to 1250 odd. Thats a whole month on my mortgage!

    Using this approach means I will be mortgage free in a nice house in Surrey by the time i'm 37 currently.

    Rates are so low, it seems pointless fixing it at the moment as i don't owe too much as the difference of saving 0.5% versus the aggravation of setting up a mortgage losing flexibility isn't worth the 15 saving per month!

    My standard mortgage after the fixed term i had 10 years ago turns out is very flexible, so happy to keep it for the next few years.

    I also invest using a firm called Nutmeg which i find very good, but not massive amounts as i prefer to pay overpay in preference of the risk this type of investing incurs.
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  11. #11
    We fixed ours for 10 years last year. We prefer to know how much we have to pay and as long as it's at a rate we can well afford we are happy. I'd like to say we overpay, but we don't. There is always something like a holiday, Rally, or something else which looks like much more fun. I don't consider it to be a bad thing.

    The other thing worth considering and this may sound mercenary, is that we live in an age when many more people are home owners, than there used to be. That means our parents are likely to own their own homes and the natural progression is that as their children, we will benefit, at some point. Then again, our children will benefit from us....That will likely clear any outstanding mortgage and ensure things are in place for you to look after your children, when the time comes.

    As someone said earlier in the thread, don't over stretch yourself now, trying to pay something off, at the detriment of your most active years. Enjoy them while you can.
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  12. #12
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    Quote Originally Posted by Gary Kinghorn View Post

    The other thing worth considering and this may sound mercenary, is that we live in an age when many more people are home owners, than there used to be. That means our parents are likely to own their own homes and the natural progression is that as their children, we will benefit, at some point. Then again, our children will benefit from us....That will likely clear any outstanding mortgage and ensure things are in place for you to look after your children, when the time comes.
    Not mercenary at all but as we all live longer, we may well be well into our 60s or older before getting our hands on an inheritance.
    Personally we have relied on no one, had no help over the years etc and haven't factored in any inheritance to pay off a mortgage. Any inheritance will 99% likely go straight to the kids as I'd rather they get a leg up in their 20s/30s than we benefitting from 50k in our late 50s or older...when we have adequate provision. (The whole 'my house is worth xxx' annoys the hell out of me as all it does is push the prices up to a point where future generations...my kids and grandkids...will struggle to afford to buy one)

    Oh and back on topic... we have tarted the mortgages over the years and will be paid off within the next 9 mths when the penalty for the one we currently have is over.
    Lots of good advice..way better than I could give.
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  13. #13
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    Did the overpay thing as much as possible, like Andrew says. My tick is in the last box. :-)
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  14. #14
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    Ours is up for renewal. An offset looks a good move for us, but need to do more research.
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  15. #15
    This topic is on my mind more and more. We fixed our mortgage when we moved 3.5 years ago, and I want to be able to extend the house a little - the planning will take some time, so the last 18mths of the fix will be key for us to figure out what we're able to do - as a positive, the prices have moved a bit here since we bough, which will help with the LTV calculations at least.

    The mortgage adviser told me last summer that I should buy the biggest house that I could afford, as its the single biggest tax free investment that I would ever make - whilst thats true, and I would love the space to not live in each others pockets when my kids are undoubtedly still living at home in their 20/30's, think we'd all benefit from having the nice holidays in the next 15 odd years, and generally enjoying life. I couldn't imagine living a life all about my house and mortgage, so I'll continue to balance the house and life as best I can - I don't want to look back when I'm retired, and wish I'd done things, I have enough regret as it is

  16. #16
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    Quote Originally Posted by ChrisP View Post
    The mortgage adviser told me last summer that I should buy the biggest house that I could afford, as its the single biggest tax free investment that I would ever make - whilst thats true, and I would love the space to not live in each others pockets when my kids are undoubtedly still living at home in their 20/30's, think we'd all benefit from having the nice holidays in the next 15 odd years, and generally enjoying life.
    I agree with you, we could have afforded more house, but I wanted a comfortable payment and bills which I have got, the house suits me, yes I would like a bigger house but with that comes more mortgage and bills, of which I can spend on fun stuff that I actually enjoy! When I am 50 maybe I will wish I had bought the bigger house as I would be seeing the benefit then, but for now I would rather enjoy the money and spend it on memories :)
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  17. #17
    Regular Peach-uk's Avatar
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    Quote Originally Posted by simonsaunders View Post
    Ours is up for renewal. An offset looks a good move for us, but need to do more research.
    After several years moving around trying several brokers i now have an incredible mortgage broker. He finds deals like no other and is a proper mortgage geek ( top bloke too). Let me know if you want his details.

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