Hi I just had to message you and let you know that your brilliant video gave me a kick up the backside to do what I did. Today I rang my mortgage company and set up to over pay an extra £150 a mth. This has brought my mortgage from 18 years to 12. Which blew me away. I am also planning on paying lump sums if and when I can. Again if it wasn’t for this very informative video I wouldn’t have done it. Thanks again. Louis
AA51FER thank you so much for that kind comment. I will keep making them then as I absolutely agree with you and I want to change that personally in the U.K. :)
I did this for years, also every time I remortgaged, say when I had 19 years left I took out the new mortgage over 17 years and so on. I'm due to be mortgage free in Feb 2021.
@@learnsomethingneweveryday1539 When you remortgage and see a better Rate, you see monthly payments go down. Thats what banks do to entice us in. The right course for you is to ALWAYS reduce your TERM rather than reduce PAYMENT. Santander told me I have to do a brand new application to reduce the term (they don't like it as they earn less Interest from you). Unbelievable.
@@learnsomethingneweveryday1539 I've been doing the same thing. I only lock into mortgage lenders for 2 years. But each time I remortgage I knock a year or two off of the total term. You'll find the payments remain similar anyway. I'm not disciplined enough to trust myself to make overpayments. By the way, paying off the mortgage early is not the only strategy. If you have enough equity in your home. Interest rates are so low now it's worth releasing that and getting a buy-to-let with all the equity. That buy-to-let will also grow in value very quickly and can be used for another buy-to-let and so on.
I live in the UK. I began my mortgage in 2010 and I paid it off in 2017. I did it with over paying it. I was able to pay up to 500 pounds more than my direct debit every month fee free. So I wished to owe around 25,000 pounds in Jan 16 and get to 10,000 by Jan 17. I opened a regular saving account and paid it off when it reached 3,000 pounds. It is lovely to find you are UK based. I am keen on American Dave Ramsey.
Thanks so much for breaking this down. Finally something for us in the UK I can truly apply. I’m considering adding 10% onto the mortgage every month. Great advice.
Sylvy A thank you for that lovely comment and so happy I’m helping people particularly in the U.K. change how they feel about their money. Excited to see what you achieve for sure :)
In process of downsizing to facilitate my future financial freedom. I was aiming to be mortgage free by the time my kids leave school in 7 years Instead, I have applied for a 27 year mortgage, fixed for 5 years at 1.2% (with intent to overpay) and plan to invest some of my equity. I now have the option to clear my mortgage as planned by overpaying, a financial strategy to plug the hole in my pension, and the release from worry about being committed to a stretching mortgage payment if life doesn’t go as planned. Regarding the comments about seeking the advice of a REAL financial advisor - I have bought 7 properties so far in my life and always used FAs yet I have found ideas and advice on your channel that are completely new to me and I cannot thank you enough. I now have an excellent FA and thanks to you both my future is looking much brighter. I have, however, wasted the last 3 evenings playing with the compound interest calculator when I should be tidying the linen cupboard for my first viewers tomorrow. I won’t know until my house sells how much I’ll have available to invest. Before I discovered your channel that sentence would have read *I won’t know until my house sells how much I have available to spend on furniture* I’ll trade a new sofa for making my dreams a reality any day of the week. #insight #perspective #grateful Greetings from Stirling btw. :)
I've wasted many a night with compound interest too :) Imagination and realising what is possible is half the fun! Lovely to have you following my channel, and thank you for the kind and insightful comments xx
Great video! I'm so excited this month we swapped our mortgage with our lender and got a better fixed rate deal. We are going to continue to pay our regular mortgage amount so the savings will be an over payment which works out at about 20% extra a month
Lindsey Newbold what a fantastic idea to keep the payment the same. That will easily take 5-8 yrs off your mortgage with no extra effort to get cash each month. Love it! And thank you so much for watching my video and your kind comment. Keep up the great work xx
I'm really enjoying your content its nice to watch a uk vlogger. It's also refreshing for me to see someone working towards similar goals none of my family understand my attitude towards finance and sometimes it can feel isolating as they can be pretty mean with comments about my life as its not the same as their for example, not owning a brand new car things like that
Lindsey Newbold If I help someone watching my video keep pushing forward, then that is good enough for me :) feel free to keep my channel as your weekly motivation then. Know one thing - to be normal gets normal results. We want to achieve more than a life of financial struggle and worry, we want the joy that comes from security and abundance of money to do whatever we like with it. That is absolutely possible but requires not doing “normal” things. Believe you can achieve anything you see in your mind, and it will happen with time. Excited to see what you achieve in the next 3, 6, 12 months alone. Ignore any negative comments only focus on the good - as negative comments are usually when people feel bad about their own habits and don’t want you to succeed to make them feel better. Concentrate only on your own joy :) keep up the great work xx
Thank you so much for this video. I've recently bought my Flat and starting to look at ways already to pay off my mortgage. I will definitely be using your method.
Christina Barton thank you for the kind comment and glad I have helped. I have a Fiat 500 myself (Fiat 500L) before that so that is a cracking car and great fun. You can achieve anything you want to put your mind to. Go make it happen xx
Andrew Devine thank you so much for your kind comment. Well done for all your hard work - that is excellent and I have no doubt you will see the results of that hard work quickly. Remember with investing it is a long game, so don’t let dips and peaks in the market rule your emotions. Leave the money there for years and years and then financial freedom kicks in :) thanks for watching and excited to have another follower of my videos
Why not take advice from an quallified independent mortgage adviser? Access to the whole of the mortgage market and don't charge a fee for the advice - just a thought.
She really ought to talk about Offset Mortgages as an option. This is an option where the amount you hold in savings offsets the interest you pay on the principal. Let's say you've borrowed £100k and have £10k in savings, you will only pay interest on £90k.
I had no idea about that. Its funny how Mortgages companys do not tell you that. Ok that was a stupid thing I just wrote. I got one Mortgage and wanted it over 15 years and they were not happy about that at all even though I could easy pay it each month. Selling and buying houses not to rent but to live in my self was always the same thing as in they always wanted me to get the new Mortgage over 25 years even when I only wanted to borrow 15k.
Hi Jennifer, ithank you again video I watched a few times :-) I also found that when you make a one of overpayment, using the overpayment calculator you mention it shows time repayed early. I am making £1000 overpayment this month due to loads of overtime at work, and it amazed me that that translated to 5 months of the mortage total time!
Thank you so much for that wonderful comment - I'm excited for what you can achieve in 2019, and keep up the great work! Thank you so much for watching and commenting xx
Good video! I'm self employed and with a cash business I pay 10% of the overall balance each year using 0% money transfer offers on a credit card then just use cash to pay off the balance. This reduces the mortgage massively and means I'll be mortgage free in under 10 years.
Hassan Hussain credit score is a myth so banks can sale their highest return products I.e credit cards Credit score is a small consideration when getting a mortgage etc they will look more at your salary and how much you spend etc
Good tips if you make the decision to make overpayments, but also consider a side pocket strategy where you direct overpayments into an investment account which should yield an annualised return of 7-8% with compound interest rather than overpayments which is the equivalent of simple or straight interest. This is really an opportunity cost decision between the two and a personal choice. With rates at such low levels I personally don’t think overpayments make sense (at least mathematically speaking) as the returns from investments should be significantly better, but people can obviously take great comfort talking their mortgage
Hi Daniel - great comment and so sorry for the late reply. Just noticed it there. You know, I completely agree with interest rates right now you will probably make slightly more money with the cash in investments to chuck at your mortgage when needed even. However, I believe that making that regular overpayment allows you to give yourself a backup should life/job/inflation come suddenly at someone - it's also the habit of the overpayment that then helps manage debt overall too and develop good money habits. Great comment though, and personally I do 10% overpayment then invest the rest for my own risk and future planning. Thanks so much for watching and truly appreciate a great comment like that :)
I think diversifying your investments is best. Paying off your mortgage early is an investment in my mind but I agree if people have spare cash they should be upping their pension contribution as well. I think if you have a large mortgage though and not a lot of equity, as we are unsure where the UK market is going in the short term, people should smash the mortgage for a few years until they have a sizeable equity pot to secure the roof over their head!
Good one. Also, if you are about to exceed 10% addtional payment per year, you can also topup howmuch ever you want between mortgage or rate switch with no penalties. I generally have two years fixed around 1.5% APR and top up mortgage every two years, you can clear off your mortgage even quicker!
Nice video, but I have always taken a fairly contrary view. My mortgage has been my leverage on the property market. I am not convinced paying it off is always the right thing to do for 2 reasons; 1) if interest rates are low as they have been for a good number of years, can you get more money back as income from investing elsewhere? If I can get 10% on my investment and pay 2.5% on my mortgage, surely I want to push more into my investments. 2) Look at the longterm growth of your property equity. If I pay off my mortgage early let us say by the time I am 50, I might have a £500k house let's say. However, if I keep on leveraging my stake in the property market by trading up whenever I can and keeping some element of mortage, I might still have a mortgage of £100k at 50 - but live in a million pound house. Nicer house and still with £900k equity instead of £500k. So paying off early is fine, if you are risk averse - but if you want to tolerate some element of risk in the property market, I would say stay invested and keep pushing and developing as you move up the ladder, just keep squeezing the mortgage element as you get older to keep your risk reducing.
There is potentially a way that you could use credit cards to overpay mortgages that may work out cheaper in the UK. You can get specialist money transfer credit cards on promotional offers, or even money transfer promotions periodically from an existing credit. This essentially is just having money transferred from your credit limit to your current account, which you could then use towards your mortgage as a lump sum capital repayment. The credit cards typically charge an upfront fee for doing a money transfer (around 4%) but this could be worthwhile depending on how long an interest free period you could potentially get on the transferred amount. Whether or not this is a worthwhile method, or even possible, will differ for everyone but I thought it was worth adding. Good video though from a UK perspective.
I absolutely love the overpayment calculator. I found the tool few months back and started overpaying my first mortage I took up this year. It is morivating and helpful.
I am pretty much throwing all my income at my mortgage trying to get it down and paid in 5-7 years. My question is this and hopefully you could do a video comparing... 1. Concentrate on paying the mortgage off then investing. 2. Invest half of what you can overpay on the mortgage and the other half on investments. 3. Invest first to get enough income to pay the mortgage inc bills and then overpay the mortgage I don’t know whats best to do. My age - 30
HI Michael - what a fantastic comment to ask. Love that you are thinking about all possibilities with your money, and of course it really might be a numbers game depending on your mortgage interest % against what we could "possibly get" with investments in 5-10 years. I would say keep doing what you feel inspired, but also look to start with small amounts in an Investment ISA so you build up passive income from the savings that you plan not to touch for 10+yrs so you gain confidence with investing in that way too. Hope that helps for the time being and thank you again for a great comment!
MamaFurFur Thanks for getting back to me! I will go for that and try to split the overpayments I am currently doing with an 80/20 approach and increase it once I get used to it :)
I had a fixed rate Mortage when the interest went up to 14% back in the late 80s I think it was. I saw many people lose their homes when the rate went up so much. I think it went up from 7% to 14% which broke so many people but I was sitting safe. People thought I was stupid going for a fix rate for so long as at the time my fix rate meant I was paying a higher rate but paying a little more back then saved me from the 14% rate that broke so many people back then and also would have done me.
Mamafurfur do you think paying off a 10percent as a lump sum say 5000 is that better than paying off overpayment of 500 pound each month for 10months pls
Stephen Metcalfe Personally if you can afford the lump sum without any penalties or life going without then do it as your interest could jump down as a result as usually charged daily. Might also be fun to do 10% overpayment anyway on top so that you set that as default new payment to get used to the habit too but totally up to you :)
What do you guys think of investing in blockchain and holding it.. Putting down a small amount.. What you can afford to lose.. Then using the profits to pull out and pay mortgage?
Thanks so much for the kind comment and appreciate it. Great suggestion for a video - I have one about Debt repayment in my "Best of" playlist about debts in general, but think I might just do Credit card payment one off the back of your suggestion. Thanks for taking time to watch and for that really good future video idea to work with!
MamaFurFur thanks again I have been paying down credit cards the obvious way- most expensive first whilst I’ve got £6000 on 0% balance transfer for three years . I aim to be debt free before then though ! Take care you are very watchable x sometimes someone telling you the obvious is all that you need to hear 😀
Steven Williams Good stuff. I would say do the highest interest physical amount first - so not % but what one costs the most out your pocket each month and smash it away. I paid off £24k in 3 yrs so totally possible :) thanks for watching!
Just watched this and imediatly changed it over, turns out i will save £11,545 in interest alone, and mean you pay the debt off in full 4 years & 1 month earlier. So you know yes in the UK they offer mortgages up to at least 35 years as thats what i got to start with. Thank you.
Great video, I’m a complete novice at this. I’ve got a lump sum and was just wondering if the right thing to do is to pay it off my mortgage. So thanks for the clarification, I’ll go ahead and do it. Now to sort my pension 😱
Good advice for the average household. However with mortgage interest extremely low right now (and when this video was produced) That overpayment money is mathematically better off invested. Real net worth is built in the spread between borrowing rates and ROI/annualised returns. Consider your overpayments as borrowed money with an APR = mortgage interest rate, then look for returns that beat that rate.
All thanks to John Floyd foreign exchange for helping me to trade my $15,000 into Bitcoin and I was credited with the sum of $58,000 after seven working days of my trade with her now I’m mortgage debt free I can settle my bills without even touching my paycheck I’m so happy with Bitcoin life is easy 😊✔✔
Mamafurfur thanks for your help i was thinking of investing about 100 pound per month your vanguard strategy looks good I thought about a index tracker .But after watching some of you great videos im probably leaning towards vanguard investment thanks
Stephen Metcalfe always do your research as it’s your money of course. I personally use Lifestrategy 100 fund then will switch to 80 fund when I retire. That is based on my risk threshold and goals though :) so do what suits you best. Thanks for watching and the great comment!
Appreciate what you're saying, but if they default, the bank lose out on the principal loan too so they arent getting rich from this purpose. Its because after 2-5yrs, most people will get a remortgage and often with a different lender offering a more attractive rate. Front loading interest means the banks make their money at the start, hence why their standard rates are not so attractive as they can get the customer to move the debt which is no longer so profitable to them.
Could get a %credit card with money transfer. Provides cash to pay lump off the mortgage. Then pay off credit card and repeat. Don't think we can target just the capital to be repaid in the UK but moves repayments further along the curve reducing interest payments and term. Even easier with cash going into an offset mortgage.
Very informative. But I think people should take this as a face value but should apply this principle based on his personal circumstances. It will depend on how much rate you pay (e.g. some people are paying as low as a 1.5%). In this case it is better to drip feed money into a regular saver paying 2.5% (It was 5% until last year) and then over pay 10% before refreshment date.
I was in my Building Society Branch Managers office for 3 hours, where he suggested various types of mortgage. I stuck to my guns and said I wanted a 10 year Fixed Rate mortgage, which had an interest rate of just under 4%. From the first month of making payments to them, I have made the maximum overpayment possible each month and the mortgage will be paid off in 5 YEARS, instead of 10, Plus, I'll be saving £5,000 (which would have been Interest that the building society would have gained from me over the 10 years)!
In the U.K. you could use an unsecured cash loan instead of a credit card. If you have excellent credit rating the rate should be 3-4% even better than a 20% credit card... as long as you can repay quicker without fees you are winning
Thanks for these videos! They have been really helpful, it's fantastic to hear it from a UK point of view and the way you explain is really simple to understand. I'm curious though, what would you recommend if you have extra cash, would you put it into adding additional funds to an Investment ISA or repay the mortgage earlier?
aughamullan oh great question indeed! So personally right now my mortgage is a very low rate so I choose to invest. But saying that you have to go with what suits your goals best - if it is to be debt free throw at the mortgage, if you want financial freedom ultimately then aim for investing. I would say though try to make sure you have short terms goals to throw money into like Holiday funds and such for extra cash too if you are hitting investing targets of 20% of your take home pay and overpaying your mortgage already as well. All about balance :) hope that helps xx
@@JenniferAMThomson Thank you very much for the reply! I'll hopefully get this all done by the end of next month, about time I get my money plans sorted! Your videos have given me great inspiration to do so :)
We used to be able to apply for a Virgin One account. Similar to HELOC in the US. Unfortunately we can't get something like that in the UK. We could however apply this method using a 0% fee over draft. The your wages top your account up to zero after a few months. Then repeat.
You need a video editor to put on screen the data you're talking about. It will make your videos more dynamic, entertained, and easier to assimilate. Happy to help out!
Great video thanks very much !! One thing for thought... Would we be able to use 'Planned Overdrafts' for the lump sum payments? Just say £1-3K every 6 months. The overdrafts having the 'simple interest rate' aka on the daily balance. (which is better than a credit card). If we get our wages paid into that account we probably have MUCH less interest to pay. Yes, as our monthly expenses go out we will be back in the overdraft by the end of the month but then if we 'save' an x amount every month we can pay back the overdraft over a 6mo period. My logic is that we pay extra interest on the overdraft BUT by putting in a bigger chunk into the mortgage every 6 months we are saving a lot more interest on the mortgage. Thus, the net effect is positive. Let me know if my logic is incorrect.
Oh this one has taken me a good few days to think about :) Great big question! I'm going to say your logic is probably completely possible, however I'm going to say that really it might be a numbers game seeing how much interest you pay each day on the overdraft compared to interest saved on the mortgage by using the money. It might also not be a long term strategy to use as you are then at risk if the overdraft charges change suddenly (which the bank can do or remove your overdraft completely). My gut would say not to do it, but the ball is in your court for that one. I'm going to go with my gut that I would say make overpayments only with money you physically have to your name, as borrowing with a risk of overdraft fees changing makes me very uncomfortable if it was my own money. Great question, and hope that helps :)
@@JenniferAMThomson Many thanks for the detailed answer! I did not expect this :) I 100% agree with you. I just wanted to venture into the concept and confirm if possible. And I actually did the math on a spreadsheet (using normal numbers) based on the current market and reasonable numbers the monthly overpayments are better, you can find it here in my public folder: drive.google.com/drive/folders/1CIfcvuANIUS-Xb6MfTbMOvv0kUFC7Cwk?usp=sharing
This video is fantastic. I've been watching Dave Ramsey in US for about a year and have learnt alot but like you say the UK is different. Here's my story, maybe you have some advice? I purchased my home Apr 17 for £146,000 with a £45,000 deposit age 26. I renovated it myself with a spend of £13,000 and now it's worth around £190,000. My mortgage repayments are £397 but at the time I was earning around £21,000, now I'm on £31,000. My outgoing a month are around £600 bills (excluding mortgage). I have no other debt. I have no car debt. I have around £5000 as an emergency fund. My question is, how can I maximise my mortgage payments to get it paid off quickly? Thanks!
Thank you for taking time to watch and comment. Great question - so really first of all find out the T&Cs for your mortgage for overpayments. If you want to pay off the maximum they allow every year, then that would be one strategy. I would also support though looking into investing in Investment ISAs and such so that you also use some of your free cash to generate income for you in the years ahead (such as retirement or before). Lots of videos on my channel with that knowledge if that might sound like something to aim for to. Well done for all your excellent efforts indeed!
What would your advice be with overpayment each month versus putting that overpayment amount in a savings account and then after you have 10k or 20k paying off a big chunk in one go? I'm currently toying with which is the best method for me as I'm on a five year fixed mortgage with four more years to go. So I'm unsure whether to overpay (not going over the 10% restriction of course) or saving that money and paying off a big amount after the fixed term ends. So glad I found your channel BTW! I too found so many US related videos but very few UK ones x
Hi Harriet - oh this is a fantastic question, and sorry for the late reply (just saw it there!). Personally I would say you might get a better rate of return on saving it in a high interest/investment account right now than overpaying too much on a mortgage. Theory being that you can then throw the lump sum at the mortgage if the interest rates shoot up suddenly (they won't). I would say aim for the 10% overpayment if you feel comfortable with it, then save the rest. That is what I do personally - but of course go with your gut. Large overpayment or regularly small overpayment is really splitting hairs and would probably need to use an overpayment calculator to work out if you are saving anything really (probably not much in it). I like the regular amounts as life can continue with balance that way. I hope that helps - and thank you for the kind comments. On a mission to help as many people as I can in the UK, and glad I'm helping in some way xx
Hello, in fact am in a similar situation and i was just thinking about this point before I come across this interesting discussion and video. Given that interet rates are low now and we are tied to 5 years fixed mortgage, we should aim to save as much as we can during this period and pay it towards our mortgage (before interest goes up). As for making lum sums versus regular overpayments, I thought that making regular overpayments may save us a couple of quids (could be significant if your current mortgage rate is much higher than the savings rate), unless the savings are invested at a higher return. btw, I am an economist and did a PhD in economics, and currently an ecademic in the profession where I also expect that interest rates will not go up in the next 5 to 10 years as the global economy is a bit fragile. Good luck.
@@learnsomethingneweveryday1539 after what's happened now (a year after your comment admittedly) it's highly likely we are going to have another 5~10 years of low rates. World governments have borrowed a massive amount to combat the virus so they will just want inflation to eat away at the debts so as such interest rates will be low for years to come. Current 5 year and 10 year fixed mortgages offered by the banks show they know rates aren't going up anytime soon as well.
I was wondering about how a typical mortgage structure would affect switching. So if the start of a mortgage is 90% interest and only 10% principle, does that reset everytime you switch provider? So your basically always paying majority interest? In that case would the lower fixed period rate be negated by the fact that your interest vs principle never crosses over? I'm coming to the end of a fixed period on my first mortgage and found your vid very helpful, but just trying to take everything into account. Thanks 😊
Thank so much for this video! We are about to remortgage and I'm now excited to find us a better deal because of what I've learned from your video. Before this I was filled with dread! Also, thank you for the 10% over payment tip. Will definitely put this into place! We have around 16 years left but I hope to bring that down some with our new mortgage.
Fix interest rate at 0.99% over 5 years, put the 10% overpayment into the stocks and shares ISA make 8% PA. for next 5 years, then either rinse and repeat if you get another great deal or take your cash from the ISA and pay down the mortgage. Got to be a better option than overpaying mortgage right?
Not to worry, as student loans are special with their conditions actually so your comment is a great one to answer. With student loans, you actually only need to start paying them back once you earn a certain amount or above and a percentage of your wage. I believe you need to earn £20k+ before you pay them back. Also, unlike any other debt you could have - after 30 years the debt is written off (the government cancel it and pay it off for you) so that debt will go even if you don't pay anything at all. So in this case, the debt actually will go even if you don't work or earn enough in your life to start paying it off. The only time really when debt will "disappear" without paying it. I think you have inspired me to make a video all about it to help others know more about it too. Thanks for the great comment xx
Thank you so much for sharing your videos Jenifer. I am finding them really useful. I would really appreciate it if you could explain why, if you can commit to over paying the mortgage each month by 10%, why not increase your fixed payments by 10% instead. I am assuming the reason is because you are committed to 10% less so it is more flexible in case any emergencies crop up and also you get a better interest rate over a longer term. Thank you.
Great question - so in theory this is what we have - our payment though shows as two parts, the default minimum amount and then the 10% top up. I can remove this if we needed, and that is the flexibility piece in the puzzle but I don't plan to remove it.
Love your common sense and truthful advice. Unlike the BS H.E.L.O.C (not a UK financial product) advice from America on TH-cam which probably get you into more debt. On a fixed term mortgage and has been paying off extra each month towards the mortgage the last few years. Now the interest is now way lowered. Going to continue this method plus a yearly extra one off payment. Hoping to pay off what's left of a 15 years mortgage in 5 years time.
Thanks for this video I am going to take this into account I have 180k mortgage paying around 700 a month am going to increase this to 900 a month now because I still have 23 years left on my mortgage and I want to be free in 10 years max
Thanks for this Jennifer, really informative stuff. I'm six months into a 36 years mortgage (necessarily long due to low salary at the time) and immediately started overpaying by £100 a month. MSE calculator informs me that this should reduce my term to 22 years, based on my current interest rate (2.59%) which I know will rise at some point. I panicked a bit when you said we have to instruct the bank is deducting the over-payments ff the principle. I thought that was automatic and didn't realise they could use it for the interest?! I will go to my lender and make sure. One more point: when you suggested to pay off lump sums with work bonuses etc. is that worth it, considering the bank will punish us for doing that? If I pay off, say, 2k lump sum, the penalty they hit me with will cancel out the interest I saved on? Thanks!
Great question - with regards to the lump amounts, always keep within the boundaries before you get any penalties. So for example if you can overpay 10% total debt only, only do that then invest any extra bonus money in a high interest saving account/Investments. That would be a great strategy and of course, keep investing in yourself and talents by reading as much as you can and finding out as much good information about money and life. Hope this helps :)
@@JenniferAMThomson Thanks for the reply. I'm planning on sitting the CeMAP exam, such is my newfound interest in all things mortgage-related! Thanks again.
Or you can do this the easy way. Step 1 : Collect paycheck Step 2 : Before paying ANY bills, pay YOURSELF atleast 10 % of your salary Step 3 : See how much is left, and pay your bills Step 4 : Whatever is left now, is free to spend any way you see fit (this is your current life money) Step 5 : INVEST YOUR 10 % ( invest in either real estate, or index funds ) Even in shitty times you should be able to pull like 5 % growth over a 10 to 15 year span. This is MORE then the interest your bank will give you, but it should also be MORE then the interest on your mortgage. So it is smarter to invest then it is to pay off your mortgage. When interest has acumulated to a substantial enough amount, THEN pay off your mortgage. The principle here is stupid easy. Make your money work FOR you, instead of doing it yourself.
Fantastic comment and actually I agree completely with investing - it is a fine line though that having no debt means you need less to live on, but I actually agree personally I only pay off 10% overpayment on my mortgage and then invest the rest. Thank you for a great comment and watching!
Fantastic UK-centric video! I currently have a 25 year mortgage with Barclays and my 2 year fixed rate will come to an end in September. When would be a good time to start looking into remortgaging before my fixed rate comes to an end? I like the idea of fixed payments instead of variable and would be looking for a 5 year or longer fixed term. I'm allowed to make over-payments on my mortgage up to 10% each year (something I haven't taken advantage of yet). Interesting info about 90% or so of your mortgage initially going towards interest payments. It defiantly makes sense putting any spare cash towards the mortgage. All of the US videos mention that you must inform your lender that any over-payments to be made should be put on the Principal and not the Interest. Is this something UK banks allow you to do? I was always under the impression that there was no way of separating the principal from the interest in the UK. To me, just the very term "pay off the principal" sounds very American :) I thought I'd ask here before calling my bank and sounding like an idiot! lol! Regards, Mo.
Hi there - great question indeed! I believe you can look into remortgaging roughly 2-3 months before the fixed period ends, but check with your bank. Usually you can even do it online if you want to stay with the same bank and perhaps consider locking down a further 2 years to get the lowest interest rate then make overpayments on top. I don't believe there is any way to "pay off the principal" only in the UK either - you just set up an overpayment and it goes against the mortgage as a whole in terms of what is due and interest daily. But it is more the fact you are paying over and above that will see you clear it and make progress faster. Hope this helps and thank you for watching!
@@JenniferAMThomson Thanks for your reply! I will speak to my mortgage advisor form Barclays to arrange a meeting as well as looking at other providers to get the best interest rate. Regards, Mo.
It might be worthwhile to spend money in a Big and nice whiteboard given than you have paid off your Mortgage rather then buying a tiny one off the Pound shop!
@@clairenicol2918 We need to focus a lot on a small one. Will have a headache. Need to visit doctor. Need to use transport. Not helpful to the environment at all :-(
Why not use your mortgage as leverage to purchase another property as a buy to let investment? Passive income each month along with capital growth of the property. Huge long term investment
Thanks for this, great advice. I have just finished my first 2yr on my fixed rate mortgage and now have a new deal with the same lender at £140 per month cheaper. Now on another 2 year fixed rate. The only catch was that there was a fee of £900 which was added to my mortgage. How can i avoid this in the future or is this normal. Any advice would be appreciated.
Hi John - thanks for a great question. So I believe you might need to shop around then when you are out of the fixed rate period, as normally fees don't apply to move to another fixed rate time period. You are simply signing up for the same mortgage but locking down the rates. You can move lender of course, and so I would say have a look around in future and even barter directly with the Bank to have the fee removed. You aren't setting up a new mortgage just moving to a fixed time period from a standard rate and they should want to keep your business after all. Hope that helps in some way!
I usually save up in an isa & release it towards my mortgage before remortgaging with another lender (a bit like the American model) Just wanted your views on whether I should consider the 10% instead? Thank you for the video xx
Ella Dcosta oh great question. So are your savings in a cash isa or investment isa? Personally if the money was in investments I would leave it there if you were achieving more than 5%+ year on year growth from it and then do 10-20% overpayments on monthly mortgage amount. If in a normal Isa then that is a great way to know down the mortgage but would say consider using that bulk money in investment ISAs to give you a passive income source lasting longer than the mortgage payment terms left. It’s your money of course - so whatever you do feel confident you are happy with how you are using it :) great comment and thank you for watching xx
Ella Dcosta and don’t be put off by the stock market going up and down :) the downs mean it is a sale and people are ready to stock up as the value will go up again soon. Thanks for a great comment xx
Hi. I’ve started watching your videos. They are very good and clear to understand. But, you need to invest in some acoustic tiles in your room : ) Very loud echo.
No Harm in asking :) and every bank will allow overpayment usually within the 10% of amount due still limit. Give them a call though for sure and here's to a great 2019!
Thanks for this vid Im gonna go get my mortgage papers and have a read Im in a fixed rate for 5 years and am already paying 10% but want to add lump sums and not sure is the penalisation is anything to worry about
I actually managed to get a 40 year mortgage with nationwide. 2 year fixed period and obviously I don't plan on having it anything like that long, but its made my monthly payments so small that I should be able to pay it off in a few years. id guess you need to be quite young to get one. I was 26
Great video very easy to understand! Is this method being applied to a repayment mortgage? What happens if you make a regular overpayment to an interest only mortgage, which is what we have?
Gary murdoch yes it is to a repayment mortgage. To be honest you need to be aiming for a repayment one as you can easily be years down the line without moving any of the principle due. Do the exact same 10% minimum for an interest only mortgage but make it a goal to apply for a repayment one as soon as the bank will allow. It’s the only way to get rid of the debt and have your home to yourself :) keep up the great work and thanks for the great comment
Do i have to tell the Mortgage Company/Bank that i am making over payments or just had the 10% on and say nothing? Thank you for your great videos and info.
Hi there- you don't need to inform them, you can make the overpayment but always check that you won't face any penalties for making overpayments within your mortgage. Hope that helps!
@@bengunns9500 I can tell you you DO need to tell them its for the capital. Santander wrote me a letter basically saying they will use it toward the Interest but to call them if you had 'another intent'. You need to tell them its for the capital. I did. They make it difficult for a reason.
Great video, I’m going to make overpayment as soon as I get the keys for my first house next month, my only question is, would I have to “set up” an overpayment or can I just over pay a random amount each month in order to benefit from this I mean I’m sure the over payment will still go towards the principle of you want it to but do you benefit from a shorter mortgage term if you simply overpay without setting it up and doing it like a pay as you go thing
We have the same system in Norway. But, I am not sure paying off your mortgage is the way to go. Thinking about the inflation, and the value of the money 10-15-20 years down the line. I would rather put my extra money into a fund maybe a 50/50 stock and interest fund. I just got a new mortgage and got an interest rate of 2.75 fixed rate for 10 years. I will not pay anything off after 10 years, have to see after 10 years, where the interest rates is then.
me neither oh great question. I am not sure if any banks offer offset mortgages any longer actually myself and to be honest would rather not have my savings guarantee the level of interest or time I pay back my mortgage. I want to be in full control of that to overpay or otherwise. I would aim for repayment mortgage of course so you can really get your home in your name quickly and with the techniques I mentioned. Great question though and I’m off to search google now too :)
Absolutely loving your videos :) I'm from Norway so when I moved to the UK a lot of the bank and finance things are different. I am now 29 years old, we have a solid buffer and have a mortgage. We are currently overpaying it every month by roughly 15%. We are still able to put away a good amount into savings (Minimum 400 pounds but we aim to put away 800 pounds) every month. But I am very interested in starting to invest as we have a bit more financial freedom. Would you recommend still overpaying the 15%( which is about 200 pounds) and put some of the money we put into saving into investments? Thank you so much for all your help in these videos :)
Always good to diversify and spread your risk. There is no other way to advise on your question because your 15% overpayment can be put toward an investment, but that return is not guaranteed to be better than 15%. The higher the investment return comes usually with the highest risk.
First of all ,i want to say i don't really comment on here but your video is that good informative i got to say something . Thank you very much for a really good informing video. Better than any have seen on here. We have just remortgaged our home 2 years ago and got 5 years fixed. the house was valued 205k and borrowed 154.125 from the bank when we remortgaged but now we've done an extension to the house which should up the value of the house. in this case what is the best to do, wait for the 5 years or try to speak to the bank of the new value of the house? Thank you in advance.
Thanks for this video! Would a money transfer on a credit card work in a similar way to the credit card method they use in the US? Maybe there are T&Cs in the money transfer that wouldn't allow you to pay toward a mortgage, but the method would be the same. I'm not exploring that option at the moment, because my only debts is my mortgage, and mentally I'd prefer to save and pay off the mortgage in an annual lump sum with my savings. Currently aiming to overpay by 25% per month. But I have a 35 year mortgage so a greater incentive to pay more to take the years off. Gives flexibility too. Maybe I'll see if I can use a calculator to work out the savings of a money transfer method. Thanks again
Great Video, Really Thanks much!!! Me and my husband have the house debt with a combination of help to buy + Bank Mortgage. Any specific ideas how to handle this kind of situation?
Hi - great video. So what if you have (in my case) 2 rental properties as well as your main home with a mortgage. Which one would you look to pay off first?Also my rental ones are on repayment, should they stay on repayment or revert to interest only?
Thank you so much for a great question! Honestly - your home means you and your family are looked after even if the rental market goes down. You can always sell off the rentals for profit/loss as the market decides. Overpay your own home first then as you feel inspired pay down the rental properties. I would say you might get more return investing money into an Investment ISA too outside of your own mortgage repayment before you then look to overpay the rentals - but again you do what you feel is right. Always look after your own self and family as the priority :) then you really will have financial and time freedom, and sounds like you have a great passive income lined up in the works with the properties too. Thank you for watching and a great comment! :)
Works better if you pay one first as you will clear an entire debt on one thing faster, if its piecemeal on each, you aren't really going to see the benefit in a reasonable time frame as interest is front loaded. However, paying down the principal on a property rental seems good as the debt is reducing. The argument against this is as follows: 1) The value of money dwindles over time, and as such, the debt you have remaining if interest only is naturally more palatable as £100k today doesn't buy you the same in 15yrs time. 2) The value of the property increases over time in most areas. As such, you will have equity along with the debt, which over many years is increasingthe gap on the interest on a value that diminshes every year. 3) As the tenant is paying, this is cashflow for you and any interest is being paid by them which you take profit on for your ownership/investment, allowing you money to spend or reinvest in other ways. The real benefit of paying some principal down would be: 1) To clear the debt and allow you not to worry about interest rate fluctuations in the coming years, which could eat away cashflow profits. 2) To consolidate and limit your exposure which may become a concern as you get older. So for example, if you are trying to grow a portfolio, paying interest only makes sense as you are trying make every penny work for you, when this is no longer the plan and you are comfortable, reducing these debts makes sense as nothing is lost to your way of life and in the event of sharp increases in interest or changes in legislation you are protected.
Hi Jen, you mentioned that you take off 10% off the mortgage term if you pay 10% extra each month. Does it increase exponentially if say I pay 20% extra each month, would say 21% be taken off the term. Can be quite motivating if there are increasing returns to scale. :-)
Great question, without knowing exactly your interest rates and T&Cs I would actually say go onto the Money Saving Expert overpayment calculator and play around with your own values/percentages to see exactly how much you could save. Normally there is a cap of 10% total overpayment a year (on the total mortgage remaining) but could be good fun to play around and see how much exactly you could save and I'm thinking it it probably exponential like you believe too!
Hi I just had to message you and let you know that your brilliant video gave me a kick up the backside to do what I did. Today I rang my mortgage company and set up to over pay an extra £150 a mth. This has brought my mortgage from 18 years to 12. Which blew me away. I am also planning on paying lump sums if and when I can. Again if it wasn’t for this very informative video I wouldn’t have done it. Thanks again. Louis
Misdemeanor Customs thank you so much for such a wonderful comment to hear. Well done for taking the action and here’s to a great future :)
Wow, well done!
Nice if you can do it. Most young(er) people, especially with kids, can't.
Be careful to not exceed the max amount you can over pay per year before being hit with fees!
All the best louis 👍🏽
Finally a UK focused video! Thanks and some great tips which I'll be sure to apply.
AA51FER thank you so much for that kind comment. I will keep making them then as I absolutely agree with you and I want to change that personally in the U.K. :)
I did this for years, also every time I remortgaged, say when I had 19 years left I took out the new mortgage over 17 years and so on. I'm due to be mortgage free in Feb 2021.
please elaborate as it seems interesting
@@learnsomethingneweveryday1539 When you remortgage and see a better Rate, you see monthly payments go down. Thats what banks do to entice us in. The right course for you is to ALWAYS reduce your TERM rather than reduce PAYMENT. Santander told me I have to do a brand new application to reduce the term (they don't like it as they earn less Interest from you). Unbelievable.
@@learnsomethingneweveryday1539 I've been doing the same thing. I only lock into mortgage lenders for 2 years. But each time I remortgage I knock a year or two off of the total term. You'll find the payments remain similar anyway. I'm not disciplined enough to trust myself to make overpayments.
By the way, paying off the mortgage early is not the only strategy. If you have enough equity in your home. Interest rates are so low now it's worth releasing that and getting a buy-to-let with all the equity. That buy-to-let will also grow in value very quickly and can be used for another buy-to-let and so on.
Thank You, i've just managed to save £16,000 and 5 year reduction in my mortgage by paying an extra £100. Thanks alot! x
HI Hamza - this is fantastic! Well done for taking the step towards making your future better for you. Have a fantastic 2019 ahead!
Im paying lump sums and overpaying every month. This mortgage feels like a ball and chain around my neck i cannot wait to get it paid off!
I live in the UK. I began my mortgage in 2010 and I paid it off in 2017. I did it with over paying it. I was able to pay up to 500 pounds more than my direct debit every month fee free. So I wished to owe around 25,000 pounds in Jan 16 and get to 10,000 by Jan 17. I opened a regular saving account and paid it off when it reached 3,000 pounds. It is lovely to find you are UK based. I am keen on American Dave Ramsey.
Thanks so much for breaking this down. Finally something for us in the UK I can truly apply. I’m considering adding 10% onto the mortgage every month. Great advice.
Sylvy A thank you for that lovely comment and so happy I’m helping people particularly in the U.K. change how they feel about their money. Excited to see what you achieve for sure :)
In process of downsizing to facilitate my future financial freedom. I was aiming to be mortgage free by the time my kids leave school in 7 years Instead, I have applied for a 27 year mortgage, fixed for 5 years at 1.2% (with intent to overpay) and plan to invest some of my equity.
I now have the option to clear my mortgage as planned by overpaying, a financial strategy to plug the hole in my pension, and the release from worry about being committed to a stretching mortgage payment if life doesn’t go as planned.
Regarding the comments about seeking the advice of a REAL financial advisor - I have bought 7 properties so far in my life and always used FAs yet I have found ideas and advice on your channel that are completely new to me and I cannot thank you enough. I now have an excellent FA and thanks to you both my future is looking much brighter.
I have, however, wasted the last 3 evenings playing with the compound interest calculator when I should be tidying the linen cupboard for my first viewers tomorrow. I won’t know until my house sells how much I’ll have available to invest.
Before I discovered your channel that sentence would have read *I won’t know until my house sells how much I have available to spend on furniture*
I’ll trade a new sofa for making my dreams a reality any day of the week.
#insight #perspective #grateful
Greetings from Stirling btw. :)
I've wasted many a night with compound interest too :) Imagination and realising what is possible is half the fun! Lovely to have you following my channel, and thank you for the kind and insightful comments xx
Great video! I'm so excited this month we swapped our mortgage with our lender and got a better fixed rate deal. We are going to continue to pay our regular mortgage amount so the savings will be an over payment which works out at about 20% extra a month
Lindsey Newbold what a fantastic idea to keep the payment the same. That will easily take 5-8 yrs off your mortgage with no extra effort to get cash each month. Love it! And thank you so much for watching my video and your kind comment. Keep up the great work xx
I'm really enjoying your content its nice to watch a uk vlogger. It's also refreshing for me to see someone working towards similar goals none of my family understand my attitude towards finance and sometimes it can feel isolating as they can be pretty mean with comments about my life as its not the same as their for example, not owning a brand new car things like that
Lindsey Newbold If I help someone watching my video keep pushing forward, then that is good enough for me :) feel free to keep my channel as your weekly motivation then. Know one thing - to be normal gets normal results. We want to achieve more than a life of financial struggle and worry, we want the joy that comes from security and abundance of money to do whatever we like with it. That is absolutely possible but requires not doing “normal” things. Believe you can achieve anything you see in your mind, and it will happen with time. Excited to see what you achieve in the next 3, 6, 12 months alone. Ignore any negative comments only focus on the good - as negative comments are usually when people feel bad about their own habits and don’t want you to succeed to make them feel better. Concentrate only on your own joy :) keep up the great work xx
Thank you so much for this video. I've recently bought my Flat and starting to look at ways already to pay off my mortgage. I will definitely be using your method.
Christina Barton thank you for the kind comment and glad I have helped. I have a Fiat 500 myself (Fiat 500L) before that so that is a cracking car and great fun. You can achieve anything you want to put your mind to. Go make it happen xx
Thanks for the tips, I found your video really motivating and have set up a 10% regularl overpayment today!
Outstanding effort - well done!
So I've watched two of your videos....I have now doubled my mortgage payments and put my savings into a fund with vanguard! Thank you!
Andrew Devine thank you so much for your kind comment. Well done for all your hard work - that is excellent and I have no doubt you will see the results of that hard work quickly. Remember with investing it is a long game, so don’t let dips and peaks in the market rule your emotions. Leave the money there for years and years and then financial freedom kicks in :) thanks for watching and excited to have another follower of my videos
What is vanguard?
@@Jaaammmbbbooo A fund.
Thank you very difficult to find UK based mortgage advice on TH-cam :D x
Why not take advice from an quallified independent mortgage adviser? Access to the whole of the mortgage market and don't charge a fee for the advice - just a thought.
Becaise they dont appreciate you wasting their time when you are not due to remortgage any time soon
She really ought to talk about Offset Mortgages as an option. This is an option where the amount you hold in savings offsets the interest you pay on the principal. Let's say you've borrowed £100k and have £10k in savings, you will only pay interest on £90k.
I had no idea about that. Its funny how Mortgages companys do not tell you that. Ok that was a stupid thing I just wrote. I got one Mortgage and wanted it over 15 years and they were not happy about that at all even though I could easy pay it each month. Selling and buying houses not to rent but to live in my self was always the same thing as in they always wanted me to get the new Mortgage over 25 years even when I only wanted to borrow 15k.
Yeah, that system is so great that it is outlawed in my country. ( The Netherlands )
Thank God, FINALLY! A UK video. Thank you 🙏🏾
Hi Jennifer, ithank you again video I watched a few times :-) I also found that when you make a one of overpayment, using the overpayment calculator you mention it shows time repayed early. I am making £1000 overpayment this month due to loads of overtime at work, and it amazed me that that translated to 5 months of the mortage total time!
Thank you so much for that wonderful comment - I'm excited for what you can achieve in 2019, and keep up the great work! Thank you so much for watching and commenting xx
Thanks for making this video it has helped me understand
Good video!
I'm self employed and with a cash business I pay 10% of the overall balance each year using 0% money transfer offers on a credit card then just use cash to pay off the balance. This reduces the mortgage massively and means I'll be mortgage free in under 10 years.
Brilliant!
Why don’t you just save the money during the year rather than using a credit card and paying that off ?
Maybe I’m missing something
Thanks
@@danielkirkland3366 good point!
@@danielkirkland3366 probably to increase credit score
Hassan Hussain credit score is a myth so banks can sale their highest return products I.e credit cards
Credit score is a small consideration when getting a mortgage etc they will look more at your salary and how much you spend etc
Love all your advice...great channel, I'm currently saving for my first mortgage with the goal to overpay each month!
"Amortization" .... I just learned a new word!
Good tips if you make the decision to make overpayments, but also consider a side pocket strategy where you direct overpayments into an investment account which should yield an annualised return of 7-8% with compound interest rather than overpayments which is the equivalent of simple or straight interest. This is really an opportunity cost decision between the two and a personal choice. With rates at such low levels I personally don’t think overpayments make sense (at least mathematically speaking) as the returns from investments should be significantly better, but people can obviously take great comfort talking their mortgage
Hi Daniel - great comment and so sorry for the late reply. Just noticed it there. You know, I completely agree with interest rates right now you will probably make slightly more money with the cash in investments to chuck at your mortgage when needed even. However, I believe that making that regular overpayment allows you to give yourself a backup should life/job/inflation come suddenly at someone - it's also the habit of the overpayment that then helps manage debt overall too and develop good money habits. Great comment though, and personally I do 10% overpayment then invest the rest for my own risk and future planning. Thanks so much for watching and truly appreciate a great comment like that :)
I think diversifying your investments is best. Paying off your mortgage early is an investment in my mind but I agree if people have spare cash they should be upping their pension contribution as well. I think if you have a large mortgage though and not a lot of equity, as we are unsure where the UK market is going in the short term, people should smash the mortgage for a few years until they have a sizeable equity pot to secure the roof over their head!
I am going to apply this method to my credit card repayments. Thank you!
Good one. Also, if you are about to exceed 10% addtional payment per year, you can also topup howmuch ever you want between mortgage or rate switch with no penalties. I generally have two years fixed around 1.5% APR and top up mortgage every two years, you can clear off your mortgage even quicker!
Nice video, but I have always taken a fairly contrary view. My mortgage has been my leverage on the property market. I am not convinced paying it off is always the right thing to do for 2 reasons;
1) if interest rates are low as they have been for a good number of years, can you get more money back as income from investing elsewhere? If I can get 10% on my investment and pay 2.5% on my mortgage, surely I want to push more into my investments.
2) Look at the longterm growth of your property equity. If I pay off my mortgage early let us say by the time I am 50, I might have a £500k house let's say. However, if I keep on leveraging my stake in the property market by trading up whenever I can and keeping some element of mortage, I might still have a mortgage of £100k at 50 - but live in a million pound house. Nicer house and still with £900k equity instead of £500k.
So paying off early is fine, if you are risk averse - but if you want to tolerate some element of risk in the property market, I would say stay invested and keep pushing and developing as you move up the ladder, just keep squeezing the mortgage element as you get older to keep your risk reducing.
Your video gives me a lot of happiness
I like the fact that she talks about income more often
Very kind - thank you! Your comments bring alot of happiness!
Another great video. You explain the topics in easy to understand ways.
90% goes towards your interest and 10% towards the actual loan? Absolute joke!
There is potentially a way that you could use credit cards to overpay mortgages that may work out cheaper in the UK. You can get specialist money transfer credit cards on promotional offers, or even money transfer promotions periodically from an existing credit. This essentially is just having money transferred from your credit limit to your current account, which you could then use towards your mortgage as a lump sum capital repayment. The credit cards typically charge an upfront fee for doing a money transfer (around 4%) but this could be worthwhile depending on how long an interest free period you could potentially get on the transferred amount.
Whether or not this is a worthwhile method, or even possible, will differ for everyone but I thought it was worth adding. Good video though from a UK perspective.
This is a fantastic point to make! Thank you so much for that extra level of detail there as I know others will find it really useful too!
She is so good in explaining. I was listening like a 5 year old.
Thank you!
I absolutely love the overpayment calculator. I found the tool few months back and started overpaying my first mortage I took up this year. It is morivating and helpful.
M A Completely agree :) so motivating to see how little amounts add up. Thank you for a great comment and for watching xx
I am pretty much throwing all my income at my mortgage trying to get it down and paid in 5-7 years. My question is this and hopefully you could do a video comparing...
1. Concentrate on paying the mortgage off then investing.
2. Invest half of what you can overpay on the mortgage and the other half on investments.
3. Invest first to get enough income to pay the mortgage inc bills and then overpay the mortgage
I don’t know whats best to do.
My age - 30
HI Michael - what a fantastic comment to ask. Love that you are thinking about all possibilities with your money, and of course it really might be a numbers game depending on your mortgage interest % against what we could "possibly get" with investments in 5-10 years. I would say keep doing what you feel inspired, but also look to start with small amounts in an Investment ISA so you build up passive income from the savings that you plan not to touch for 10+yrs so you gain confidence with investing in that way too. Hope that helps for the time being and thank you again for a great comment!
MamaFurFur
Thanks for getting back to me! I will go for that and try to split the overpayments I am currently doing with an 80/20 approach and increase it once I get used to it :)
@@mikiedoes4890 Good questions, you might find Dave Ramsey 7 baby steps helpful
Thank you for this video, we have been overpaying our mortgage for some time now and we can see the difference, also nice to see a UK focused video
Glad it was helpful!
I had a fixed rate Mortage when the interest went up to 14% back in the late 80s I think it was. I saw many people lose their homes when the rate went up so much. I think it went up from 7% to 14% which broke so many people but I was sitting safe. People thought I was stupid going for a fix rate for so long as at the time my fix rate meant I was paying a higher rate but paying a little more back then saved me from the 14% rate that broke so many people back then and also would have done me.
I have a mortgage and I have to thank you .I am now paying an extra 100 pound per month morgage is 53000 pound thank you for the advice steve
Fantastic to hear but really all the hard work is down to your efforts. Keep it up and I'm sure you will achieve great things!
Mamafurfur do you think paying off a 10percent as a lump sum say 5000 is that better than paying off overpayment of 500 pound each month for 10months pls
Stephen Metcalfe Personally if you can afford the lump sum without any penalties or life going without then do it as your interest could jump down as a result as usually charged daily. Might also be fun to do 10% overpayment anyway on top so that you set that as default new payment to get used to the habit too but totally up to you :)
What do you guys think of investing in blockchain and holding it.. Putting down a small amount.. What you can afford to lose.. Then using the profits to pull out and pay mortgage?
Another great video! Could you do a video on paying off debts from cards if you have any advice for us. Keep up the good work
Thanks so much for the kind comment and appreciate it. Great suggestion for a video - I have one about Debt repayment in my "Best of" playlist about debts in general, but think I might just do Credit card payment one off the back of your suggestion. Thanks for taking time to watch and for that really good future video idea to work with!
MamaFurFur thanks again I have been paying down credit cards the obvious way- most expensive first whilst I’ve got £6000 on 0% balance transfer for three years . I aim to be debt free before then though ! Take care you are very watchable x sometimes someone telling you the obvious is all that you need to hear 😀
Steven Williams Good stuff. I would say do the highest interest physical amount first - so not % but what one costs the most out your pocket each month and smash it away. I paid off £24k in 3 yrs so totally possible :) thanks for watching!
Excellent UK oriented video but one small thing... ;-)
Amortisation - British English
Amortization - U.S English
Just watched this and imediatly changed it over, turns out i will save £11,545 in interest alone, and mean you pay the debt off in full 4 years & 1 month earlier. So you know yes in the UK they offer mortgages up to at least 35 years as thats what i got to start with. Thank you.
Great video, I’m a complete novice at this. I’ve got a lump sum and was just wondering if the right thing to do is to pay it off my mortgage. So thanks for the clarification, I’ll go ahead and do it.
Now to sort my pension 😱
Really love your video..Very educational..So inspired..❤
Good advice for the average household. However with mortgage interest extremely low right now (and when this video was produced) That overpayment money is mathematically better off invested. Real net worth is built in the spread between borrowing rates and ROI/annualised returns. Consider your overpayments as borrowed money with an APR = mortgage interest rate, then look for returns that beat that rate.
All thanks to John Floyd foreign exchange for helping me to trade my $15,000 into Bitcoin and I was credited with the sum of $58,000 after seven working days of my trade with her now I’m mortgage debt free I can settle my bills without even touching my paycheck I’m so happy with Bitcoin life is easy 😊✔✔
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Mamafurfur thanks for your help i was thinking of investing about 100 pound per month your vanguard strategy looks good I thought about a index tracker .But after watching some of you great videos im probably leaning towards vanguard investment thanks
Stephen Metcalfe always do your research as it’s your money of course. I personally use Lifestrategy 100 fund then will switch to 80 fund when I retire. That is based on my risk threshold and goals though :) so do what suits you best. Thanks for watching and the great comment!
Appreciate what you're saying, but if they default, the bank lose out on the principal loan too so they arent getting rich from this purpose. Its because after 2-5yrs, most people will get a remortgage and often with a different lender offering a more attractive rate. Front loading interest means the banks make their money at the start, hence why their standard rates are not so attractive as they can get the customer to move the debt which is no longer so profitable to them.
Could get a %credit card with money transfer. Provides cash to pay lump off the mortgage. Then pay off credit card and repeat. Don't think we can target just the capital to be repaid in the UK but moves repayments further along the curve reducing interest payments and term. Even easier with cash going into an offset mortgage.
So just to clarify. This method will work even if I am on a fixed mortgage. So long as i am not charged for paying back more than needed
Very informative. But I think people should take this as a face value but should apply this principle based on his personal circumstances. It will depend on how much rate you pay (e.g. some people are paying as low as a 1.5%). In this case it is better to drip feed money into a regular saver paying 2.5% (It was 5% until last year) and then over pay 10% before refreshment date.
Love ur videos! Thank u so much for inspiring me. Sue ❤️😄
Thank you so much for that kind comment - glad you enjoy my channel and thank you for watching xx
I was in my Building Society Branch Managers office for 3 hours, where he suggested various types of mortgage.
I stuck to my guns and said I wanted a 10 year Fixed Rate mortgage, which had an interest rate of just under 4%.
From the first month of making payments to them, I have made the maximum overpayment possible each month and the mortgage will be paid off in 5 YEARS, instead of 10, Plus, I'll be saving £5,000 (which would have been Interest that the building society would have gained from me over the 10 years)!
In the U.K. you could use an unsecured cash loan instead of a credit card. If you have excellent credit rating the rate should be 3-4% even better than a 20% credit card... as long as you can repay quicker without fees you are winning
Thanks for these videos! They have been really helpful, it's fantastic to hear it from a UK point of view and the way you explain is really simple to understand. I'm curious though, what would you recommend if you have extra cash, would you put it into adding additional funds to an Investment ISA or repay the mortgage earlier?
aughamullan oh great question indeed! So personally right now my mortgage is a very low rate so I choose to invest. But saying that you have to go with what suits your goals best - if it is to be debt free throw at the mortgage, if you want financial freedom ultimately then aim for investing. I would say though try to make sure you have short terms goals to throw money into like Holiday funds and such for extra cash too if you are hitting investing targets of 20% of your take home pay and overpaying your mortgage already as well. All about balance :) hope that helps xx
@@JenniferAMThomson Thank you very much for the reply! I'll hopefully get this all done by the end of next month, about time I get my money plans sorted! Your videos have given me great inspiration to do so :)
Great video, thank you very much might of just saved me a lump and more! Keep on keeping on.
Did it 2019. Happy days!
Good advice thanks im going to pay 10 % or more every month on the mortgage
zee shan thanks so much for watching and glad my tips are helping others. Keep up the good work
We used to be able to apply for a Virgin One account. Similar to HELOC in the US. Unfortunately we can't get something like that in the UK. We could however apply this method using a 0% fee over draft. The your wages top your account up to zero after a few months. Then repeat.
You need a video editor to put on screen the data you're talking about. It will make your videos more dynamic, entertained, and easier to assimilate. Happy to help out!
Appreciate that - this is an older video now and you will see that my current videos have those elements you mentioned.
So informative and easy to understand. Thank you!
Great video thanks very much !! One thing for thought... Would we be able to use 'Planned Overdrafts' for the lump sum payments? Just say £1-3K every 6 months. The overdrafts having the 'simple interest rate' aka on the daily balance. (which is better than a credit card). If we get our wages paid into that account we probably have MUCH less interest to pay. Yes, as our monthly expenses go out we will be back in the overdraft by the end of the month but then if we 'save' an x amount every month we can pay back the overdraft over a 6mo period. My logic is that we pay extra interest on the overdraft BUT by putting in a bigger chunk into the mortgage every 6 months we are saving a lot more interest on the mortgage. Thus, the net effect is positive. Let me know if my logic is incorrect.
Oh this one has taken me a good few days to think about :) Great big question! I'm going to say your logic is probably completely possible, however I'm going to say that really it might be a numbers game seeing how much interest you pay each day on the overdraft compared to interest saved on the mortgage by using the money. It might also not be a long term strategy to use as you are then at risk if the overdraft charges change suddenly (which the bank can do or remove your overdraft completely).
My gut would say not to do it, but the ball is in your court for that one. I'm going to go with my gut that I would say make overpayments only with money you physically have to your name, as borrowing with a risk of overdraft fees changing makes me very uncomfortable if it was my own money. Great question, and hope that helps :)
@@JenniferAMThomson Many thanks for the detailed answer! I did not expect this :) I 100% agree with you. I just wanted to venture into the concept and confirm if possible. And I actually did the math on a spreadsheet (using normal numbers) based on the current market and reasonable numbers the monthly overpayments are better, you can find it here in my public folder: drive.google.com/drive/folders/1CIfcvuANIUS-Xb6MfTbMOvv0kUFC7Cwk?usp=sharing
This video is fantastic. I've been watching Dave Ramsey in US for about a year and have learnt alot but like you say the UK is different.
Here's my story, maybe you have some advice?
I purchased my home Apr 17 for £146,000 with a £45,000 deposit age 26. I renovated it myself with a spend of £13,000 and now it's worth around £190,000. My mortgage repayments are £397 but at the time I was earning around £21,000, now I'm on £31,000. My outgoing a month are around £600 bills (excluding mortgage). I have no other debt. I have no car debt. I have around £5000 as an emergency fund. My question is, how can I maximise my mortgage payments to get it paid off quickly? Thanks!
Thank you for taking time to watch and comment. Great question - so really first of all find out the T&Cs for your mortgage for overpayments. If you want to pay off the maximum they allow every year, then that would be one strategy. I would also support though looking into investing in Investment ISAs and such so that you also use some of your free cash to generate income for you in the years ahead (such as retirement or before). Lots of videos on my channel with that knowledge if that might sound like something to aim for to. Well done for all your excellent efforts indeed!
Absolutely wonderful tips Jennifer. Big Thank you
What would your advice be with overpayment each month versus putting that overpayment amount in a savings account and then after you have 10k or 20k paying off a big chunk in one go? I'm currently toying with which is the best method for me as I'm on a five year fixed mortgage with four more years to go. So I'm unsure whether to overpay (not going over the 10% restriction of course) or saving that money and paying off a big amount after the fixed term ends. So glad I found your channel BTW! I too found so many US related videos but very few UK ones x
Hi Harriet - oh this is a fantastic question, and sorry for the late reply (just saw it there!). Personally I would say you might get a better rate of return on saving it in a high interest/investment account right now than overpaying too much on a mortgage. Theory being that you can then throw the lump sum at the mortgage if the interest rates shoot up suddenly (they won't). I would say aim for the 10% overpayment if you feel comfortable with it, then save the rest. That is what I do personally - but of course go with your gut. Large overpayment or regularly small overpayment is really splitting hairs and would probably need to use an overpayment calculator to work out if you are saving anything really (probably not much in it). I like the regular amounts as life can continue with balance that way. I hope that helps - and thank you for the kind comments. On a mission to help as many people as I can in the UK, and glad I'm helping in some way xx
Hello, in fact am in a similar situation and i was just thinking about this point before I come across this interesting discussion and video. Given that interet rates are low now and we are tied to 5 years fixed mortgage, we should aim to save as much as we can during this period and pay it towards our mortgage (before interest goes up). As for making lum sums versus regular overpayments, I thought that making regular overpayments may save us a couple of quids (could be significant if your current mortgage rate is much higher than the savings rate), unless the savings are invested at a higher return. btw, I am an economist and did a PhD in economics, and currently an ecademic in the profession where I also expect that interest rates will not go up in the next 5 to 10 years as the global economy is a bit fragile. Good luck.
@@faekmenlaali3266 interesting comment. You really think rates will be low for 5-10 years
@@learnsomethingneweveryday1539 after what's happened now (a year after your comment admittedly) it's highly likely we are going to have another 5~10 years of low rates. World governments have borrowed a massive amount to combat the virus so they will just want inflation to eat away at the debts so as such interest rates will be low for years to come. Current 5 year and 10 year fixed mortgages offered by the banks show they know rates aren't going up anytime soon as well.
Good video and awesome and realistic technique
Thanks so much Farooq for the kind comment - have a fab weekend ahead!
I was wondering about how a typical mortgage structure would affect switching. So if the start of a mortgage is 90% interest and only 10% principle, does that reset everytime you switch provider? So your basically always paying majority interest? In that case would the lower fixed period rate be negated by the fact that your interest vs principle never crosses over? I'm coming to the end of a fixed period on my first mortgage and found your vid very helpful, but just trying to take everything into account. Thanks 😊
Thank so much for this video! We are about to remortgage and I'm now excited to find us a better deal because of what I've learned from your video. Before this I was filled with dread! Also, thank you for the 10% over payment tip. Will definitely put this into place! We have around 16 years left but I hope to bring that down some with our new mortgage.
Really thorough! Thanks!
Thanks so much for the kind comment and glad I can help :)
Excellent video, thank you!
Kamau Thomas thank you for the kind comment and for watching :)
Wonderful channel.
Thank you very much!
Fix interest rate at 0.99% over 5 years, put the 10% overpayment into the stocks and shares ISA make 8% PA. for next 5 years, then either rinse and repeat if you get another great deal or take your cash from the ISA and pay down the mortgage. Got to be a better option than overpaying mortgage right?
The only loan I have is my student loan. I have no idea how I am ever going to pay it off as I don’t work 😬
Not to worry, as student loans are special with their conditions actually so your comment is a great one to answer. With student loans, you actually only need to start paying them back once you earn a certain amount or above and a percentage of your wage. I believe you need to earn £20k+ before you pay them back. Also, unlike any other debt you could have - after 30 years the debt is written off (the government cancel it and pay it off for you) so that debt will go even if you don't pay anything at all. So in this case, the debt actually will go even if you don't work or earn enough in your life to start paying it off. The only time really when debt will "disappear" without paying it. I think you have inspired me to make a video all about it to help others know more about it too. Thanks for the great comment xx
MamaFurFur thanks that makes me feel a lot better!
Thank you. Invaluable as always.
Very welcome
Thank you so much for sharing your videos Jenifer. I am finding them really useful. I would really appreciate it if you could explain why, if you can commit to over paying the mortgage each month by 10%, why not increase your fixed payments by 10% instead. I am assuming the reason is because you are committed to 10% less so it is more flexible in case any emergencies crop up and also you get a better interest rate over a longer term. Thank you.
Great question - so in theory this is what we have - our payment though shows as two parts, the default minimum amount and then the 10% top up. I can remove this if we needed, and that is the flexibility piece in the puzzle but I don't plan to remove it.
Great info, Thank you!
Niall thank you for watching and the kind comment :)
The answer is simple . Live a life like you are a peasant . That's what they all.do . Extreme tightness is the key .
Love your common sense and truthful advice. Unlike the BS H.E.L.O.C (not a UK financial product) advice from America on TH-cam which probably get you into more debt.
On a fixed term mortgage and has been paying off extra each month towards the mortgage the last few years. Now the interest is now way lowered.
Going to continue this method plus a yearly extra one off payment. Hoping to pay off what's left of a 15 years mortgage in 5 years time.
This is outstanding - well done for great progress xx
@@JenniferAMThomson Thank you. Just have to keep going with this financial discipline.
Thanks for this video I am going to take this into account I have 180k mortgage paying around 700 a month am going to increase this to 900 a month now because I still have 23 years left on my mortgage and I want to be free in 10 years max
Thanks for this Jennifer, really informative stuff. I'm six months into a 36 years mortgage (necessarily long due to low salary at the time) and immediately started overpaying by £100 a month. MSE calculator informs me that this should reduce my term to 22 years, based on my current interest rate (2.59%) which I know will rise at some point.
I panicked a bit when you said we have to instruct the bank is deducting the over-payments ff the principle. I thought that was automatic and didn't realise they could use it for the interest?! I will go to my lender and make sure.
One more point: when you suggested to pay off lump sums with work bonuses etc. is that worth it, considering the bank will punish us for doing that? If I pay off, say, 2k lump sum, the penalty they hit me with will cancel out the interest I saved on?
Thanks!
Great question - with regards to the lump amounts, always keep within the boundaries before you get any penalties. So for example if you can overpay 10% total debt only, only do that then invest any extra bonus money in a high interest saving account/Investments. That would be a great strategy and of course, keep investing in yourself and talents by reading as much as you can and finding out as much good information about money and life. Hope this helps :)
@@JenniferAMThomson Thanks for the reply. I'm planning on sitting the CeMAP exam, such is my newfound interest in all things mortgage-related! Thanks again.
Good Yeoman oh wow that is a fab idea! Really aim to help people and it will change your world. Outstanding goal zx
Or you can do this the easy way.
Step 1 : Collect paycheck
Step 2 : Before paying ANY bills, pay YOURSELF atleast 10 % of your salary
Step 3 : See how much is left, and pay your bills
Step 4 : Whatever is left now, is free to spend any way you see fit (this is your current life money)
Step 5 : INVEST YOUR 10 % ( invest in either real estate, or index funds ) Even in shitty times you should be able to pull like 5 % growth over a 10 to 15 year span.
This is MORE then the interest your bank will give you, but it should also be MORE then the interest on your mortgage.
So it is smarter to invest then it is to pay off your mortgage.
When interest has acumulated to a substantial enough amount, THEN pay off your mortgage.
The principle here is stupid easy. Make your money work FOR you, instead of doing it yourself.
Fantastic comment and actually I agree completely with investing - it is a fine line though that having no debt means you need less to live on, but I actually agree personally I only pay off 10% overpayment on my mortgage and then invest the rest. Thank you for a great comment and watching!
Fantastic UK-centric video!
I currently have a 25 year mortgage with Barclays and my 2 year fixed rate will come to an end in September. When would be a good time to start looking into remortgaging before my fixed rate comes to an end? I like the idea of fixed payments instead of variable and would be looking for a 5 year or longer fixed term.
I'm allowed to make over-payments on my mortgage up to 10% each year (something I haven't taken advantage of yet). Interesting info about 90% or so of your mortgage initially going towards interest payments. It defiantly makes sense putting any spare cash towards the mortgage.
All of the US videos mention that you must inform your lender that any over-payments to be made should be put on the Principal and not the Interest.
Is this something UK banks allow you to do? I was always under the impression that there was no way of separating the principal from the interest in the UK. To me, just the very term "pay off the principal" sounds very American :)
I thought I'd ask here before calling my bank and sounding like an idiot! lol!
Regards,
Mo.
Hi there - great question indeed! I believe you can look into remortgaging roughly 2-3 months before the fixed period ends, but check with your bank. Usually you can even do it online if you want to stay with the same bank and perhaps consider locking down a further 2 years to get the lowest interest rate then make overpayments on top.
I don't believe there is any way to "pay off the principal" only in the UK either - you just set up an overpayment and it goes against the mortgage as a whole in terms of what is due and interest daily. But it is more the fact you are paying over and above that will see you clear it and make progress faster.
Hope this helps and thank you for watching!
@@JenniferAMThomson Thanks for your reply!
I will speak to my mortgage advisor form Barclays to arrange a meeting as well as looking at other providers to get the best interest rate.
Regards,
Mo.
It might be worthwhile to spend money in a Big and nice whiteboard given than you have paid off your Mortgage rather then buying a tiny one off the Pound shop!
This might indeed be a place where the bigger the better indeed! Thank you for that comment and hope you enjoyed the video
Or you could stick with a small one which is perfectly adequate and help the environment 😁
@@clairenicol2918 We need to focus a lot on a small one. Will have a headache. Need to visit doctor. Need to use transport. Not helpful to the environment at all :-(
KriTech slightly melodramatic 🙄
Why not use your mortgage as leverage to purchase another property as a buy to let investment? Passive income each month along with capital growth of the property. Huge long term investment
If people are committed to paying off their mortgage early then an offset mortgage should be the first place they look at
Thanks for this, great advice. I have just finished my first 2yr on my fixed rate mortgage and now have a new deal with the same lender at £140 per month cheaper. Now on another 2 year fixed rate. The only catch was that there was a fee of £900 which was added to my mortgage.
How can i avoid this in the future or is this normal.
Any advice would be appreciated.
Hi John - thanks for a great question. So I believe you might need to shop around then when you are out of the fixed rate period, as normally fees don't apply to move to another fixed rate time period. You are simply signing up for the same mortgage but locking down the rates. You can move lender of course, and so I would say have a look around in future and even barter directly with the Bank to have the fee removed. You aren't setting up a new mortgage just moving to a fixed time period from a standard rate and they should want to keep your business after all. Hope that helps in some way!
I usually save up in an isa & release it towards my mortgage before remortgaging with another lender (a bit like the American model)
Just wanted your views on whether I should consider the 10% instead?
Thank you for the video xx
Ella Dcosta oh great question. So are your savings in a cash isa or investment isa? Personally if the money was in investments I would leave it there if you were achieving more than 5%+ year on year growth from it and then do 10-20% overpayments on monthly mortgage amount. If in a normal Isa then that is a great way to know down the mortgage but would say consider using that bulk money in investment ISAs to give you a passive income source lasting longer than the mortgage payment terms left. It’s your money of course - so whatever you do feel confident you are happy with how you are using it :) great comment and thank you for watching xx
I use a cash isa for saving.
Thanks for your reply. I'll look into the investment isa as well xx
Ella Dcosta and don’t be put off by the stock market going up and down :) the downs mean it is a sale and people are ready to stock up as the value will go up again soon. Thanks for a great comment xx
Hi. I’ve started watching your videos. They are very good and clear to understand.
But, you need to invest in some acoustic tiles in your room : )
Very loud echo.
It ‘s funny how she threw her husband under the bus 😄.Good video
Thank you for watching and commenting - always keeping it real :O) and glad it didn't sound too harsh then!
Thank you for the video and making it UK centric. Not sure if Santander will allow overpayment but I will ask
No Harm in asking :) and every bank will allow overpayment usually within the 10% of amount due still limit. Give them a call though for sure and here's to a great 2019!
Most UK bank allow 10% extra payments without charging ERC early repayment charge (1-5%).
My last mortgage deal with Halifax did not allow overpayments.
Thanks for this vid
Im gonna go get my mortgage papers and have a read
Im in a fixed rate for 5 years and am already paying 10% but want to add lump sums and not sure is the penalisation is anything to worry about
Thank you very Much @Mamafurfur I shared these info you explained in this lovely video and they are gonna make the difference for us :)
I actually managed to get a 40 year mortgage with nationwide. 2 year fixed period and obviously I don't plan on having it anything like that long, but its made my monthly payments so small that I should be able to pay it off in a few years. id guess you need to be quite young to get one. I was 26
Great video very easy to understand! Is this method being applied to a repayment mortgage? What happens if you make a regular overpayment to an interest only mortgage, which is what we have?
Gary murdoch yes it is to a repayment mortgage. To be honest you need to be aiming for a repayment one as you can easily be years down the line without moving any of the principle due. Do the exact same 10% minimum for an interest only mortgage but make it a goal to apply for a repayment one as soon as the bank will allow. It’s the only way to get rid of the debt and have your home to yourself :) keep up the great work and thanks for the great comment
MamaFurFur thanks for the reply and advice keep up the good vid content
Gary murdoch I will keep up my end of the deal if you get that financial freedom too :) let’s do this! Thanks for watching I truly appreciate it!
Do i have to tell the Mortgage Company/Bank that i am making over payments or just had the 10% on and say nothing? Thank you for your great videos and info.
Hi there- you don't need to inform them, you can make the overpayment but always check that you won't face any penalties for making overpayments within your mortgage. Hope that helps!
@@JenniferAMThomson The terms and conditions say i won't be penalised for making overpayments, Thankyou for getting back to me so quick.
@@bengunns9500 I can tell you you DO need to tell them its for the capital. Santander wrote me a letter basically saying they will use it toward the Interest but to call them if you had 'another intent'. You need to tell them its for the capital. I did. They make it difficult for a reason.
We want to get a 10 year mortgage and pay it off in 7-8 years but it will mean overpaying more than 10%
George Austers obviously..
Great video, I’m going to make overpayment as soon as I get the keys for my first house next month, my only question is, would I have to “set up” an overpayment or can I just over pay a random amount each month in order to benefit from this I mean I’m sure the over payment will still go towards the principle of you want it to but do you benefit from a shorter mortgage term if you simply overpay without setting it up and doing it like a pay as you go thing
We have the same system in Norway. But, I am not sure paying off your mortgage is the way to go. Thinking about the inflation, and the value of the money 10-15-20 years down the line. I would rather put my extra money into a fund maybe a 50/50 stock and interest fund. I just got a new mortgage and got an interest rate of 2.75 fixed rate for 10 years. I will not pay anything off after 10 years, have to see after 10 years, where the interest rates is then.
Firstly, thank you for you great channel. Do you have video of your current portfolio and investments? Thank you
Yes - check out my latest video that went live on Tuesday!
What is your opinion about offset mortgage is this better than paying the principle. Or is there any bank still doing it in uk
me neither oh great question. I am not sure if any banks offer offset mortgages any longer actually myself and to be honest would rather not have my savings guarantee the level of interest or time I pay back my mortgage. I want to be in full control of that to overpay or otherwise. I would aim for repayment mortgage of course so you can really get your home in your name quickly and with the techniques I mentioned. Great question though and I’m off to search google now too :)
Absolutely loving your videos :) I'm from Norway so when I moved to the UK a lot of the bank and finance things are different. I am now 29 years old, we have a solid buffer and have a mortgage. We are currently overpaying it every month by roughly 15%. We are still able to put away a good amount into savings (Minimum 400 pounds but we aim to put away 800 pounds) every month. But I am very interested in starting to invest as we have a bit more financial freedom. Would you recommend still overpaying the 15%( which is about 200 pounds) and put some of the money we put into saving into investments? Thank you so much for all your help in these videos :)
Always good to diversify and spread your risk. There is no other way to advise on your question because your 15% overpayment can be put toward an investment, but that return is not guaranteed to be better than 15%. The higher the investment return comes usually with the highest risk.
First of all ,i want to say i don't really comment on here but your video is that good informative i got to say something . Thank you very much for a really good informing video. Better than any have seen on here. We have just remortgaged our home 2 years ago and got 5 years fixed. the house was valued 205k and borrowed 154.125 from the bank when we remortgaged but now we've done an extension to the house which should up the value of the house. in this case what is the best to do, wait for the 5 years or try to speak to the bank of the new value of the house? Thank you in advance.
Thank you Deen - that is very kind of you to comment that and for watching!
Thanks for this video! Would a money transfer on a credit card work in a similar way to the credit card method they use in the US? Maybe there are T&Cs in the money transfer that wouldn't allow you to pay toward a mortgage, but the method would be the same.
I'm not exploring that option at the moment, because my only debts is my mortgage, and mentally I'd prefer to save and pay off the mortgage in an annual lump sum with my savings. Currently aiming to overpay by 25% per month. But I have a 35 year mortgage so a greater incentive to pay more to take the years off. Gives flexibility too.
Maybe I'll see if I can use a calculator to work out the savings of a money transfer method. Thanks again
Great Video, Really Thanks much!!! Me and my husband have the house debt with a combination of help to buy + Bank Mortgage. Any specific ideas how to handle this kind of situation?
Hi - great video. So what if you have (in my case) 2 rental properties as well as your main home with a mortgage. Which one would you look to pay off first?Also my rental ones are on repayment, should they stay on repayment or revert to interest only?
Thank you so much for a great question! Honestly - your home means you and your family are looked after even if the rental market goes down. You can always sell off the rentals for profit/loss as the market decides. Overpay your own home first then as you feel inspired pay down the rental properties. I would say you might get more return investing money into an Investment ISA too outside of your own mortgage repayment before you then look to overpay the rentals - but again you do what you feel is right. Always look after your own self and family as the priority :) then you really will have financial and time freedom, and sounds like you have a great passive income lined up in the works with the properties too. Thank you for watching and a great comment! :)
@@JenniferAMThomson Thank you. Nice videos kudos to you.
Works better if you pay one first as you will clear an entire debt on one thing faster, if its piecemeal on each, you aren't really going to see the benefit in a reasonable time frame as interest is front loaded.
However, paying down the principal on a property rental seems good as the debt is reducing.
The argument against this is as follows:
1) The value of money dwindles over time, and as such, the debt you have remaining if interest only is naturally more palatable as £100k today doesn't buy you the same in 15yrs time.
2) The value of the property increases over time in most areas. As such, you will have equity along with the debt, which over many years is increasingthe gap on the interest on a value that diminshes every year.
3) As the tenant is paying, this is cashflow for you and any interest is being paid by them which you take profit on for your ownership/investment, allowing you money to spend or reinvest in other ways.
The real benefit of paying some principal down would be:
1) To clear the debt and allow you not to worry about interest rate fluctuations in the coming years, which could eat away cashflow profits.
2) To consolidate and limit your exposure which may become a concern as you get older.
So for example, if you are trying to grow a portfolio, paying interest only makes sense as you are trying make every penny work for you, when this is no longer the plan and you are comfortable, reducing these debts makes sense as nothing is lost to your way of life and in the event of sharp increases in interest or changes in legislation you are protected.
Hi Jen, you mentioned that you take off 10% off the mortgage term if you pay 10% extra each month. Does it increase exponentially if say I pay 20% extra each month, would say 21% be taken off the term. Can be quite motivating if there are increasing returns to scale. :-)
Great question, without knowing exactly your interest rates and T&Cs I would actually say go onto the Money Saving Expert overpayment calculator and play around with your own values/percentages to see exactly how much you could save. Normally there is a cap of 10% total overpayment a year (on the total mortgage remaining) but could be good fun to play around and see how much exactly you could save and I'm thinking it it probably exponential like you believe too!
Excel has a mortgage template