I Stopped Investing and Overpaid My Mortgage… This Is What Happened.

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Overpaying your mortgage is as good as it has ever been, but should you do it?

With inflation at a high, the Bank of England have been raising the bank rate throughout the year. This has resulted in mortgage rates rocketing, up to an average value of 6% per year, meaning that overpaying your mortgage is as attractive as it has ever been.

In this video, I explore the benefits of overpaying your mortgage, and compare it to investing in the stock market. Choosing between investing and mortgage overpayments is an extremely difficult decision, but I found a solution.

[TheJackCain-]

Back in the day, when I purchased my first home to live-in; that was Miami in the early 1990s, first mortgages with rates of 8 to 9% and 9% to 10% were typical. People will have to accept the possibility that we won't ever return to 3%. If sellers must sell, home prices will have to decline, and lower evaluations will follow. Pretty sure I'm not alone in my chain of thoughts.

[tonysilke]

Mortgage rates are currently at an all time high since 2000(23 years) and based on statistics on inflation, we might see that number skyrocket further, a 30-year fixed rate was only 5% this time last year, so do I just keep waiting for a housing crash before buying or redirect my focus to the equity market

[Ogden]

I have an Investment portfolio that's worth $1million, I don't think that'll be enough for retirement. I need an average risk investment strategy in stocks that'll give me more yield.

[SVJoe]

I took a 30y mortgage and payed it off in 7. Best advice I ever got from my grandfather.

[pauleff]

If you overpay your mortgage (like I did) you get into the habit of living within your means and not squandering your money. You pay out (meaning DON'T SQUANDER) more of your disposable income on your mortgage....

When your mortgage comes to an end (and mine did Much MUCH earlier than the term), I have the dreadful habit of NOT SQUANDERING my money - but seeing as my mortgage has gone that habit has become a 60% of income savings habit! Yep - I now know how to live within my means and the banks HATE it. They cannot get their fangs back into me to suck out my financial lifeblood anymore because the disciplines of overpaying just turn into the disciplines of saving.

I have a BELOW AVERAGE income for the UK but I have managed to save about £11 grand a year from my earnings since I became debt free. I am a part time idiot, so I was told, for paying off my mortgage so quickly. I have NO debt at all. You can do this too! PAY IT OFF!

[sambrickwood]

I took out a mortgage in Jan 2020 for five years. I have overpaid the penalty free amount each year. NatWest now let me overpay 20% a year and I did that this week. I will do it again next year. Dropped the loan from £211k to £110k. No regrets

[JerryLuca-nmru]

The best investment one can do right now is investing on real estate though stocks are good but ever since I swapped to real estate, I've seen so much difference.

[fvlok]

I paid off my house, threw everything at it. Took 7 years. It’s great that I don’t have to make monthly payments on a shelter anymore. I use this money to dollar cost average into the markets on a monthly basis now

[greggmcclelland]

I saved 20% of my salary in my 401K. Then we overpaid our mortgage by $400/month. Also, we periodically made lump sum payments to pay down the mortgage. It was a really great feeling to be completely out of debt.

So you make money two ways. The money you save off of your mortgage interest is completely tax free. If you are using taxed earnings to pay off your mortgage, you are paying anywhere from 20% to 40% of your gross income on taxes. So if you save 5OK on interest, it is actually saving the taxes you would have paid to earn the money to pay the mortgage.

[comicmania]

Certain 'people', including some 'friends', told me to never-ever-never pay my mortgage off! I didn't wake up for a long time after that advice! But when I did wake up, I never looked back. Paid it all off early by age 55, then retired at age 60. I'm 63 now, still living rent-free and mortgage free, doing just fine financially. The only difference I noticed was my bank has reduced my credit score quite a bit, because I no longer borrow any money for anything, which suits me just fine!

[tombowman]

Great video! Was going to comment early on saying the tax you will pay on any investment or savings interest needs to be factored in but you went on to cover that though I don't think you did in the very first set of figures. Its definitely a big aspect to factor in. But having so much money trapped in one asset like you mentioned with no cheap or easy way to release that equity is also a really big deal.

Im concluding that any savy investor should hedge their bets on this one and do a mix or both because let's face it.. interest rates and market returns are equally as unpredictable right now.
Having said that, if you just want security and peace of mind but not the very best returns, then paying down your mortgage is definitely the way to go.

[jonsnow]

There is nothing like the last mortgage payment . After that the world is yours

[secretagentrandybeans]

Do a bit of both and rest easy that you're doing 2 very good things for your future. Also, there's something to be said for not having to pay that massive monthly bill

[chriscaarnold]

Clear well delivered honest information

[LorenaG.Cresswell]

Buying a stock is easy, but buying the right stock without a time-tested strategy is incredibly hard. Hence what are the best stocks to buy now or put on a watchlist? I’ve been trying to grow my portfolio of $160K for sometime now, my major challenge is not knowing the best entry and exit strategies ... I would greatly appreciate any suggestions

[ianodonoghue]

In Ireland there's a massive incentive to invest via pension.

Tax relief is given at source which generally makes it more appealing than paying higher rate of tax and then using the rest of your salary to try over pay your mortgage

[project-overland]

What a nice channel.

Keep up the good work fella!

[jannemyllyla]

Dave Ramsey has quite simple rules that have a great idea of making a mix. The first rule after paying non-mortgage debt is a saving account / emergency fund, followed by investing 15% of income AND using the extra left to pay back mortgage. I think optimal solution is a mix, but not sure about exact details.

[neilinvests]

Lads this video is brilliant, richly deserves the views it’s getting. Well done.

[TheAndreidonko]

Great video - first time someone’s talked about this topic, isn’t a financial planner and given a fair explanation as to what the key variables are that determine the optimal decision. Every planner uses the S&P returns as a guideline but if you have diversified your portfolio then you probably have lower returns shown by your vanguard research