Earlier in the week, I shared our first mortgage journey, thankfully since then, things have been a little smoother. We have recently started to think ahead to our next mortgage and maybe even our next home.
We have always had plans to move from this house eventually, in the long run, the move will be up to Scotland for us to retire however between now and then we are still unsure whether we will move from this house first. Either way, we are going to need to start thinking about our mortgage as it is due to come off it’s the fixed rate in the next 12 months.
As we currently stand, we are on a repayment mortgage with a rate of 3.29%. On top of this, we are also overpaying our mortgage by £140 a month, this may not sound like much however when you calculate the savings from this, we will be paying our mortgage off 6 years and 5 months early. More importantly, we will be saving ourselves £26,241 interest at that time!
Whilst we have been weighing up whether to move or not, I have been using this handy mortgage calculator to start looking at the costs to us monthly with various different options on mortgages currently. It allows us to adjust the terms of the mortgage and rates to see what our monthly payment will be. It is quite interesting if you scroll down past the pie chart, you get a year on year total of how much interest you pay and how much capital you have paid off. It is the first time I have ever seen our mortgage in that format and it is interesting (and slightly scary) to see that as we currently are it is 10 years until we are actually clearing more capital yearly than interest!
One thing that is clear from this all, we are looking that we can possibly get a mortgage for 25 years (the one we currently have will have 29 years left to run at this point) at a cheaper rate! So we will be cutting 4 years off the mortgage just by remortgaging. We will continue the overpayments too so we are maybe even able to trim our mortgage down to less than 20 years at that point.
I know that may seem long still, however, this would mean we are mortgage-free by the time I am 55. Pushing us the right direction for our early retirement.
Now a lot of this all depends on how mortgage rates and the housing market go over the coming months and years. If the news is to be believed, currently the housing market is bouncing back following the pandemic. It is hard to judge what will happen currently as the UK battles with the fall out of the pandemic, regardless of what happens though, we are going to keep ploughing on with overpayments on our current mortgage.
This combined with snowballing other debts should help us get our mortgage costs down and eventually paid off early!