Stop Investing And Pay Off Your Mortgage.

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Interest rates are shooting up at the quickest rate in decades and with them the cost of your mortgage. At the same time forecasts for stock market returns look bleak... Should we put the breaks on investing and now focus on mortgage payments instead?
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Timestamps:
00:00 - Is It Time?
01:40 - The Problem
03:22 - Pro 1
04:30 - Pro 2
04:48 - Pro 3
05:15 - Pro 4
05:36 - Con 1
07:29 - Con 2
07:58 - Con 3
08:40 - Con 4
09:11 - Con 5
10:55 - Alternative Option.
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Опубликовано:

19 июн 2024

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Комментарии : 1,1 тыс.

@jaybartgis5148 Год назад

2:13 what? Do British people not have fixed rate mortgages like the Americans? I guess their system is different than ours

@DamienTalksMoney Год назад

We do not have 30 year fixed mortgages only 2/5 years. So millions of people who fixed a few years ago are now coming to the end of the deal

@jaybartgis5148 Год назад

@@DamienTalksMoney that is such an L. In the US system: the whole point of buying a house is to have a fixed payment to hedge against inflation and rate hikes. So what In the heck is the POINT in buying in the UK's version of banking if your payments go up and down just like rent!

@Masterche18 Год назад

@@DamienTalksMoney that's aweful tbh, but good to know. It's like yoyr only options are equivalent to 5 year arms at best.

@DamienTalksMoney Год назад

@@Masterche18 You can get some long term fixed deals but they are really not very common. The 2/5 year fixed is what most people go for. A 30 year fixed at 2% is the dream! So what we do in the U.K. is fix then remortgage at the end of the fixed term once it goes onto a variable rate. The same as your arm ones I assume? Remortgaging at the end of the fix was all good while rates have been low. But now people coming off those fixes will move from 2-6% overnight..

@Criticodoscriticos Год назад

@@DamienTalksMoney now we are all suffering. I literally dont know what I am going to do in 2 years time if the rate is still 6%, mine at the moment is 2.19, I pay £791 per month. That means if continues on 6% I will be paying over 1.400 per month, I can never afford that and will probably lose my house. I have a headache just to think about that.

@NicholasBall130 19 дней назад

In the early 1990s, when I bought my first home in Miami, first mortgages often came with rates of 8 to 9% and 9% to 10%, which was quite common. It's important to consider that we may never return to 3% rates. If sellers are compelled to sell, home prices may need to decrease, leading to lower valuations. I believe many others share this line of thinking.

@LiaStrings 19 дней назад

I hope to own a home some day, not quite long I started investing. I'm very curious already and need help on how to enhance and increase my returns. Any good investment tips will be appreciated.

@StacieBMui 19 дней назад

The enduring US stock market bull run evokes a mix of fear and excitement, presenting opportunities with insight, resulting in $780k gains in the past ten months, utilizing a portfolio advisor for a well-defined strategy.

@Wellerpage 19 дней назад

How do I reach out to one? my assets have been struggling since 2022 and I’ve been holding on by the skin of my teeth.

@StacieBMui 19 дней назад

Sharon Lee Peoples is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment..

@LucasBenjamin-hv7sk 16 дней назад

I just googled her now and I'm really impressed with her credentials. I reached out to her since I need all the assistance I can get.

@ClementRusso2 9 месяцев назад

Basically , mortgage rates have reached their highest point since 1998, spanning 25 years. Considering inflation trends, there's potential for them to rise even further. Just a year ago, a 28year fixed rate was only 6%. This prompts the question: should I wait for a housing market downturn before buying or shift my focus towards the equity market?

@Jason9o669 9 месяцев назад

The stock market follows a similar pattern; in order to sustain profits, it's crucial to possess a deep understanding of the market.

@Rodxmirixm 9 месяцев назад

Indeed, I primarily engage in buy-and-hold, but my portfolio has been in the negative for an extended period. To achieve substantial gains, consistency and regular portfolio adjustments are essential.

@antonnohr 9 месяцев назад

My partner is also thinking about taking a similar approach. Could you please provide more details about the advisor who assists you?

@VickyAlvy 9 месяцев назад

Thank you for this tip. It was easy to find your coach. Did my due diligence on her before scheduling a phone call with her. She seems proficient considering her resume.

@Zwrld781 4 месяца назад

Buy when u can afford

@ChristopherAbelman 28 дней назад

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

@HildaBennet 28 дней назад

The stock market is no different, to maintain profit you need to have some in-depth knowledge on the market. I mostly just buy and hold stocks, but my portfolio has been mostly in the red for quite awhile now. Unfortunately to be able to make good gains, you’ll need to be consistent and restructure your portfolio frequently.

@JosephineKenney 28 дней назад

In my opinion, it was much easier investing back in the 80s but it’s a lot trickier now, those making consistent profit in these times are professionals reason I’ve been using an advisor for the past 5 years to consistently build my portfolio in preparations for retirement.

@PennyBergeron-os4ch 28 дней назад

My partner’s been considering going the same route, could you share more info please on the advisor that guides you

@JosephineKenney 28 дней назад

Google Sonya Lee Mitchell and do your own research. She has portfolio management down to a science

@PennyBergeron-os4ch 28 дней назад

I'm grateful for this tip. It was easy to find your coach. Did my due diligence on her before scheduling a phone call with her. She seems proficient considering her resume.

@yannip2083 5 месяцев назад

100% mortgage-free, debt-free and peace of mind is priceless!

@MarcAntoineBvl 4 месяца назад

Debt free isn’t always the best solution though

@cluggywuggy 4 месяца назад

@@MarcAntoineBvl for peace of mind it really is, no question. That is what they're saying. From a purely financial perspective maybe not but life is more than just numbers and spreadsheets.

@MarcAntoineBvl 4 месяца назад

@@cluggywuggy I can understand what you mean but I don’t feel the same. Maybe we have a sense of safety here in France as there very little ways to lose money. I could even say that I would feel worse having no debt knowing that I’m not making the best out of my work

@victorcretu7741 3 месяца назад

I borrow as much as I can and I'm still at peace. As long the capital gain is higher than the borrowing cost, I see no problem with borrowing.

@TheCompoundingInvestor Год назад

I threw everything at the mortgage, making quite a few sacrifices along the way. When it was all gone in 2009 I decided to turn the tables and get the banks to pay me instead. With the mortgage gone I now had extra firepower each month to build a dividend portfolio which I have been compounding ever since and generate over £1000 a month in passive income. And as you mentioned Damien, there is also the psychological effect of getting rid of the mortgage burden which should not be underestimated.

@lukesargent5594 Год назад

How fast did you pay it off and what dividend portfolio you using ?

@lukesargent5594 Год назад

I’m overpaying mine but can’t see the light at the end

@TheCompoundingInvestor Год назад

@@lukesargent5594 10 years to pay off mortgage and I use Barclays Smart Investor for my dividend portfolio.

@lukesargent5594 Год назад

@@TheCompoundingInvestor Thankyou are you picking your own stocks or do they do it in like an isa ?

@Shiva10883 Год назад

Excellent ..I completely agree with you

@markahomer Год назад

The moment of paying off a mortgage is one of the most fantastic experiences in life.

@DamienTalksMoney Год назад

I can only imagine!! True ownership over one’s castle

@mrc1500 Год назад

I echo this sentiment.

@martinfarrow2825 Год назад

Paid mine off in April. Everyone told me I was crazy 😂

@marcwareham9351 Год назад

It’s not actually a good idea but it helps you sleep at night.

@sadieround2766 Год назад

@@marcwareham9351 Best thing I’ve ever done… 👌

@geztinsdale Год назад

paid my 25 year mortgage off in 15 years, im 50 now and boy is it great watching all these videos / news and not having to worry about interest rates. Sure I could have invested but my risk tolerance is zero and me and my family will now always have a place to call home. 100% of repossessions happen to those who have mortgages....

@geztinsdale Год назад

@@jdmulloy but you do have to worry about mortgage payments, that said i agree must have both a paid off house and a healthy pension / investment to see out your days in retirement

@bellmattwebb Год назад

Houses can be lost due to nonpayment of taxes and well. You can never truly own your land.

@whywouldigivemyrealname5162 Год назад

This is situation dependent. I was paying my mortgage off early for awhile. Once I owned 20% and got rid of PMI, it no longer became worth it to pay extra into my mortgage. My fixed rate is less than 3%, so I’ll earn more money by simply keeping my money in a high yield savings account at this point. If I want to pay early still, it makes more sense to just save the overpayment in that savings account and pay it off as a lump sum in a few years. I work in tech, so I’m worried for my job currently. It makes sense for me to stay liquid instead of locking my money up in a mortgage.

@3103frank Год назад

Congratulations! Can’t wait to get to that point in life!

@nibblitman Год назад

@@whywouldigivemyrealname5162 Exactly the same here mine is at 2.3 or so and so basically even the most conservative investing will beat my interest so I save my overpay and will either have a downpayment for a new home or pay it all off when X=Y

@dd7aa Год назад

I'll have mine paid in 12 months I've just turned 45, cant wait,👍🏻👍🏻👍🏻

@RickSanchez-dn6rd Месяц назад

Well done :)

@k.h.6991 Год назад

The thing with paying off your mortgage is that you clear off a lot of downside risk: if life interferes (inflation, illness, losing a job, divorce etc). Downside risk is way more important than upside potential.

@jjefferyworboys8138 Год назад

Agreed, particularly when the potential upsides are tiny in comparison. How many people ignored the downside risk by not fixing their mortgages in recent years ? The more you have to lose the more important it is to protect the downside.

@ep1929 Год назад

Paid off house leaves you at more risk in a divorce. Husband or wife can demand their half and could force a sale.

@MovingAlong531 Год назад

I like how you phrased this “downside risk is way more important than upside potential” . This is so true.

@jaybartgis5148 Год назад

How is paying off your house going to help you in a divorce when she is going to seize said house? Like what?

@ep1929 Год назад

@@jaybartgis5148 exactly what I said.

@ryandaley655 Год назад

Biggest lesson i learnt in 2022 in the housing market is that nobody knows what is going to happen next, so practice some humility and follow a strategy with a long term edge.

@yvonnejoordan Год назад

Nobody knows anything You need to create your own process, manage risk, and stick to the plan, through thick or thin, While also continuously learning from mistakes and improving.

@debstrodovan Год назад

Uncertainty... it took me 5 years to stop trying to predict what bout to happen in market based on charts studying, cause you never know. not having a mentor cost me 5 years of pain I learn to go we’re the market is wanting to go and keep it simple with discipline.

@tateoften Год назад

@@debstrodovan The one effective technique I'm confident nobody admits to using, is staying in touch with an Investment-Adviser. Based on firsthand encounter, I can say for certain their skillsets are topnotch, I've raised over $700k since 2017. Just bought my 3rd property for rental. Credit to Yvonne Annette Lively.. my Investment-Adviser.

@odegaardlumi Год назад

@@tateoften I just looked up Yvonne Annette Lively online and researched her accreditation. She seem very proficient, I wrote her detailing my Fin-market goals and scheduled a call.

@deweyvu820 4 месяца назад

RU-vid needs to stop recommending me videos about weird things they do in the UK, like not lock down a date for 15/30 years. Happily taking locked rates for granted here.

@AlisonWonderland999 Год назад

You certainly picked an "interesting" time in UK history to be a financial commentator 😁Always impressed by your ability to help make sense of overwhelmingly difficult situations.

@DamienTalksMoney Год назад

Yeah what a shit show Alison haha I just hope i am helping people in some way.

@hasskhan6133 Год назад

@@DamienTalksMoney Hi Damien I really like your view on investing I was thinking of investing in the stock market buying into ETF what do you think about this many thanks for any advice

@bernardo.daSilva Год назад

@@DamienTalksMoney bet you are. Some of the topics you talk about are eye openers and you bring a lot of knowledge to the table in a very easy to understand way. As usual, appreciate the astrophysics humour!

@DamienTalksMoney Год назад

@@bernardo.daSilva I see you posting some fascinating space stories on insta mate love them

@guyr7351 Год назад

@@DamienTalksMoney you are along with other you tubers. I’m 62 work colleague just over 40 we were discussing does he pay off a mortgage that has 8 years to go with a sitting tenant that covers the mortgage, or invest his cash into his stocks n shares ISA I did an excel for him where he could add pension pot and ISA pot value and compare investment amount 😢options into both with a 5% annual return. He is looking to buy a place in 2-3 years

@timsilva1944 Год назад

I paid large amounts extra to the principal during the first few years of my 30 year mortgage. This not only increased my equity, but made all subsequent payments as if I was paying extra, since interest amount was lower. I refinanced to a 15 year mortgage after 5 years when interest rates declined and my new payment was actually lower. I continued investing and overpaying my mortgage. In 2022 I paid off the mortgage which allowed me to retire with pension at 55. I've contributed to my 401k since I was 24, so I have more to come, along with Social security.

@minimad8793 Год назад

I hope to be in a similar situation as you at 55, although the mortgage started at 25yrs now down to 10yrs and did reduce the term by 5 years to get to 10 years but still overpaying and investing. Not sure I would want to retire that early though, I think those with wealth should think from age 60 is a good starting block for retirement. 40 years is a long time to enjoy life (assuming we all reach the 100 mark :) From what I can see from all the video blogs online is that if you can sustain your current lifestyle from the day you retire then go for it.

@foxyfoxtrot4233 4 месяца назад

Great if that’s possible. In Germany the amount you can pay in addition is capped in the mortgage contract, most often to 5% or 10% of the original principal a year. So even if you’d had the means to pay down faster, you wouldn’t be able to.

@paulmussett94 Год назад

I did both from 2012. I hedged my bets. I invested in my SIPP and overpaid my mortgage. Result. Win Win.

@kerrylow6894 Год назад

Great video. We made sure we had an emergency fund before paying additional to mortgage , then if we get pay rises we split 3rd mortgage,3rd spend (usually on food!) 3rd short term savings goals. We have inched along but now have brought our 25yr mortgage to 3 years to go...we refinanced when rates went crazy low and locked for 5 years. When you get a way in the interest starts to drop aswell as you are paying extra so it drops faster and faster...it's so worth it for us but we wouldn't cut everything we enjoy just prioritised the things we enjoy most.

@Norristheforest Год назад

Great that you mentioned the 'feeling of freedom' it's a point that's often overlooked in the pursuit of greater potential gains.

@DamienTalksMoney Год назад

The aim is to be happy isn’t it that is the best return from life anyone can hope for

@jjefferyworboys8138 Год назад

Difficult to put a price on that. It makes you look at life differently and gives you an opportunity to rearrange your priorities.

@A_friendwithoutbenefits Год назад

i get my feeling of freedom from not having a mortgage at all lol. Each to their own

@deant3980 Год назад

Yeah I feel free. I don't have a mortgage where one thing going wrong in life could end me. I don't need it. I'll rent mansions till I die. Handing your kids stuff hurts them, not helps them.

@k20ee96 Год назад

@@DamienTalksMoney it's a refreshing change from the usual financial gurus who call people idiots for paying their mortgages off early. Everyone has different wants and needs 👍

@felixveja8154 Год назад

I am a huge fan of paying off the mortgage. The peace of mind is priceless. I can sleep at night if my investments have taken a hit, no problem. But won't ever risk my home. However, I purchased in 2013 in the Midlands, and it's a small home so wasn't stupid money, and managed to clear it in 6 years when I was 34, which gives me many years to invest. Might be different if it was a larger mortgage amount.

@JonathanWillis Год назад

Ha, snap, £220k house, same area, same year of purchase, almost same age too, "in effect cleared" as saving > mortgage at 33.

@felixveja8154 Год назад

@@JonathanWillis that's amazing Jonathan. Well done

@JonathanWillis Год назад

@@felixveja8154 same to you. It's totally an emotional debt. Certainly menas I'm risk adverse in a sense but now I can risk future capital whilst still having a roof over my head

@holamissmusica Год назад

Well done

@soheil2626 Год назад

@@JonathanWillis congrats to you matr, im 38, my remaining mortgage is 60k and i have 70k saving, what do u suggest? Paying off and live with 10k or what this guy said about stock(which i dnt know anything about) or to put toward my pension(while ive got one through my work) ?

@auwz66 Год назад

Took my mortgage out in 02 at the age of 22. Paid off in 2019 when I was 40. So 17 years. The overpayments I made were not massive but in the end it did add up to 8 years off the term. I was soooo tempted in 2020 to move and take out another mortgage but covid put a hold on that and now rates are back to 6% I am glad I got it paid off. At my age a lot of my piers still have 15+ years left to go on their mortgages. The key is for overpayments to be of a size that make no financial difference to you. Still allowing you to have savings, pension etc.

@RobinHood-us7sg Год назад

Exactly 👏🏻 well said

@nathalielady2592 Год назад

Good job!

@solefreak2 Год назад

Exactly what I've been doing, still have a bit to go on mine but if I really wanted to, I could clear it off by then end of the year however, will make over payments that still allow for savings etc to be made. Should still have it paid off at the end of my 41st birthday and I've only had my mortgage for 5 years.

@MrLasty12 Год назад

I love that your videos have sections so I can just skip to the bits I'm interested in. Keep up the good work Damo!

@TrevorSwayne Год назад

I think this video has beautifully summed up and answered what so many of us are questioning, and some how the news outlets aren’t answering even half this well. Thanks!

@galacticsupervolcano656 Год назад

Our 5 year fixed rate (2.89%) was up at the end of August & after many long discussions My wife and I decided to sell everything & dump 90% of our life savings into the mortgage and pay it off. I don't know if it was the right decision long term but, you can forgive me for feeling like Einstein for a month or two!!

@TheMiltonroad Год назад

good move

@jml9550 Год назад

Tell me about it. I paid my $328K mortgage off in 25 months. Went absolutely crazy on my part.

@minimad8793 Год назад

Nice one on clearing the Mortgage debt. I will be in your shoes one day but I would ask if you are young enough to be able to claw back some of those savings to compensate being mortgage free? if so then well done and look forward to your mortgage payment free pay day :)

@notyet2345 Год назад

So many ways to pay a house off early. Someone I knew sold their mcmansion after living there for 13 yrs, they sold it. They made enough money to pay cash for a smaller home........that was 7 yrs ago and they are living their best lives.

@logdon17 2 месяца назад

3 years ago I got a great paying job but never thought it would be forever so I put all my extra money into paying off my mortgage. Sure enough, I just got laid off from that job but now have a 7 figure net worth with no mortgage. And that is why I paid off my mortgage instead of investing all that extra money.

@chrismantonuk Год назад

Nice and balanced advice, you cover all bases. Mirrors exactly what I’m thinking about right now. Thanks 🙏

@BenCarnage Год назад

I have paid my mortgage below 50 %. My rates are locked until 2025 at 1.5 %. It is my only form of debt. Trying to min/max returns without considering risk will leave you exposed to needing to pause investments or even selling investments at a loss to cover expenses. A low risk approach that values cashflow benefits and very low day to day costs makes it easy to keep investing no matter what else is going on. Don't just get stuck on the highest rates of returns because you'll be very exposed. I'll be a millionaire 10/10 times. I'm not worried about the specific number of millions. It really doesn't matter much.

@VegasMilgauss Год назад

Dave Ramsey baby steps 4,5&6, invest 15% then throw everything else at paying off the house. 👍 great video

@8G00SE8 Год назад

As Ramsey would say about mortgage vs investing after that 15%, 'would you take out a loan on a paid off house to invest? Then why wouldn't you overpay your mortgage?'.

@DamienTalksMoney Год назад

If the loan was at 2% I would seriously consider it yes.

@SP-sl6dj Год назад

I think it depends on your current level of liquidity. If you have a good amount of liquid assets, then it might be ok to overpay the mortgage for a time. If all you have access to is what you got paid one month from a job you might lose, then you probably should continue increasing your liquid assets.

@AbulHossain-df7hs Год назад

VERMONTCORPLTD is young. Holding almost anything mentioned here is a good hold because the VHS or Beta will only show in time. I want to hold them early. Its sad that most dont think of these things as good future holds instead of being out of the market and bottom hunting. Are we the adopters or are we scavengers? surely one of these layer ones will become the standard and i dont want to sell any of them too early.

@perspective4517 Год назад

It's a different scenario in Australia when you make additional payments into your mortgage. The money isn't locked away. Your mortgage statement quotes the amount of any overpayments as available for redraw: it can be used as a line of credit for any purpose, e.g. investment when mortgage rates are low and the benefit of leaving it against your mortgage is minimal. Very flexible. When interest rates rise, you can take the capital out of investments and return it to the redraw facility which again offsets the principal owed (with greater effect because when rates are higher). Hope you're feeling better soon.

@antinbath Год назад

Thanks for the short version of this when you came in to talk with us at work. I appreciate the advice and hearing your experiences. I’ve tweaked my investments, checked the % fees, and set up my emergency fund. I’ll be a bit better off in the future now - thank you.

@andrewbankier3448 Год назад

One of the biggest things that helped repay my mortgage off was rounding up any transactions to repay to the mortgage. If you spend £8.72 on your card £1.28 can be transferred to your mortgage if they allow faster payments. This technique will allow significant overpayments over time without needing to specifically allocate funds. It's also worth noting most mortgages interest is applied monthly where as most savings rates are applied quarterly or annually so the compounding effect over the years also helps save more

@fireblade8905 Год назад

I just want to pay off my credit card debts which I’m doing now and it all should be clear next year November. I’m paying £100 a week to debt recovery companies. Once that’s clear I’m keeping away from credit cards

@jamiewinstanley1881 Год назад

this is exactly what i was looking for. was about to max out the 10% early repayment thanks

@mattsennett Год назад

My approach over the years was a bit of everything when it came to overpayments and saving / investing. A point I think you missed Damo was if you save cash, when it comes to getting a new deal after the fixed term ends, these normally cost a fee to secure lower rates so that money can be very useful then. Peace of mind was important to me as not having to worry anymore about what for most is the largest monthly expense means I am free now to invest more. Great video as always 👍🏻

@purplemonkeydishwasher5269 7 месяцев назад

I'm the same. I over payed the hell out of my mortgage up until last year because cash accounts paid FA. But this year savings accounts are paying a higher rate so Im dumping what I was overpaying on the mortgage into a savings account and will pay off a lump sum once my fixed term ends. But we have another four years on my fixed mortgage.

@LiamJamesKay Год назад

mate, the way you make your analogies, jokes and value flow together- is nothing short of genius.

@DamienTalksMoney Год назад

You legend mate what feedback this is. Thank you 🙏🏻

@davidstuart3795 Год назад

Recent subscriber having been recommended based on watching another British finance RU-vidr. I’m glad both of you are doing this content, and glad I came across it. I’m much better informed for it… But on top of that. Bravo for spending the time to put the Warren Buffett and Sandra Bullock thing together, I thought it was all a bit tenuous right up until you pulled out getting kicking in the Bullocks.

@DamienTalksMoney Год назад

Hahaha love that it was the kick in the bullocks that convinced you

@roberthuntley1090 Год назад

I always did. Compared to other ways of investing any surplus money you have, it zero risk and also tax free (they only tax you on interest earned, not interest saved). I started by rounding my payments up by a few 10's of quid, and kept up payments every time interest rates dropped instead. Overall, I saved a few years from the term of my mortgage and several £k in interest. The only downside is the lack of flexibility, you can't get the money out again easily so you can only real do this if you have enough cash in your rainy day fund to cover life's emergencies.

@anthonynorman1234 Год назад

Great video! Great points! Feels like (especially in the uk) we're getting slapped at all angles at the moment! My personal approach is I have slowed (not stopped) downed slightly on the investing side and upped the saving/bonus mortgage repayments for the short term. See how things play out for the next 12(ish) months and re-evaluate.

@DamienTalksMoney Год назад

Defo feels like a slap from all sides mate!

@Asif24960 Год назад

Personally I think a mixture of both. Build up a contingency fund for 3-6 months. Overpay on mortgage whilst investing through ISA accounts. Don’t think it needs to be one of the other. Just do all and manage accordingly

@Asif24960 Год назад

Also bear in mind sooner you get to a 60% or lower LTV mortgage you get access to better rates.

@urArchitect Год назад

Thanks for this

@kiefershanks4172 Год назад

I agree. Mortgage debt is certainly worth paying off sooner if possible but financial investments and strategy should be established in parallel. At some point, the debt will disappear and you should have a financial machine built to take your newfound free cash flow and start producing returns immediately. It's risky in itself to throw all your money at the mortgage. If your house value takes a dump, you are left essentially burning all of your money and any shred of security. Diversification includes your home and no financial advisor would tell you to put all your money on a single stock. Why on earth would you do it with your home?

@MUHAMMETq7 Год назад

You should do a new video about VERMONTCORPLTD ! I really like you’re mellow delivery and you seem like you’re very knowledgeable. I watch lots of influencers and you always seem very calculated and know exactly what you’re talking about and understand it. You’re better at explaining complicated things simply, than any other person on youtube keep it up brother!

@Ravsview Год назад

Glad you’re doing this full time man. More content 🤝

@hydrainsaan108 Год назад

I have kept my eye out over the years whenever there is a printed review of portfolio management software. I can say unequivocally that there is not a better all-around portfolio management software program out there today. LIBERTON CORP handles everything... even those esoteric transactions that no one thinks about talking about in the media. And, Quicken is not sophisticated enough to handle the transactions as seamlessly as VERMONTCORPLTD

@ds61821 Год назад

I'm in America and (still) found this to be a really excellent discussion of the issues and their various pros and cons. Well done.

@ianwhittaker3041 Год назад

Hi Damien, an offset fixed mortgage may be the answer. We have one with First Direct, whereby we can put money in the linked offset account which acts as a way to offset the interest you’d pay just like paying off a portion of the mortgage, but, you can access or take that money out if needed. It is also fixed for 2 years so it’s predictable. The other benefit is you only pay the interest which keeps the monthly payments down, but can make overpayments (or simply put in the offset account) whenever you want. Food for thought 💰

@michaewelina7983 Год назад

Great option, but not always accessible, and rates was 4% when market average on standard mortgage was 2.54%.

@cashkitty3472 Год назад

I had this when I paid my flat off but you can no longer get an offset with first direct.. they stopped doing it

@Paul-vl2wg Год назад

@ian, just taken one with YBS at 4.69%, not the best rate but we will be offset 100% so paying zero interest but hedging the rate and keep the liquidity. Also works well with todays higher rates as only around £10k saved will create around the £500 interest income before paying 40% on the amount over if a HRT.

@buckspounds Год назад

Great content as always. There is also another option - pay off your mortgage as much as you can now and release equity when interest rates are low again and stock markets are trending up. Most people lock their mortgages for 2 or 5 years anyway.

@snowbind Год назад

I think leveraging your house to invest is some of the worst advice I've ever read.

@victoratos Год назад

Nice summary, offset mortgage has worked for us - YMMV, but the lender we’re with makes it flexible & convenient

@williams6334 Год назад

@7:40 This is why a variable loan + redraw is important IMO. You can save on interest and also have the ability to access funds if absolutely necessary.

@BigHenFor Год назад

Overpaying on your mortgage if you can is always a bonus, because of the saving on interest. But honestly, an Emergency Fund should have come before the mortgage. Its wise to have an energency fund of the value of 3 to 6 months worth of expenses, as things do go wrong, and we're living with a finance cycle where recessions - mostly minor, but 2008 was only 14 years ago - are coming around more frequently.

@sjbutcher Год назад

Great video👍 into my 5th yr of a 10yr fix and have now been directing overpayments into a monthly saver of 5.25% and will keep doing this and reinvest each year so if fixed rates don’t come down I can overpay closer to the end of the deal without the stress that I’ll have to find more money each month when I renew at a higher %. Only time will tell what will happen to the rates

@Paul-vl2wg Год назад

5.25% sounds good until you pay basic rate tax of 20% after the first £1,000 and if a HRT after the first £500 40%. In todays environment you only need £10k to make £500. We have just taken out an offset to hedge the rate and eliminate the tax impact if saving in another vehicle.

@timothygears Год назад

Thank you 🙏 Great listen

@DamienTalksMoney Год назад

Thank you!

@henrypawson513 Год назад

Hi Damien I'm a brand new subscriber and I have to say I'm very impressed! Ive been interested in personal finance since 16 and 2 years on I'm in a low cost Vanguard index dund dollar cost averaging my way to early retirement! Keep up the good work I'll be watching more of your videos for sure ! :)

@DamienTalksMoney Год назад

Thanks Henry mate! Welcome to the channel and well done for getting started so young you are going to do so well

@aaronclarke6796 Год назад

I've been overpaying my mortgage off with an extra 75% for about five years now and it's helped my mortgage term come down by years, the extra payments just become part of the normal mortgage payments, every six months or so it's nice to see actual progress on the amount coming down rather than just a tiny bit due to the interest they take! My advice is at least over pay something, even 100 pounds a month, you will feel and see the results.

@jml9550 Год назад

I paid my $328K mortgage off in 25 months. Went absolutely crazy on my part.

@maryanakurti Год назад

@@jml9550 Bullshit.

@jml9550 Год назад

@@maryanakurti bullshit huh? My income and 3 paid off rentals in the SF Bay Area says otherwise. love those rental incomes, average 3+2 rents here is minimum $3K. You can do the math. Life’s good.

@maryanakurti Год назад

@@jml9550 highly doubt that.

@jml9550 Год назад

@@maryanakurti believe it, don’t believe it. Don’t affect me one bit. Life’s good though for sure.

@tl1850 Год назад

After coming through the late 80s and 90s recession, then the 2008 recession. I learnt a few things. I could not afford to pay 15% rates then 10% rates in the 90s, especially after being put on a 3 day week. I rented the house out and my wage and rent just covered mortgage. After 1 year I moved back in and rented a bedroom instead. Always have your house in a ready to sell condition just in case things go tits up. You do have options.

@FrostiesDoodles Год назад

I think in uncertain times people look even more for certainty, I invest across all sorts but I also like the certainty of fixing my costs. Rate chasing in long term debt is like rate chasing in long term investing.

@henghistbluetooth7882 Год назад

I’m 50 years old. I had a mortgage of £250,000 that was due to be paid off when I reached 70 (my wife is 45). In January I decided to change to a 5 year fixed mortgage and overpay by 300%. I did it mainly because I was terrified of still having a mortgage at 70. It felt like a big commitment. But after a few months it’s weird how it no longer feels like a stretch. It’s just ‘the mortgage’. We life off my wife’s income and mine all goes on the mortgage and on an ISA and pension for my 9 year old son (based lately on advice from brilliant channels like this). I did a calculation using rhe CBS site to estimate what I would pay now if I chose to take out a new mortgage either £250k for 20 years or £250k for 5. The first would mean paying an extra £800 a month. The second an extra £500. Choosing to massively overpay my mortgage and fix it at exactly that time was the best decision I have ever made in my life. If I had chosen to invest instead (another option) - I would not have had either £800 or £500 to invest. Also - don’t underestimate the psychology. While the world has been going to hell in a handbasket over the past 8 months I’ve been watching the capital in my home increase by £3500 a month. It’s an incredible feeling of having at least some control in a volatile environment.

@alangordon3283 Год назад

Cool story . How much did that story cost you in overpayment penalties seeing as you were fixed for 5 years 🙄

@guyr7351 Год назад

@@alangordon3283 he changed to a 5 year fix, but last year I left a 5 yr fixed deal a year early it cost me 2% of the balance on the mortgage. I moved to a new 5 yr deal there were three advantages1) new rate 1.29 % which was nearly 1% lower. 2) the remortgage was for the amount still owing 3) my saving was about £370 a month which I could use better elsewhere

@guyr7351 Год назад

@Ra’s Abdul surely that depends if interest on the mortgage exceeds income from investments and if you can reduce the debt ( it does not have to be cleared) mortgages are often the cheaper rates of lending money

@henghistbluetooth7882 Год назад

@@alangordon3283 I’m sorry I don’t know what ‘how much did that story cost you?’ means. If you mean did I face any charges - I didn’t face any. I had a mortgage with the same company since 2003 and had 3 different mortgage product with them. The first two were variable. I switched from the second product - a variable mortgage that I had held for 12 years and that was on a standard variable rate. The 5 years fixed was the first fixed rate mortgage I ever held in my life. Had a I continued with the mortgage ‘as was’ I would now be paying a little over £1700 instead of roughly £1,200 I had been paying. That’s slightly more than my current car payment. I am currently paying in £240 into my son’s pension and £250 into my son’s ISA. Had I kept my mortgage as it was in December 2021 the increase in payments would have meant I had to cancel both, both for the duration of the increase in interest rates which could mean years, and also without paying off any capital on the mortgage. I haven’t paid any fees. I had 65% in equity so CBS wasn’t about to start charging me for anything. My total interest over the 4 years and 9 months I now have remaining is about a tenth of the interest I would have paid over 20 years if I kept the original mortgage product (about £7k compared to £70k - and that is based on the interest rates from December - I haven’t calculated what I would now being paying on the variable because I no longer need to). Is this the point where I insert some sort of emoji in place of an argument? I’m afraid I’m not up with current ‘use emojis instead of a coherent argument’ trends.

@vander9678 Год назад

Or you could have bought puts on everything, easy asf gains if you understood QT and rate hikes, DCF formula. Lol

@bigdawg1353 Год назад

One alternative view is try neutralise your interest costs rather than overpay the mortgage capital. So throw some cash in high interest savings and/or fix deposit accounts depending on how long your mortgage has left to run on the fix deal. This way you earn more interest than what you pay on the mortgage. Kinda like offset mortgages from back when. And you build a cash buffer as well at the same time.

@MrLaughinggrass Год назад

yep this is exactly what I have done. especially with savings interest rates going up passed my mortgage rate

@jd9720 Год назад

Very clever!

@andytaylor3443 Год назад

Great video again mate explaining all options open to people with + and - risks for each choice . Got to admit though when I think of Sandra bullock it’s for a totally different reason than you do

@ep1929 Год назад

I compressed my mortgage term years ago, then at the start of pandemic I started "overpayments on steroids" - at a rate of 1.74% interest fixed until summer 2023 I decided to finish my mortgage once & for all. Paying around 60 - 65% of take home pay into the mortgage and I'm nearly there, under £5000 owing on 1st November 2022. To say I'm relieved with all this turmoil going on is an understatement!

@jrlx86 Год назад

You can generally only overpay by 10% if in a fix rate term without early repayment charges

@DamienTalksMoney Год назад

Yeah mate I think I mentioned this at one point

@guyr7351 Год назад

Yes but for many overpaying 10% of a 200K mortgage is hard to achieve, that’s an extra £1667 a month.

@jrlx86 Год назад

@@guyr7351 200k is a crazy amount tbh, 8x national median earnings

@guyr7351 Год назад

@@jrlx86 well I live in the. North east property is not as high as south/ London where in London 300K does not even buy a 3 bed terrace. At the time it was three times our joint income but redundancy in covid for me and the new job at 60% previous salary meant it was tight till I could re-mortgage. It was a new build on a good estate where my house at £300K is a cheaper one. I don’t care it’s a 4 bed wife and i plus two of her grandkids live with us, it’s a home first still get a buzz when I come home. Have split our money into property, investments and pension. Looking forward to the day nil mortgage. One thing I would say is to move I I had to clear all Other debt such as credit cards, loans. Which I needed toaccess via a pension but best thing I ever did. I only have one credit card zero interest and it’s for emergencies / big purchases. Having no debt is a massive stress buster.

@akosiamarillo Год назад

Doing both 🎉. Overpay on mortgage and doing stock investment via ISA. Best of both worlds.

@waynehodgin4511 Год назад

Great video as always. Now that interest rates are raising this is a great time to 'overpay' using things like 1 year fixed interest saving products...sort of keeping your cash whilst it's earning more than a lot of mortgages cost you. I am currently using a mix of Zopa notice accounts and Atom fixed rates...all of them pay in excess of 1.85% to 4.11% for a 1 year product. Keep up the good work!

@dudleyjoseph9485 Год назад

Yep - good idea. I'm thinking of doing the same. Must be quite a few people that still have some time to run on a mortgage fix with savings rates or savings bonds running higher. Still got to be wary of inflation though.

@guyr7351 Год назад

Well nothing being offered guaranteed that meets inflation. My building society has a 12 month monthly saver offering 5% and the bank 2% monthly saver

@waynehodgin4511 Год назад

@@guyr7351 I agree. No investment is matching inflation. My point was that there if you were looking at paying down the mortgage there are ways to maximise how quickly you can pay it down. The investing world is mad now. I do like the message in this video about diversifying how you approach the current situation...overpay a bit...increase cash a bit...invest a bit.

@guyr7351 Год назад

@@waynehodgin4511 totally agree, I have the two schemes running I mentioned, pay into a personal pension fund to gain the tax back, which is a 25% boost. Have a DB pension scheme which I am due an update on shortly so current climate is a bit of a worry as 2 1/2 yes from DB scheme retirement. 3 1/2 from state retirement. I did look moving out from DB scheme but the multiple offered was not attractive PLUS it would mean a lot of my pension being stock market based. Since the inglorious mini budget I have seen personal DC scheme drop 7%. My next target is to move some savings into an ISA scheme. Spread the risk is key

@MrLasty12 Год назад

As always a great, insightful video, thanks Damo! I've been trying to reach my mortgage provider to increase my monthly payments for weeks but alas, they never answer the phone!

@ronlhubbard1353 Год назад

Pay your mortgage off first and any other debts. Once you’ve done that it becomes a question of how to invest it.

@davidc7636 Год назад

Excellent video as per. Thanks Damo!

@LFC645 Год назад

Been following you for the last couple of days and really love your videos about finance. Actually adopted some of your methods. One off topic question: what’s damien calendar 😅 would love to know if its got something to do with investing 👍🏻

@__Wanderer Год назад

actually with prices in the stock market dropping surely the future return (which is what counts) is only improving... yes it hurts to see a portfolio go red for a year or two but buying stocks cheaply with decent dividends means you get paid to wait while you bought companies at decent levels (thinking long term)...

@ordinaryhuman5645 Год назад

I knocked out the mortgage before investing more and it was a bad idea in hindsight, as the investments would have outpaced the 4% mortgage by quite a lot. Having the house paid off is nice, but being a millionaire right now would have been nicer.

@MIKEZG Год назад

What kind of investments

@ordinaryhuman5645 Год назад

@@MIKEZG I had plenty of VTSAX prior to getting the mortgage, so it was dabbling in TSLA that waited until after I paid it off (and it 10x'd in the meantime).

@Chan-dc3zj Год назад

Another great video that’s helped me decide what I’m going to do - thanks!

@DamienTalksMoney Год назад

Amazing this! Thank you so much for letting me know.

@adamyt0 Год назад

Wow, great video. Explained this beautifully, and covered all aspects, both sides

@DamienTalksMoney Год назад

Thank you!

@whtmasterd Год назад

Living within our means, paying off the two mortgages we had early and investing the mortgage money we would have had and additional savings was a recipe for our success. You have to have a plan and execute, it won't be perfect, but it will provide direction in an ever-changing world. Having options that you create are priceless.

@mattsidebottom7603 Год назад

This is a perfectly timed video for me. I was thinking of switching monthly isa payments to overpaying the mortgage while i can make more of a dent in loan while my rate is 1.74% Im gona stick with my original plan

@DamienTalksMoney Год назад

Glad I could help you come to a decision!

@sspeedy3 Год назад

same here, isa v mortgage and isa wins

@guyr7351 Год назад

@@sspeedy3 certainly if mortgage rate is very low.

@grantwarrender8909 Год назад

Great post Damien and I love the reference to the Oompah Band. They're a great band too (having gigged with them)!

@alexdorian6194 Год назад

Thanks for the video, Damien! The topic is relevant to a lot of us.

@DamienTalksMoney Год назад

You are so welcome!

@Roastkardoviral Год назад

While everyone is focused on BTC, ETH, or any other top alt coin and playing defense, they are missing out on high-quality projects set to launch on CEX. For example, VERMONTCORPLTD will go mainstream soon, with 10x-20x possible even during this bear market, but only a few people are aware of this.

@jp92382 Год назад

good message. people should really be honest with themselves. the order of investing does: pay off your debts, get an emergency cash reserve, get some physical gold and silver, and then you can start investing once you have that foundation.

@simonalcroft7897 Год назад

What? Clueless

@jp92382 Год назад

@@simonalcroft7897 hahaha can't help but notice that you don't present any alternative. We all know what that means. You don't even invest. Lol people these days

@guyr7351 Год назад

@@simonalcroft7897 core recommendations on Dave Ramsey in The states. Except for the gold / silver but. Before you do anything get rid of debt such as cards etc. do not underestimate the relief that the only debt you have is your mortgage, all credit cards are clear or on zero interest

@michaelarlov3463 Год назад

@@simonalcroft7897 just curious, what is it about paying down your debts and building a reserve prior to investing is clueless? perhaps the key word here is investing, as opposed to speculating. if you have unsecured credit card debt on a floating interest rate, it seems to me a pretty bad idea to be yoloing your money on altcoins or memestocks. just my 2 cents here, but it seems like you are the one who is clueless.

@Life_Literacy Год назад

Clear, informative and funny. Food for though for many fella. Another great video 👍🏻

@DamienTalksMoney Год назад

I love you mate haha

@Nerdchacho Год назад

I'm currently doing EXACTLY what Kiki is doing.. I'm on a fix rate for 5 years now, just started.. so I'm going to amass a pot leading up to the fix ending and decide what to do with it then. That way, as you have said, I can either pay the lump to bring the rate down, use it in an emergency, invest it or even add it to my "fun-fund" and spend it on something I want to - but either way, I'm securing some sort of future with the capital I have..

@paulgaffey7244 Год назад

I paid my mortgage off early age 49 . One of the Best feeling ever !!! then gives you the option and freedom to do whatever with your money, Knowing I'll always have a roof over my head.

@johnjames5666 6 дней назад

Early 49 lol bless ya , needs to be done at 30 u should of worked harder in your youth ;)

@ronniep9272 6 дней назад

@@johnjames5666and what do you do for a living?

@ryanifbb5204 Год назад

Another great video Damian. People like you (knowledgeable with charisma) are so needed in our UK schools and colleges. Thankyou again

@DamienTalksMoney Год назад

Thank you so much!

@ryanifbb5204 Год назад

@@DamienTalksMoney Sorry Damian, I did see your last message about contacting you, but I could not work it out. I have mentioned you to my wife (School business manager in the midlands) and she would love to speak more about getting you involved if you would. If you are able to contact me without either of us doing it publicly then please do. Thanks again Damien, again, loving the channel and your work

@DamienTalksMoney Год назад

@@ryanifbb5204 Hi Ryan, That last message was not me it was a scam account pretending to be me trying to con you. You will notice my name is highlighted in grey this is the only way to tell that it is actually my profile replying. Feel free to email me on damientalksmoney@gmail.com

@tmilsted Год назад

First video I've seen from you great video liked and subscribed nice to see a decent UK financial channel 👊

@DamienTalksMoney Год назад

Thank you so much! Really appreciate it and welcome to the channel

@FIRE_in_the_NHS Год назад

As always, it all depends on your individual financial circumstances. What is evident is that as regards buying the market, things are on sale at present. The opportunity to dollar cost average is there... Personally speaking, I could pay off the remainder of my mortgage now although it would ~ halve the value of my investment. My mortgage is a 25 year fixed rate and I've not heard from the bank yet about changing the cost (that could change my view). As things stand, I prefer to keep the money invested and let the mortgage run its course. It will be paid off shortly before my target retirement date. In the meantime I can benefit by investing a larger amount in the market whilst things are cheap and I'm dollar cost averaging. If I were on a variable rate mortgage and the bank had been in touch to raise the cost, in deciding whether to change my approach I would look at the comparative costs of the increase in the mortgage cost compared to the effect on my target retirement date, by reducing/ceasing my investment. Notionally, my gut feeling is that it would take a helluva rise to make me think it's worth sacrificing my target retirement date. ** Always read the terms of your mortgage contract carefully ** I can overpay without penalty, but that's not always the case. Sometimes limits, frequency and fees can apply...

@Bomberm4n Год назад

Nice post, thanks man. Lucky enough to be on a low fix mortgage for a few years here so not panicking just yet. Hoping to ride the interest wave out and pick up some cheap investments along the way. But I'm seeing friends lose their jobs so by no means complacent...

@DamienTalksMoney Год назад

Yeah the job thing is a big threat especially if we enter a big recession

@Bomberm4n Год назад

@@DamienTalksMoney Yeah huge. Plus you have absolutely no idea what this batshit government might do next!

@kpankh07 Год назад

What a brilliant video. Great points!

@aaronag7876 Год назад

I've forwarded your video to my wife, who wants to over pay the mortgage, I want to invest or add to ISA or savings but as she is "The one who must be obeyed" (yes you can see her thumb print on my forehead), I can see which way it will go lol. Thanks for an outstanding explanation. New subber and bell set.

@CJC1080 Год назад

Great video Damien. Very refreshing to hear a Brits take on the financial world! Keep it up

@DamienTalksMoney Год назад

I love flying the British flag! We deserve dedicated content

@CJC1080 Год назад

@@DamienTalksMoney you got it! It can feel very oversaturated with American content. Keep flying for flag for us 👏🏻

@hdfiuhl Год назад

Yes, I keep telling this to people persuaded they need to keep on investing no matter what... I take it as "reverse" savings account. Not sure how does it work in UK, but in Czech republic you generally with this preliminary payment pay mostly the principal of the debt and monthly installment goes down with every preliminary payment. I paid my first mortgage planned for 30 years in 10 years, for sure conservative approach, but if I compare myself to many "investors" around, I am far better off at the end... Now waiting for prices to deflate and preparing myself for another mortgage, while refurbishing first flat for long term rents...

@carkchan Год назад

Great video mate, nearly 3 months into my Morty, 5 years fix rate think I got lucky there. Sorry it's been awhile been saving up your videos to binge watch! Haha Good show.

@DamienTalksMoney Год назад

Hello mate! Hope you are well

@colinrobinson4327 Год назад

Top vid as always mate, it was the Bullocks………

@lukasg6254 Год назад

Thank you! As always masterpiece and has a lot of different points of view! At the moment we are investing twice as much as we overpay the mortgage. We have shortened the mortgage a bit and we are building our investment. Damo and this is because of you! I can't thank you enough for all that you do. Just keep it going. Big thank you!👏🍻🖖

@DamienTalksMoney Год назад

Mate this comment makes me so happy that I have been able to help you get a hold of your finances. Over pay or invest no matter what you do you will be better off as a result

@malcolmshelley4999 Год назад

Life is a balancing act….in all matters, especially with regard to finance. Debt is always the ‘driver’ on financial matters. The less debt you have, the more wriggle room you have. Every pound off your mortgage, creates a small lifting of the shoulders and Empowers your ability to adequately deal with whatever the world throws at you. Your well-being increases, your stress levels diminish and life begins to get back into Your control ……not others. A huge factor in these uncertain times.

@MrDavepassey Год назад

Such a good quality video mate! Really well thought out, good pace and got you're point across perfectly! Keep up the good work.

@DamienTalksMoney Год назад

Thank you so much! I love your name btw 🤣

@UbiquitousBooks Год назад

Beautifully concise summary. You touched at the end on something that I think is quite important. The nominal return on overpayments may be climbing but, with inflation currently at about 10%, the real return on overpaying a mortgage, even at a 6% rate, is negative. A mortgage is basically a negative cash balance, which is a pretty good thing to have when inflation is rampant. As long as you can afford to service the debt, there's an advantage to keeping the mortgage balance high and letting inflation eat it away.

@JayFengBeat Год назад

But the problem is not everyone can afford to service such debt with the rising interest rate. If you have the opportunity to keep your monthly mortgage payment down by paying a lump sum into your house, why would you not do it in this case?

@UbiquitousBooks Год назад

@@JayFengBeat I agree that if the only way to keep the mortgage going is to overpay then it makes sense to do that. But, as mentioned in the video, overpaying typically won't do much to your monthly payments and reduces your flexibility vis-a-vis putting the money aside and using it to meet the higher monthly payments as needed. In any case, my comment was indeed really directed at people who don't have a problem servicing their mortgage. That might include those who plan to meet the higher monthly payments by reducing the rate at which they save, or those who are on a fixed deal with plenty of time left.

@michaewelina7983 Год назад

Inflation will eat it out only if your wages will keep up with it. Usually rates on mortgage go up higher than wage rise. It is all individual situation, but almost nobody that I heard from had 10% (RPI) wage rise, usually it was 3-6%, so in fact mortgage is eating purchase power not devaluating.

@UbiquitousBooks Год назад

@@michaewelina7983 I agree that inflation also reduces the purchasing power of your income. But that doesn't mean it's not a good idea to let inflation eat away at the mortgage. We can see this with a simple stylised example. Imagine a situation where you have a £100 mortgage with a two-year term and 0% fixed rate of interest (the numbers aren't important, so I just keep things simple). You earn £100 per-year. The other thing you can spend money on besides mortgage payments is a consumption good that costs £1 in year 1. Inflation is 100% so each unit of the good will cost £2 in year 2, but your income doesn't increase. The question is whether it's better stick with the original plan to pay £50 each year on the mortgage, or whether you should overpay the entire mortgage in one year. Let's look at what you can consume over the two years in each case. Firstly, if you don't overpay then you spend £50 each year on the mortgage, leaving £50 each year to buy goods. That means you can buy 50 units of the good in the first year and 25 units in the second year. Your total lifetime consumption is 75 units of the good plus a house. Alternatively, suppose you overpay the entire mortgage in year 1, spending the whole £100. Then you don't buy any goods in the first year, but you have £100 free for goods in the second year -- enough for 50 units of the good. Your total consumption is 50 units plus a house. Overpaying reduces lifetime consumption because it means spending money in the first year (when a pound goes a long way) in order to have the money free in the second (by which time inflation has destroyed its value). Note that in this example inflation reduces the value of your income as quickly as it reduces the value of the mortgage balance, just like you said. But you would still be better-off waiting to repay the mortgage. The example is silly, of course, but it illustrates a more general logic that is not widely-understood. You can put more realistic numbers into the same example and come to a similar conclusion.

@nikm8476 Год назад

@@UbiquitousBooks I think that's a good illustration for fixed rate mortgages although if you have a variable rate, your mortgage has a risk of going up in year 2 as well if interest rates go up to try and combat the inflation.

@martysamuels Год назад

I'm 13 months into my 5-year fix at 1.8%. I was overpaying, but since inflation and interest rates soared during the end of 2022, I stopped overpaying and starting investing/saving these overpayments. I can get a much higher interest on these savings than the % on what I have my mortgage at. Plus the fact that inflation is >10%, I am effectively paying -8.2% on my mortgage. I got very lucky getting my mortgage when I did, so I am trying to take advantage whilst I have the length of this fix left

@waterismyhome Год назад

It's a refreshing video where you try and point out the benefits of investing verses paying down the mortgage. A key factor you didn't point out is not only does £200 invested in a pension become £240 or £280 (depending on tax brackets) but more importantly is the 25% tax free lump sum. Paying off a mortgage using tax free cash AND having money left over! The other point is, due to inflation, the real terms cost of your mortgage decreases over time.

@Bokuma01 Год назад

Good advice covering the various angles. We came to the same conclusion - our mortgage is fixed for another 4 years @ 1.7% but you can easily beat that with a savings account so rather than overpay we are going to build up a cash pot to keep our options open when we have to refinance.

@iansullivan9590 Год назад

I think this is the way I'm leaning, while putting what I was saving for children's future into an equity fund.

@ljn100 Год назад

Great video again. Its different for everyone like you say. I fixed last year for 5 years at under 1.5% and am feeling very lucky now. Definitely not overpaying the mortgage but looking to put some equivalent cash in some fixed rate cash savings now they're nearing 5%. Inflation is still eating away but I'll get 3 times the return compared to locking in to the mortgage and can use it for something else instead if the landscape has changed in 4 years time. Nervous about my s&s isa currently but continuing to invest for the long term (buying cheap right now?) just at a slightly lower amount each month.

@TheBooban Год назад

What kind of dumb bank gives a 1.5% interest rate for 5 years? Whenever I ask any bank for a fixed rate, they add on extra for every year I want it fixed at. So if the rate is 1.5% now, I would be paying 2% or more, starting from now, even if now is just 1.5%. So you definitely got a nice deal. You must have a very large loan.

@ljn100 Год назад

@@TheBooban sounds like it works differently for you than here in UK. A fixed rate means that's the interest rate for the whole fixed period so i know my monthly payment amount for the next 5 years. Central bank rates were still very low last year and mortgage rates reflected this, hence I feel lucky to have fixed when I did. Loan amount is not high, well under 50% of house value.

@DamienTalksMoney Год назад

A fix at 1.5 for 5 looks so good right now

@guyr7351 Год назад

@@TheBooban in the UK we had a base rate of 0.1% I got a 5 yr deal at 1.29% and just missed a sub 1% deal. We will see what is offered in 4 years when it expires

@johnstonlee Год назад

@@TheBooban the banks didn’t see this coming. I fixed x2 buy to let mortgages at 2% for five years in March this year. Bank of England have been far too slow to raise the rates. People still smashing out those pcp cars. No one is poor just yet.

@notyet2345 Год назад

Funny how times have changed, when I told people about 8 yrs ago that I was going to pay off my mortgage, they told me don't do it.....invest.........now it seems every one wants to pay off their home. best thing I ever did. If I go broke, i will always either have income (rent) or a place to live. When you have a paid off home, you can recover from financial castrophies so much faster and with less struggle.

@jd9720 Год назад

If you pay off your mortgage you still need to go to work to pay the rest of your bills. If you invest the money instead, it can create an income that can pay all of your bills.

@bikecurious9163 Год назад

Bad advice

@mariavega4898 Год назад

Wheres the income 🤣 its all red negative...

@petralandafamily3665 Год назад

Calculating risk

@Harmonic14 Год назад

@@bikecurious9163 not really. If you have a longer loan period with a lower monthly payment and you use the extra cash on hand to invest smartly, you'll offset the extra interest and inflation and end up with more money than you would from lower interest on a shorter loan.

@littlerunner4505 Год назад

What I'm confused about (and I'm not in the UK so maybe that's why) is why there sounds like an almost certainty that people will re-mortgage? Is the norm in the UK to have an adjustable rate mortgage? Or a balloon payment? I have a 30 yr fixed and barring something unexpected, I will not be refinancing.

@DamienTalksMoney Год назад

There is no widely available 30 year fixed mortgages in the UK. We only really have access to 2/5 year fixes. So millions of people are coming to the end of their fixed rate deals and are now being faced with higher interest rates.

@littlerunner4505 Год назад

@@DamienTalksMoney oh man, that's really tough. It makes home ownership feel inherently more risky. I suspect it is bc the US govt buys/secures conforming home loans that it is widely available here. Even the jumbos that banks own will offer that term.

@DamienTalksMoney Год назад

@@littlerunner4505 the 30 year fix is a dream! Especially over the last decade. I will pin this comment as many people from your part of the world have asked the same question.

@veed71 Год назад

Countries with fixed rates exist? 😮

@mapryan Год назад

@@veed71 The US has a completely socialist mortgage market where the state takes over the risks for people's housing decisions

@gargipatel9678 Год назад

Great Analysis, and eye opening! Always preferred investing over savings and savings over paying mortgages. I.e. calculate 15k towards mortgage repayment for 30 years vs 15k to FD (or equity investment) over same interest rate with same years. Investing always wins🥇 thanks for providing as sanity check 👍

@Tommy-wh6zs Год назад

Damien, My mortgage term comes to an end this month. I was all set on remortgaging, taking money out and getting a buy to let, had offer accepted about a month ago but now with the rises it has become completely unaffordable. I’m unsure what to do, whether to fix for 2 years and take 10/20k out and invest in an index fund, or sit on it hoping to get a cheap house next year , or sit on the variable rate take money out and try and save. Any recommendations? Great channel by the way 👍🏻

@timclark4195 Год назад

It's a personal choice and depends what you want from life at the end of the day. But one factor I don't see discussed very often is the age at which each strategy realises its full benefit. For example I'm planning to be mortgage free by 42. It will bring freedom to invest more, travel, take a career break, change career altogether... at relatively young age. If I let my mortgage run its full course and invest the extra money instead I'll be 60... I'll undoubtedly be financially better off overall by this point but I'll be 60! I've got 18 fewer years to enjoy the benefit of this strategy.