Owning your own home

Yeah, I mean basically if you are afraid of investing and you have debt, and the debt is pricier than the return on savings, pay off the debt.

If you are confident you can make the money work harder for you elsewhere, do that instead.

LTV keeps reducing anyway because London ..

What about this tho?

If the value increases say 10% at minimum every 2 years and I keep remortgaging every 2 years ..

Owning the house 100% .. what does that exactly achieve? Frees up funds for next house? That I already have because I havent overpaid ..

I am genuinely seeking an answer for 'always overpay' rule.

I don't think it is an "always overpay" rule. It's an "overpay if it makes sense once you've done the sums rule".

I overpay all savings once they hit a certain point because I save more than I get in interest.

I am genuinely seeking an answer for 'always overpay' rule.

Like I say, it's not a rule - if you can make the money work harder elsewhere, do that.

I think as a guiding principle it makes sense... if you have say a generous company pension and your investments are well balanced and you aren't sure what to do with the extra dorrah kicking around in your bank account at the end of the day.

extra dorrah

looking at a shand stoater ..

shand stoater

It could be the only bike you ever need

Fuck that

Speak to aroogah as I believe he has experienced this.

I do not. I think you have me confused with someone else.

Think this was discussed fairly recently, maybe on the investments thread.

Overpaying doesn't necessarily make sense at the moment. For example I'm getting about 7.5% return on an ISA with nutmeg. That compares to a mortgage rate of about 2%. Currently overpaying doesn't make sense.

However, there is a chance that further down the line interest rates will jump and if you have more capital left you'll be paying more interest. In theory you can use the interest/money you've saved from not overpaying to pay off a chunk of capital and return you to a better position but there may be a limit on how much you can overpay.

The other side is if you overpay you may get to a more favourable LTV band with a better mortgage rate sooner.

It's a bit more complicated than overpaying is always best.

http://www.moneysavingexpert.com/mortgages/mortgage-overpayment-calculator

a) get a 2 bedroom (I rented my spare room out at first, and no I didn't tell the landlord or the bank. He paid me in furniture and appliances)

Possible, given generous gift from parents.

b) you can get a better flat in a better area than you could buying outright,

Absolutely - I wouldn't go for it if I could buy outright in the same area in a year or two.

c) you can afford to staircase to 100% as quickly as possible

Not sure. Depends on how this career lark goes...

All good points, thanks. It's good to get input from people who've done it.

Not my spreadsheet but this is a useful one for comparing overpayment, deals, etc http://www.locostfireblade.co.uk/spreadsheet/Index.html

But, you do need to compare it with what the overpayment would be earning if you did something else with it.

My fixed rate is up at the end of sept and my advisor really wants me to go for an offset mortgage rather than another fixed. Anyone else on offset or has strong opinions either way versus another fixed product?

I think overpaying as much as possible in general makes sense. With penalties for overpaying above certain annual thresholds, if interest rates do go up and given that most first time mortgages have high LTV over long terms - I think it makes sense.

I'm overpaying my mortgage and paying into a Nutmeg ISA at the same time but it's a little more effort.

What's your advisor's rationale for promoting the offset mortgage? Higher commission?

For me, it's easier to keep savings and mortgage separate, but for those more disciplined people, offset could work.

I think he genuinely thinks it would be best based on our salaries. But while we have been easily paying the mortgage, we've also not really been saving. Things like paying for a lease extension and a big upcoming holiday out of pocket and some recurring medical expenses mean we have less left over every month than he might expect.

He's coming to see us later in the month to lay out all the options but i was just wondering if anyone here had experience Vs fixed.

If you can get more in interest from savings then you might as well put your money there.
If you have (say) a 300,000 mortgage and you can pay back 10% a year without penalty then unless you think you can pay back more than 30,000 in a year you can overpay at any time within the year that you see fit, so why not earn more from your savings and overpay the day before the anniversary if that's what you want to do?

Alternatively you can take the view that overpaying is effectively the same as having a shorter mortgage term. With that proviso, you could take the mortgage out with the longest term you can get and then choose to overpay to bring the term down to what you actually would rather have.

This all gets more complicated when you factor in the various ways you can be charged interest. If you're on a fixed deal and looking to remortgage when the deal ends, then it might be useful to overpay to get to a particular LTV threshold to get a better deal. You also typically pay a penalty to cancel a fixed term early and that penalty is often a percentage of the remaining loan - overpaying to reduce that prior to cutting ties is maybe a way to save some fees (although you'll lock away your cash). If you're on a variable rate then you may as well put your money where you get the most interest and re-evaluate as rates change, I suppose.

I'm not a financial advisor, just outlining the various scenarios I've been playing through in my mind.

If you're on a fixed deal now, even though the early cancellation fees are eye-watering, they can still be a net win if you switch - do the math, as some might say.

The discount you get for forfeiting a room doesn't stack up against the disadvantages

Conversely, there is a relatively big premium for a two bed flat as many people want that extra bedroom over a one bed. If you buy a one bed your mortgage payments are more affordable so you don't need to get a lodger and compromise your private living space (which to me is one of the main benefits of home ownership, I had some great flatmates but...).

Laner's advice is good if you want the option of easily renting a room out. Alternatively, do what we did and buy a one bed with a cellar. We've always got the option of going down and creating a few more rooms, for way less than it would cost to sell up and buy a bigger flat.

Yeahbut shared ownership though

If you are doing whole of market then yea you have other options

One more thing to consider with shared ownership is that your landlord will be a housing association. In my (sample size of one) experience HA's attract the staff that are too thick and useless to work in councils which means they are useless landlords and terrible when it comes to selling. HAs exist to make money from building homes, nothing more. Everything else they just pay lip service too, and badly.

On the one/two bedroom thing, an awesome flat will always sell, even with one bedroom. Valuation tends to be on square footage and location. My girlfriend's 1 bed in Hackney sold for 1.5 times as much as my 2 bed in Bethnal Green, because mine was spacious but modern and hers was bigger and in a cool Victorian factory conversion.

If you have (say) a 300,000 mortgage and you can pay back 10% a year without penalty then unless you think you can pay back more than 30,000 in a year you can overpay at any time within the year that you see fit, so why not earn more from your savings and overpay the day before the anniversary if that's what you want to do?

Check the details of the overpayment limits. Ours (Santander) is 10% of the outstanding balance per calendar year. So whilst you can pay £30k (in your example) in the first year, it will be less than £27k the year after, etc. Unless you want to be paying back a very high percentage each year it's unlikely to be a problem as you'll be through the limited overpayment period before the limit gets too low.

Also, it doesn't have to be a "fixed or offset" choice, there are such things as fixed offset mortgages. Having one of them from the start would have really suited us...

Anyone had Velfac windows fitted? They look nice a slim, but some forums say their after sales care is wack...

Nice slim frames with a simple design.

I'll be going for an L shaped loft conversion and was estimating around £50k - Hoping to get 2 beds and an en-suite in there. Should be doable?

I'm pretty chuffed with our loft guy.

Oh, soz. Totally missed that bit.