Ah, the mortgage – the bane of every grown up’s life. Not that I’d call myself a grown up – I’m still getting there!
Ben and I lived in 3 houses together before we bought our own property with a mortgage. Saving for a mortgage might be a post for another day, but we were both very fortunate to be gifted and left some money on either side of our families which significantly helped with a deposit. The time we spent renting meant we were able to gather funds and increase our salaries to the point at which we could afford a nice house with a good mortgage.
Personally, I prefer to live with a mortgage rather than renting, but this isn’t everyone’s choice. I like the fact that at the end of it all, we own our own property and are not at the mercy of anyone else. But for others, being in debt with a mortgage might be stressful and just not what they want to do.
Our mortgage is through HSBC which was the best offer for us due to the accounts we already had with them. At our first mortgage appointment, it was explained to us what all the terms and conditions were – one of which was that we could overpay on our mortgage meaning that we would pay it off more quickly.
At the start of our mortgage around 2 and a half years ago, our monthly mortgage payment budget was comfortable but slightly stretched. We knew from the outset though that we wanted to overpay it as much as possible to reduce how long we would be in debt and how much interest we were being charged on it. The interest was probably the most shocking thing for me – you pay so much more than what you think you’re going to over time!
All mortgages have a limit on how much you can overpay – ours is currently 10% of what we owe at the beginning of the year.
At first, we could only put down £100 a couple of times throughout the year. But we’ve been lucky and worked hard enough to have had a couple of pay rises and bonuses between us. On top of that, my extra income has increased to add on top of my full time salaried job. We’ve been managing our finances well enough this past year that we’ve been able to add to a savings account, not have to worry too much about our monthly spending and overpay on the mortgage – that’s what running blogs has done to my income! If you want to start your own blog and start earning money, check out my guide on how to start a blog in 5 easy steps here.
At the beginning of the year, I decided to set up a direct debit from my bank account to the mortgage overpaying £250 per month. We decided that if I noticed I was struggling and having to move savings back into my bank account each month, we would lower the number, thinking it would be a stretch for me. In fact, it turned out not to be an issue at all. Actually, I’m still sending money to our savings every month. Twice a month, as it turns out.
We checked the HSBC online calculator and by overpaying £250 per month on our mortgage, we can knock 7 years and 3 months off our total repayment time while also saving £48,661. That’s a huge amount!
And we’re not using anywhere near the overpayment amount each month that we can do! In fact, we could be overpaying almost £16,000 more this year without going over our limit.
The benefits of this in the long run are huge. And thanks to the extra income I’m earning online, it hasn’t been a struggle in the slightest.
That’s why in my goals for December, I decided that I wanted to overpay the mortgage by £300, an increase on my usual £250. I’m actually thinking I may overpay more, so we’ll see how that turns out when I reach the end of the month – I’ll round it up when I go back over my goals in early January so keep an eye open for that!
If you want to check out how I’m earning this extra income that means I can overpay on my mortgage, check out my November income report here.
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