Poll: Are you using the Reduced Mortgage Rates to Pay off your Mortgage Quicker?

[Zak33]

Lo people.

I know some of you are stuck in fixed rate mortgages, but you can answer this too, imagining that you were out of them.

With this last 6 months of interest rate cuts, some of which have been passed onto borrowers, and some haven't, are you:

Spending all of the the savings on other things, and making a lower payment into your Mortgage, one which will pay off the debt in the SAME time as when rates were higher, ie are you using the rate drop saving as spending money (be it on essentials like gas/elec, or on lifestyle/retail)

Spending some of the saving, but also paying off the mortgage a little quicker than it was planned

Spending no extra money on anything, and using the interest rate drop purely to clear the mortgage faster.

Choose away

[piggin23]

Keeping my payments the same and paying off the mortgage.
With the extra I am paying the mortgage will be payed off 6 years early (if things stay the same).
Have been told that for every extra £50 per month you pay off over the life time of a mortgage reduces the term from 25 years to 23 years.

Prefer to have the money in my pocket than give it to the banks.

[Funkstar]

Technically I am.... for now.

I've been over paying on my mortgage for a while not, over a year I think. My actual mortgage payments are gown to almost 2/3rds of what they were at their peak. However I'm still paying the full overpayment amount I set up last year. Not sure exactly what value of capital i'm re-paying a month, but it's a lot.

Come July though, my mortgage will balloon as I get the keys to my new place. Going to get hammered for interest as I wanted to borrow as much as the bank would give me at the moment. I should end up with a nice excess from selling my current place, letting me pay off my car, settle any other outstanding balances, furnish and perhaps decorate my new place and give me some spare.

So I end up with a terrible fixed rate for two years, but after that it'll drop quite considerably.

If I had stayed where I was, I could probably have payed off my mortgage is something like 6 years instead of another 19.

[Zak33]

So I end up with a terrible fixed rate for two years, but after that it'll drop quite considerably.

you gotta do what you gotta do bud. Shame the banks are all stiffing people like that though. Still, you're a higher risk on this new pad I guess, borrowing lots more dough.

[Funkstar]

you gotta do what you gotta do bud. Shame the banks are all stiffing people like that though. Still, you're a higher risk on this new pad I guess, borrowing lots more dough.

Yeah, I do understand why 90% products are so rare, it's just a complete PITA for me specifically, especially when my affordability is about £30k higher than I actually want to borrow, it's all just based on the lowest of the purchase or valuation price.

Only 2 years at fixed rate though, and I can still pay up to 10% extra a year If i want to.

[Bugbait]

I have an offset mortgage so in theory I'm overpaying every month that I remember to move money into the account. With a mortgage interest rate of 0.89% I'm not too fussed at the moment . Might as well enjoy it while it lasts.

[directhex]

Still on a lengthy and high-rate fixed. By the time that's over, rates will be back up again

[Zak33]

I have an offset mortgage so in theory I'm overpaying every month that I remember to move money into the account. With a mortgage interest rate of 0.89% I'm not too fussed at the moment

I'm offset too, but dont need to move any money, cos what I've got is in the offsets.

but i WISH it were at .89%!!!

Mine's at 4%

[Barrichello]

We are down to £850 a month, down from originally £1,350 on a tracker interest rate of 1.5% and we have basically been over paying on the capital for a while now but i just found we have made the maximum overpayments possible in this term. Gutted.

So voted for option 2.

I would rather pay more of the mortgage, annoyingly we just got our bonuses last week and would like to pay some more off as well with that, but cant now

[malfunction]

Haven't reduced my payment so I'm technically overpaying but as my mortgage (thankfully!) isn't that big and doesn't have that many years to run it isn't making a huge difference. Have overpaid like crazy in the past (more than doubling the payment) but that had knock on effects (all work and no play makes Jack a dull boy, and a miserable one though I wasn't quite at the knocking down doors with an axe stage)...

Oh and mine's an offset too but again due to the relatively short term remaining it isn't making a big difference. IIRC my rate is 1.89%

[tiggerai]

On a fixed, so answering hypothetically...

I would save a bit and pay off a bit... seeing as I have a very limited budget at the moment, it would be a good way to finally have some savings. I live from paycheque to paycheque at the moment, so would give me a little bit of financial security.

I'm glad I went on a fixed, coz I would have defaulted (without help) after 5 months otherwise. It runs out in 2011 so hopefully I can ride out the recession silliness knowing what I need to pay each month. It would be lovely to be in a position where I could overpay... but that'll come later.

[piggin23]

Only paying an interest rate of 0.67%

[TheAnimus]

Saving the rest in a risky, but lowish risk IV.

But that money is going to ultimately be used to pay off my mortgage once it hits a target, so i awnsered for the pay it off... Even thou i'm not.

[Bugbait]

I'm offset too, but dont need to move any money, cos what I've got is in the offsets.

The more money I take out of my company the more tax I pay so there's always a balance between the interest savings over time versus the additional tax payable. Since the base rate has dropped so much I actually leave most of it in the company for reinvestment purposes as the interest savings on 0.89% versus 5.89% at its peak are significant.

For those on non-variable PAYE incomes it's best to overpay your mortgage unless you can get more (post-tax) income by reinvesting it intelligently.

[MasterFlash]

We've gone from a fixed 4.69 to a automatic variable 2.5%. We're going to pay in the same amount if not increase it slightly. I'm considering cashing in my ISA's and whacking it in as well.

[Steve]

I'm trying to save so that in a few years I can get a mortgage. Of course the very thing that's allowing people to pay off mortgages quicker is preventing me from earning much on my savings.

Damn.