dozy:
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Well you’ve gone wrong then somewhere Connor , I’m 60 & my mortgage was paid of 20 yrs ago
No I haven’t. I invested what I was going to overpay my mortgage with instead of paying the mortgage. Much better returns.
Say I have a £100,000 mortgage at 2% over 25 years. I overpay at £200 a month. I pay off my mortgage 9 years and 5 months early, I save £10,724 in interest, paying a total of £116,455.
Say I don’t overpay the mortgage and I invest the £200 a month instead at the stock market long term historic average rate of 7% returns. My fund would be worth what the mortgage is by year 15 so I could pay off the mortgage 10 years early. But more importantly it’s cost me just £112,520 in combined mortgage payments and monthly investments. So I’m not only mortgage free over a year quicker but it’s cost me £3935 less to do so.
If I were really going to do it to the max, and by god do I wish I’d had the balls to actually go through with this especially given the 24% my fund has grown between today and this time last year, I’d go interest only on the mortgage reducing the £424 a month to £167, top up the monthly investment by the difference between interest only and repayment mortgage to £457 a month. Invested with the same 7% average returns I’d be mortgage free at 11 years 10 months costing me a total of £89,000 out of my pocket which is actually less than I’d taken out the original mortgage for.
Edit: Sod it, I’m putting my money where my mouth is. For £75 I can change my mortgage to interest only so I’m going to, just waiting on the phone call from the bank. Interest only works out at £68 a month, £15.69 a week. You can’t even rent a bedsit for a week for that, there’s no point ever paying off the mortgage at that rate.