Aggressive Mortgage Repayment
It is great that you came up with a plan to own a rental home, free and clear, and also move up in home.  It is also really good of you to recognize that curtailing spending has a profound effect on your net worth, many people fail to acknowledge that factoid and prefer to instead blame things outside their control.  Good work there.  Here are some items of your plan that I have comments on. 11mo by aggressively curtailing elective spending How does your spouse feel about this?  They have to be on board, but it is such a short time frame this is very doable. cashing out all corporate stock, This will probably trigger capital gains.  You have to be prepared to pay the tax man, but this is a good source of cash for your plan.  You also have to have an additional amount that will likely be due next April 15th. redirecting all contributions to my current non-matched R401(k) This is fine as well because of the short time frame. withdrawing the principal from a Roth IRA This I kind of hate.  We are so limited in money that we can put into tax favored plans, that taking money out bothers me.  Also it is that much more difficult to save in a ROTH because of the sting of taxes.  I would not do this, but would favor instead to take a few extra months to make your plan happen. buy home #2 How are you going to have a down payment for home #2?  Is your intention to pay off home and save a while, then purchase home #2?  I would do anything to avoid PMI.   Besides I would take some time to live in a paid for house. Overall I would grade your plan a B.  If take a bit longer, and remove the withdrawing from the ROTH, it then becomes an A-.  With a good explanation of how you come up with the down payment for house 2, you could easily move to an A+.
A common rule of thumb is the 28/36 ratio. It's described here. In your case, with a gross (?) salary of £50,000, that means that you should spend no more than 28% of it, or £1,167 per month on housing. You may be able to swing a bit more because you have no debts and a modest amount in your savings. The 36% part comes in as the amount you can spend servicing all your debt, including mortgage. In your case, based on a gross (?) salary of £50,000, that'd be £1,500 per month. Again, that is to cover your housing costs and any additional debt you are servicing. So, you need to figure out how much you could bring in through rent to make up the rest. As at least one other person has commented, the rule of thumb is that your mortgage should be no more than 2.5 - 3 times your income. I personally think you are not a good candidate for a mortgage of the size you are discussing. That said, I no longer live in England. If you could feel fairly secure getting someone to pay you enough in rent to bring down your total mortgage and loan repayment amounts to £1,500 or so a month, you may want to consider it. Remember, though, that it may not always be easy to find renters. If you hadn't done it already cut up the cards. Don't close the accounts because it could hurt your credit score even more. Switching some or all of the CC debt onto low rate cards, or a debt consolidation loan is a way that some people use to reduce their credit card payments.  The biggest risk is that you become less aggressive with the loan payback. If you were planning on paying $800 in minimum payments,plus $200 extra each month; then still pay $1000 with the new loan and remaining credit cards.  Another risk is that you start overusing the credit card again, because you have available credit on the card that was paid off with the loan. The third risk, which you haven't proposed, occurs when people switch unsecured credit card dept, to a secured 2nd mortgage debt. This then puts the family home at risk. "Aside from the calculations of ""how much you save through reducing interest"", you have two different types of loan here.  The house that is mortgaged is not a wasting asset. You can reasonably expect that in 2045 it will have retained its worth measured in ""houses"", against the other houses in the same neighbourhood. In money terms, it is likely to be worth more than its current value, if only because of inflation. To judge the real cost or benefit of the mortgage, you need to consider those factors. You didn't say whether the 3.625% is a fixed or variable rate, but you also need to consider how the rate might compare with inflation in the long term. If you have a fixed rate mortgage and inflation rises above 3.625% in future, you are making money from the loan in the long term, not losing what you pay in interest. On the other hand, your car is a wasting asset, and your car loans are just a way of ""paying by installments"" over the life of the car. If there are no penalties for early repayment, the obvious choice there is to pay off the highest interest rates first. You might also want to consider what happens if you need to ""get the $11,000 back"" to use for some other (unplanned, or emergency) purpose. If you pay it into your mortgage now, there is no easy way to get it back before 2045. On the other hand, if you pay down your car loans, most likely you now have a car that is worth more than the loans on it. In an emergency, you could sell the car and recover at least some of the $11,000. Of course you should keep enough cash available to cover ""normal emergencies"" without having to take this sort of action, but ""abnormal emergencies"" do sometimes happen!" It would be worthwhile reading into 'guarantor mortgages' or 'family offset mortgages' to achieve the same outcome. Ideally you are wanting the wealth of your parents to help make a mortgage more accessible to you. The first thought is to merely transfer money physically. However, for the reasons listed in the other posts, this carries potential problems. A guarantor mortgage will mean your parents agree to pay the portion about 75% LTV if you stop paying. You may take out a 95% LTV mortgage and therefore only have to find 5% deposit but benefit from the interest rates of a 75% loan. (Personally the chances of causing a family rift if things go pear-shaped would steer me away from this one. Each to their own though.) A family offset mortgage involves money rather than a guarantee. It will allow for the parents to dedicate some of their money to a third-party (ie. the bank or building society) so that you can achieve a mortgage. In practice, parents deposit money in a dedicated savings account. The bank adds that amount to whatever deposit you may have, and the combined amount is treated as the deposit towards the mortgage. Once your LTV reduces over time (by repayments and house value rises), your parents have their money returned and you carry on as normal. Here's an independent Which article: http://www.which.co.uk/money/mortgages-and-property/guides/first-time-buyer-mortgages/parent-mortgages/ I'd also read a couple of provider's pages to get a feel for the idea: https://www.barclays.co.uk/Mortgages/FamilySpringboardMortgage/P1242627640100 or http://www.scottishbs.co.uk/mortgages/guarantor-mortgage-for-first-time-buyers.html or http://www.mhbs.co.uk/family_deposit_mortgage_1_50_discount_for_term.aspx Not endorsements obviously, just a way to understand the concept and get a feel for the language they use. In short, using the money indirectly is much cleaner than your parents actually just giving you such a large sum and then you having to pay it back. If you're truly ready to pay an extra $1000 every month, and are confident you'll likely always be able to, you should refinance to a 15 year mortgage. 15 year mortgages are typically sold at around a half a point lower interest rates, meaning that instead of your 4.375% APR, you'll get something like 3.875% APR.  That's a lot of money over the course of the mortgage.  You'll end up paying around a thousand a month more - so, exactly what you're thinking of doing - and not only save money from that earlier payment, but also have a lower interest rate.  That 0.5% means something like $25k less over the life of the mortgage.  It's also the difference in about $130 or so a month in your required payment. Now of course you'll be locked into making that larger payment - so the difference between what you're suggesting and this is that you're paying an extra $25k in exchange for the ability to pay it off more slowly (in which case you'd also pay more interest, obviously, but in the best case scenario).  In the 15 year scenario you must make those ~$4000 payments.  In the 30 year scenario you can pay ~$2900 for a while if you lose your job or want to go on vacation or ... whatever. Of course, the reverse is also true: you'll have to make the payments, so you will.  Many people find enforced savings to be a good strategy (myself among them); I have a 15 year mortgage and am happy that I have to make the higher payment, because it means I can't spend that extra money frivolously. So what I'd do if I were you is shop around for a 15 year refi.  It'll cost a few grand, so don't take one unless you can save at least half a point, but if you can, do. "I suspect this is a function of deregulated banks' desire to write and flip as many mortgages as possible. The best targets for this sales push were naturally those with the most education, who tended to have the best credit ratings and most secure jobs.   The last time I bought a house, the mortgage salesman practically lit up when looking at my income and credit score, pushing me hard to borrow more. ""You could buy a lot more house than this!"" he said. ""You could buy apartments as an investment or for resale!""  I resisted temptation, thank heaven, but it's all too easy to see how millions of others didn't." I wouldn't like to say either way what you should do, not being an financial advisor or lawyer, but I did find an interesting article on nytimes.com: Walk Away From Your Mortgage!  that you might also find helpful to frame your decision. It has some interesting information on defaults, it says this: Mortgage holders do sign a promissory note, which is a promise to pay. But the contract explicitly details the penalty for nonpayment — surrender of the property. The borrower isn’t escaping the consequences; he is suffering them. In some states, lenders also have recourse to the borrowers’ unmortgaged assets, like their car and savings accounts. A study by the Federal Reserve Bank of Richmond found that defaults are lower in such states, apparently because lenders threaten the borrowers with judgments against their assets. But actual lawsuits are rare. And given that nearly a quarter of mortgages are underwater, and that 10 percent of mortgages are delinquent, White, of the University of Arizona, is surprised that more people haven’t walked. He thinks the desire to avoid shame is a factor, as are overblown fears of harm to credit ratings. Probably, homeowners also labor under a delusion that their homes will quickly return to value. White has argued that the government should stop perpetuating default “scare stories” and, indeed, should encourage borrowers to default when it’s in their economic interest. This would correct a prevailing imbalance: homeowners operate under a “powerful moral constraint” while lenders are busily trying to maximize profits. More important, it might get the system unstuck. If lenders feared an avalanche of strategic defaults, they would have an incentive to renegotiate loan terms. In theory, this could produce a wave of loan modifications — the very goal the Treasury has been pursuing to end the crisis. Depending on your bank you may receive an ACH discount for doing automatic withdrawals from a deposit account at that bank. Now, this depends on your bank and you need to do independent research on that topic. As far as dictating what your extra money goes towards each month (early payments, principal payments, interest payments) you need to discuss that with your bank. I'm sure it's not too difficult to find. In my experience most banks, so long as you didn't sign a contract on your mortgage where you're penalized for sending additional money, will apply extra money toward early payments, and not principal. I would suggest calling them. I know for my student loans I have to send a detailed list of my loans and in what order I want my extra payments toward each, otherwise it will be considered an early payment, or it will be spread evenly among them all.