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Hurrah - Mortgage Paid off in Eight Years!

Idaho said:
I have a fairly small mortgage on interest only - so no plans to pay it off. My long term financial plans don't really involve paying off the mortgage. In fact right now I want to find reasons to borrow large amounts of money.
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I remember reading an article a while back that argued fairly logically and convincingly that you're better off with an interest only mortgage that you basically never pay off, and that it's better to use money that you would otherwise use to pay off your mortgage to invest elsewhere for higher returns.

Basically, the argument went that the rate of return that you'd get for investing your money in the stock market for 25 years is better than you'd get for paying off a mortgage and 'saving' yourself the outlay of capital and low interest repayments.

The financial expert who wrote it had no intentions whatsoever of ever paying off his mortgage. It made a lot a sense at the time. I mean, why do we? It's not like you can take your house with you when you go, is it?
 
AnnO'Neemus said:
I remember reading an article a while back that argued fairly logically and convincingly that you're better off with an interest only mortgage that you basically never pay off, and that it's better to use money that you would otherwise use to pay off your mortgage to invest elsewhere for higher returns.

Basically, the argument went that the rate of return that you'd get for investing your money in the stock market for 25 years is better than you'd get for paying off a mortgage and 'saving' yourself the outlay of capital and low interest repayments.

The financial expert who wrote it had no intentions whatsoever of ever paying off his mortgage. It made a lot a sense at the time. I mean, why do we? It's not like you can take your house with you when you go, is it?
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This is exactly what my boyfriend does funnily enough. It seems to work for him, although I'm still quite baffled by it (ie why not just rent?)
 
sojourner said:
How the fucking fuck do people do that?

Are you mortgage-payer-offers on ridiculous salaries or something?

I think mine's due to be paid off when I'm about 75

Bollocks to that - I intend on dying first.
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I'm not on a ridiculous salary at all - far from it! When my gf first suggested making overpayments, I was really worried about it. So we just did it bit by bit. Paying an extra £100 a month. And then after six months of that and finding it was OK, just upping it by a little bit. After a while, it becomes addictive - especially when you see the term drop away so quickly. Because you're mostly paying interest for the 25 years, when you up the repayments it really cuts down the term.
 
Pip said:
This is exactly what my boyfriend does funnily enough. It seems to work for him, although I'm still quite baffled by it (ie why not just rent?)
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There's not inherent reason not to rent. But a lot of people like the security of knowing that nobody can kick them out of their home. And, to quote my friend, if you want to paint "KABBES" in big green letters on one wall then nobody can stop you.

The idea behind investing the money elsewhere other than the mortgage is sound in principle alright. However tax does rather take a chuck. Typically mortgage rates are about 6% (they are temporarily lower, admittedly), which means that as a 40% tax rate payer you would need to get better than a guaranteed 10% gross return to be worth investing rather than paying back the mortgage. That's really tough to achieve, although not impossible. Personally I gave up trying and started to pay back the mortgage instead, which causes me far fewer sleepless nights.
 
Pip said:
This is exactly what my boyfriend does funnily enough. It seems to work for him, although I'm still quite baffled by it (ie why not just rent?)
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I suppose if he sells and moves he'll make a profit, and instead of investing that in a new property, he can invest it elsewhere and make money with it as well, instead of it being locked up in bricks and mortar, which I guess people like that see as equivalent to being tucked away under a mattress, they'd prefer to make the money work for them. Or something like that.

I'd rather have the bricks and mortar myself, you can't live under a worthless paper share certificate if you invest in the next Enron.

ETA: Kabbes explained it all much better than me. :o :)
 
ianw said:
I'm not on a ridiculous salary at all - far from it! When my gf first suggested making overpayments, I was really worried about it. So we just did it bit by bit. Paying an extra £100 a month. And then after six months of that and finding it was OK, just upping it by a little bit. After a while, it becomes addictive - especially when you see the term drop away so quickly. Because you're mostly paying interest for the 25 years, when you up the repayments it really cuts down the term.
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I echo the "addictive" sentiment. There is nothing more satisfying to spend your money on, in my experience. And with the added knowledge that you haven't realy spent it at all, but saved it!
 
Yelkcub said:
I've just phoned my mortgage company to up my payments and it transpires that I'll have complete paid of my mortgage in eight years. I'll be 43 (gulp -no hurrah for that) then and I'll be FREEEE!:D

Sorry for smugness but it's much sooner than I thought!
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It's a huge relief when it happens. :)

I'm mortgage free now. :)

Although I wouldn't recommend the route I took: have an accident, smash up your wrist, have two botched operations, have two more lots of corrective surgery involving bone and tendon grafts at a specialist hospital, sue the first hospital for medical negligence and win. More than half a decade if you include the time between having the accident and settling the law suit. That's an eighth of my life those b@st@rds stole from me! I'd much, much, much rather have those years of my life back.

But failing that, it's nice not to have to worry about rent or mortgage. Especially as my contract has finished and I don't have another job lined up. If I had to worry about paying rent or mortgage or losing my home, I'd be a total stress bunny.
 
i didnt think anyone managed to pay their mortgages off unless they were like, 98. Or Kanda: prob like, in one instalment.
 
kabbes said:
There is nothing more satisfying to spend your money on, in my experience.
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Jesus - that's sad :D

Still each to their own. I'd rather fripper it away on books and food, and not much else tbh :confused: (oh forgot - and wine :D)

The only spare money I have after paying all the bills goes into a savings account. And that's only there for when I lose my job (no redundancy payout for me), and it's really not a lot

It's probably a lot easier to save/make overpayments if you're living with someone. A solo wage goes nowhere - esp with a non-earning dependent
 
Ah, an offset mortgage means that you still have instant access to get the money back if you really need to. It's more efficient than a savings account.

It's about freedom. I work so that one day I won't have to work. Not having any housing costs is the biggest factor in that. If I can own my own house and obtain enough savings elsewhere to pay me a moderate amount then I will be able to never work again, which would be the best.
 
kabbes said:
Ah, an offset mortgage means that you still have instant access to get the money back if you really need to. It's more efficient than a savings account.

It's about freedom. I work so that one day I won't have to work. Not having any housing costs is the biggest factor in that. If I can own my own house and obtain enough savings elsewhere to pay me a moderate amount then I will be able to never work again, which would be the best.
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Sorry - I fell asleep at the first line :p

I fucking loathe money talk. Money Box on R4 makes me want to twat the radio with a big stick

I'll always just work.
 
When we've finally paid off our house, I'm going to rub my naked body over every part of it. Even the difficult to reach bits in the attic.
 
sojourner said:
Sorry - I fell asleep at the first line :p

I fucking loathe money talk. Money Box on R4 makes me want to twat the radio with a big stick

I'll always just work.
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Word.

"so if you invest 4% in tesp account and wait 6 months for it to mature, then withdraw it, but not before the annuity doubles to avoid a penalty fee then place it on a no interest card then swap it to your hepo account you'll save 2% which roughly will work out at £56 for every £200,000 which I'm sure you will agree will be well worth it blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah"

That's what exactly moneybox sounds like to me.
 
And that's why some of us will be doing the naked house rubbing and some of us will not.
 
kabbes said:
It's about freedom. I work so that one day I won't have to work. Not having any housing costs is the biggest factor in that. If I can own my own house and obtain enough savings elsewhere to pay me a moderate amount then I will be able to never work again, which would be the best.
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That, and / or having a "minimum wage" lifestyle ;)
 
kabbes said:
And that's why some of us will be doing the naked house rubbing and some of us will not.
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I can naked rub my flat all I like, and continue to do so until the day I die - which is the only time they'll get me out of here.

And push as many sponges down the overflow as my heart desires :cool:
 
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