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?