Firstly, I want to thank everyone who took time to read my post last Friday and ofter suggestions; it was so helpful to read through the comments and to see how other people would figure out what to do in our situation.
I’ll be honest, some of you put what I thought would be the most popular answer – to compromise and do half and half. Option B was to do a bit of each. Put slightly less into savings and overpay more on the mortgage. So, our aim this month is to save £700 and overpay £85. Option B would mean saving £400 and overpaying by £385, ish. So we are doing things to help us, just as a slightly slower path. 8 people who responded in the comments suggested Option B as the one to choose.
And, I can see why! It would mean we are continuing building income by investing, although a lot slower, plus we are chipping away at the capital of the mortgage too, reducing the amount we pay back and get it lower over time.
But, if you read personal finance posts about long term, all of them say invest. You need to invest over the long term, as investing should be done over a longer period of time. Reinvest the dividends if you get them and stick to your original plan, so to speak. This was Option A in the original post. Interestingly, only 1 person in the replies picked this option.
One comment say “If you are worried about the stock market right now, should you be investing at all?” This is such a valid point! Obviously, I want to be investing and I am enjoying that journey (I love building my dividend income stream!) but I have talked to quite a few different people and some are slightly anxious as to what might be around the corner, in terms of Brexit and the fallout from that. Surely that’s a natural thing to be apprehensive about? But yes, I understand that investing should have the emotions taken out of it – easier said that done. Also, although I’m worrying about it, I’m not selling my holdings in a panic, from far it.
The most popular response, which actually surprised me somewhat, was Option C. Option C was to only put a small amount in savings and overpay much more on our mortgage. This option could be putting £200 into savings and the rest on our mortgage. This would have a bigger impact on reducing our mortgage much more quickly than we are at the moment, but our savings and in turn the dividends received would slow down dramatically.
I think the appeal of this one is the idea of being mortgage free. To no longer have that monthly mortgage payment coming out. You would own your own home, if anything should happen. Plus, over the term of your mortgage you would pay a lot less in interest. Now, we could potentially pay off our mortgage over 10 years early, if we focused primarily on paying it off. 10 years early would be a lot less interest paid. 14 people responded saying that they would pick this option. Which, percentage wise is a lot more!
So, I have mulled this over this week. Mr FC and I have talked about it [though mainly me] and thought about what it would mean.
In the short term, I think we’re going to go with Option B. It might change to Option C at some point, but I feel like the fact that we can still put something into savings and then overpay as well, means that we are doing something proactive on both accounts, if that makes sense? If we are going to retire early, then we need to continue to save. The numbers are getting stretched anyway, so this would just add to that. Our money can only go in so any different directions!
It feels a bit strange to be changing tact, but I’m looking forward to our mortgage numbers going down a bit quicker 🙂 And again, thank you for taking the time to comment, it was so helpful.
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I’m please that you have been able to make a decision and also that you are keeping it flexible. I feel sometimes we are guilty of listening to media scaremongering, telling us what we should be doing. You know your family budget, income and outgoings. Keep building your future around you and yours. Most people live from pay packet to packet! Who knows what the future may bring.
Good luck
Personally I think option B is kind of the worst of option A and C in that you neither invest for the future nor gain peace of mind by clearing the debt really quickly.
As per my post on the other thread I’d be plowing into the markets still .. sure some units will be bought high but some will be bought low – it’s all about cost averaging.
But I can see where your decision is coming from and it’s a decision you have to be happy with. But when the crash comes (and it is coming) then be ready to switch to option A and hold your nerve ☺️
Also you seem to worry a lot about Brexit, diversify your portfolio as the UK only makes up a small percentage of world markets so by avoiding home market bias you can mitigate a lot of the potential effects of Brexit if any 😉
I’m glad to hear you guys were able to make a decision! Best of luck 🙂
I think for some people it is just very rewarding to be mortgage free. It is almost like emotional freedom! However, that is not always the most rational decision! I have invested in 2 rental properties and I have hardly any debt on those, because I just don’t like the feeling of being in debt. Ultimately you need to sleep well at night and feel good about your decisions 🙂 Good luck!
I’ve just decided to make additional payments to my mortgage- this in a bid to pay it off earlier and make a risk free return of 1.69%!!! But also to maybe get some future benefit down the line.
We remortgaged a year ago and in the 2 years before we had made £2500 in overpayments. This made the process of getting a new valuation over the phone a lot easier for a lower orc and not paying for the valuation and getting a rate that was due to jump 0.1 Or 0.2% imminently.
Making some regular overpayments could be a very good move especially if you go fire-lite in the future.