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Kryton I am rubbish at maths and even worse at modelling but I put a piss-poor hamfisted attempt at a spreadsheet together which I will email you now. It's a bit inaccurate but does allow you to play around with it. Usual warnings apply about using at your own risk etc.
A genuine question because I'm open to different opinions - Why do people buy houses
youve got a clear and deliberate benefit from renting ie living in a place you couldnt afford to rent that enhances qualityof life. Renting in the UK is expensive and usually not cost effective. When I first bought 10yrs ago the mortgage repayments were the same as the rent I'd been paying for a similar property, and my repayments have gone down since (with interest rates and reduction in amount owed) rather than up to match inflation/landlord demands. After 25yrs (actually will be far less due to overpayments) I own my house and could live 'rent free', you will own nothing and have to continue paying that expense for as long as you need a roof over your head.
Horses for courses but for many in the UK renting does not make economic sense, I understand othe European countries have a far more affordable rental market. My house choice isnt about quality of life (location, views etc) it is somewhere to sleep and store my kit when I'm not working or doing something interesting.
Always been mortgage free, never had, never will 🙂
Same as kevevs really, just another world, that we know is there but is not part of ours!
i too get pleasure in the cycle, no cares in the world when i'm on my bike 🙂
Have the money to pay them (more than 1 house) off now, but interest rate is so low, base +0.5 that the money is better off where it is.
At current run rate, about 8 years time so 51 or 52. Depends of course how investments go - I have an interest only mortgage and then a number of investments that I started before I even had a house that will go to pay it off. they don't look great currently of course (although they do cover ca half of the lump sum) but maybe in a few years time we'll be back to boom and they'll be worth a lot more.
Unknowns of course are whether I'll stay in this job (doubtful; hate it with a vengeance currently); whether we move (or extend in some way); and ultimately when my folks peg out, how much will their place be worth and will much have been spent on residential care or the like.
There's too many unknowns in there to worry about. My wife's best friend had breast cancer 2 years ago and after a series of dizzy spells, went to see the docs last week, ending up with a trip under blue lights to St Georges in Tooting last night. She's going to be operated on tomorrow to remove a brain tumour. That might be any of us in a year's time, so I intend to spend what i feel worthwhile to enjoy life, and put the rest into the mortgage / savings, and if that means it takes a few years more to pay it off, so be it.
On the pessimistic side, my wife works in a pension section, it is amazing how many best laid plans come apart due to ill health.
On the basis of this life about getting the right mix
My mates and my boss are the same .......my boss actually commented the other week "i dont know how you can afford that house(although he has no idea what i paid) on your salary" ..... urm cause i dont smoke , drink much , drive a flash car , have kids ,go on holiday to 5 star resorts in exotic places , drive to work.
nothing wrong with either choice if it makes [b]you[/b] happy. I have loads of mates/colleagues (on similar salary) with bigger houses and much bigger mortgages who often ask "I dont know how you can afford 3 or 4 foreign holidays a year!". We choose to live in a pokey 2 bed but in the last 12 months have dived and trekked in Thailand, biked in India, biked in Switzerland and dived in Egypt. I am happy with my choice and hope they are happy with theirs.
ononeorange - Member
Kryton I am rubbish at maths and even worse at modelling but I put a piss-poor hamfisted attempt at a spreadsheet together which I will email you now. It's a bit inaccurate but does allow you to play around with it. Usual warnings apply about using at your own risk etc.
Cheers OOO. Now done (approx). So, I need and extra £200pm to reduce it by 5 years which is my aim, and £400 to reduce it by 10 years which would see me mortgage free by 55.
Off I go then, slightly hampered by the fact Mrs K wants our last forseeable holiday in Barbados in 2013 as its the year before Jnr no 1 goes to school.
crashtestmonkey
I understand its a personal choice- as i said above we aint going without to appease the mortgage - rode in les arc last year and all going well california next year !
Currently it's looking like 59.
Wish I'd not checked now 🙁
39 and mortgage free as of Sept this year, I have never remortgaged or moved. 2yrs ago I took out a 2nd mortgage on a 2nd property buy to let as a retirement nest egg, that's planned to be paid off in 18 years but i'll shift most of that down to 10.
The other thing is to consider the capital in your property if you have a mortgage as well. So although I have a small mortgage that will last until I'm 65 I'm sitting on over 200k in capital. I could sell and buy outright, but I'm happy with things as they are.
see i think its a fallacy to think about the "capital" in your house .... the market could crash tomorrow.
the only capital you have in this life is what you have in your hand , not an arbitrary figure made up by estate agents to squeeze more money out of you.
@trail_rat over the last few 100 years that view in the UK would have seen you lose out massively over any medium or long term period.
yes maybe but tomorrow is the start of the next 100 years ....
then again ive never been good as selling stuff on.
As soon as I get one, I'll let y'all know...
Not read the whole thread but...
Has anyone considered not paying it off early?
Or even releasing capital when it gets close?
Has anyone considered not paying it off early?
My mortgage still has 32 years to go. I put what I should/could overpay into sharesaves. Currently sitting on a 110% return, the "profit" I will take off the mortgage in a lump sum (or offset)
ononeorange - Member
Kryton I am rubbish at maths and even worse at modelling but I put a piss-poor hamfisted attempt at a spreadsheet together
I'm good at this stuff, have mailed this to many on here before:
https://docs.google.com/spreadsheet/ccc?key=0Al-Bq4gR-Hn7dHFmcjN6LVk2MmR3UlRMdWxsa1o2dUE
Hopefully in 4 years time, when we're both 60, which isn't that bad seeing as we both had to re-start our lives after divorces!
In a reasonable position now though, 3 houses & 3 mortgages, all being steadily paid off. (unless it all goes PROPER tits up)
We just got our first mortgage this year.
I am 25 and my fiance is 24. Currently have £119k left to pay over 29.5 years!!
I think that may change substantially in years to come but its a start!
I only have had repayment mortgages, as advised by solicitor (an uncle) and I've never fretted that I was mis-advised..
Had been lucky in parts certainly; but also by having a two-bed flat from the start, and letting the spare room/s, was able to sit tight through ups and downs, and then to move to a house - but only after marriage and having been in the flat for about 11/12 years.
But yes, approaching 50 this year and have been mortgage free for about 7/8 years - aided by use of redundancy cash. But that is in part by starting earlier than many, possibly.
I think it's very hard to access the capital in a house's value as you need somewhere to live. Downsizing will probably only let you access a fraction as the house price differences in an area aren't that big (compared to the total capital).
mudshark - Member
ononeorange - Member
Kryton I am rubbish at maths and even worse at modelling but I put a piss-poor hamfisted attempt at a spreadsheet together
I'm good at this stuff, have mailed this to many on here before:https://docs.google.com/spreadsheet/ccc?key=0Al-Bq4gR-Hn7dHFmcjN6LVk2MmR3UlRMdWxsa1o2dUE
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Cheers Mudshark - yours and OOO's numbers aren't far apart - I appreciate the help! However, how does the model change if I pay the overpayment as a lump sum at the end of the year?
ie, rather than a £200 overpayment per month, what if its a £2400 over payment at the end of each year - on the 12th month?
We just got our first mortgage this year.I am 25 and my fiance is 24. Currently have £119k left to pay over 29.5 years!!
I think that may change substantially in years to come but its a start!
Well generally, salaries rise quite a lot in your 30s in professions, so the debt gets proportionally smaller by quite a bit over the years, although most people keep trading up to maintain the same debt level (which seems mad to me).
However, how does the model change if I pay the overpayment as a lump sum at the end of the year?
Just added an annual o/payment field for you
Cheers mudshark.
So, annually the same x 12 monthly figures make no difference to the number of years remaining, but do make a difference to the final amount paid (capital +interest). How so the former, becuase, paying (for example) £200 in monthly 1,2,3 etc is reducing an amount of interest calculated up to 12 months prior to the annual payment - yet proves more expensive?
Or is the difference of (in this example) £200 per month over a year really inconsequential in the scheme of things?
The reason I ask, is that my mortgage company will only make a term reduction if lump sums are paid each january, and charge a £30 admin fee to do so, whereas a [i]monthly[/i] overpayment is used to reduce the ongoing monthly payments the day after its paid - ie no reduction in term.
So my thought is (again using my example) is to stick £200 per month in an ISA / savings account, let it earn 3% and then use it for the January payment - My goal being term reduction.
Does my plan sound overly bonkers?
I'm not sure I follow you. Paying 200/month is slightly better than 2400/year right? I've fiddled a bit with it and the figures look sensible to me but you think not? The paid off yrs box indicates a shorter term for monthly payments and the total paid figures are lower too are they not?
Your plan is OK though I'd be annoyed at the fee! The thing is why not do the monthly overpayment? OK the amount you have to pay each month is reduced rather than the duration reduced but surely if you overpay each month you'll be lowering what you owe until eventually you've paid off the debt which will be at an earlier date than initially planned. The lender will have to stop taking your money then as you owe nothing. Do this and save £30pa IMO.
See mud shark, the mortgage company ate clever. They won't process a capital repayment monthly unless its over £500 per month.
They will accept lower payments, but they are "stored" until January and processed as a single annual payment. Therefore unless I could afford £500pm I may as well earn the interest rather than them.
There is of course nothing stopping me paying every 2 or 3 months of course as I reach the £500 mark, to get the capital down sooner.
Double post
i made sure i wasnt falling into that trap when i bought.
the nature of my work meeds fairly regular bonus payments if i opt to work abroad so wanted to make sure i could capitalise on the bonus rather than frittering it (all) away on bikes and land rovers !
To add and get back to the thread rather than my own circumstances a bit, , I'm indecisive about the "pay mortgage early" option as a full time commitment or "have fun now" as others have mentioned)
I guess my view of paying off annually is that money is always there for the optional luxuries - ie bike frame snaps or TV blows up - but when I get to jan and don't need it, into the mortgage it goes.
Of course if any of you are lucky enough to have a tracker mortgage with a rate of around .1 above base or even 1.0 above base, then the last thing you want to be doing at the moment is paying any capital off your loan.
The other thing about mortgages is that whilst its nice to think about paying them off.....its far better to extend your mortgage to enable you to move up or extend etc. As sure as eggs is eggs, property will rise in value in the long term, so if you keep pushing on, you will (when you retire) potentially have a house that you can recoup a chunk of capital and downsize.
Unlike a pension, that enables you to only take a 25% of the fund in cash, leaving the rest to the vagaries of how much life you actually have to live, you will have complete control of that cash.
So...as long as you can afford the payments keep borrowing!
Oh well, that's a big part of why I went for an offset mortgage - 0.49% tracker over base rate.
So...as long as you can afford the payments keep borrowing!
Thing is you never know if you can afford the payments. Recessions / unemployment / ill-health can all come along and wreck any well intentioned plans. Personally I'm very happy being debt free and intend to stay that way!
Indeed, if you are on a low interest rate then paying it off is silly; far better to save or invest the money.
We have been in a position to pay it off for years now, but it's offset against savings so costs nothing, and better that we have the money than the bank. It'll be gone anyway in 4 years when I'm 43.
Good jobs and no kids helps, but mainly it's been luck. The house we owned between '97 and '05 went up from 80k to 200k simply due to the economy. Had we not owned a property at that time it would have been much more expensive to get going on the property ladder.
[i]Thing is you never know if you can afford the payments. Recessions / unemployment / ill-health can all come along and wreck any well intentioned plans. Personally I'm very happy being debt free and intend to stay that way![/i]
Very true...and if thats what works for you then thats fine. However, if you want to get anywhere in life you have to take a few risks. Its amazing how recessions/unemployment can all be dealt with if you have the right mindset.....but, at the end of the day if it really does all go tits up, you can always sell the house!
Indeed, if you are on a low interest rate then paying it off is silly; far better to save or invest the money.
We have been in a position to pay it off for years now, but it's offset against savings so costs nothing, and better that we have the money than the bank. Payments are fairly minimal so actually won't greatly improve our lives when we arent making them anyway. It'll be gone anyway in 4 years when I'm 43.
Good jobs and no kids helps, but mainly it's been luck. The house we owned between '97 and '05 went up from 80k to 200k simply due to the economy. Had we not owned a property at that time it would have been much more expensive to get going on the property ladder.
but, at the end of the day if it really does all go tits up, you can always sell the house!
Try doing that in Ireland at the moment.