Image courtesy of ddpavumba at FreeDigitalPhotos.net
As a result of my even-more-frugal mindset for 2015, I’ve been thinking about our mortgage payments and how much of our wage they take up. We have a much smaller monthly payment than a lot of people I know, but even so it would be so great to not have to think about this expense in the future.
A little history – we took out a 25 year fixed mortgage in 2010 and for the next 3 years we overpaid by £150 a month. This had a massive, positive impact on our balance and when it came to taking out a new mortgage we were able to change it to a 15 year term. We are now overpaying by around £38 a month. However, this month I have upped that overpayment to £50 as every extra penny we can throw at it will reduce the term – and the interest paid.
In a few months we will have finished paying for our new kitchen so the intention is to up that overpayment to £150 again, and come the end of our current 5 year fix, we hope to be able to reduce the term to 5 years. Who knows what will be happening with the base rate by then. Any time we can take off the term now is surely a good thing.
So. Any extra cash I have from now on will be thrown at the mortgage. I will be mortgage free by 50!
If you’d like to look at how overpaying your mortgage can reduce the term and the amount of interest you’ll pay, have a look at the Mortgage Overpayment Calculator over at MoneySavingExpert. It’s fascinating, tempting stuff! Also, why not pop over to Mrs Financial Freedom and read her thoughts too?
Smart move, you are on the right financial track.
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