How to be mortgage free in 5 years NO MONTHLY OVERPAYMENT (if you live up north)

missk_ensington · 20 April 2006 at 8:48PM

It is really easy to be mortgage free in 5 years if you know how to go about it, and you dont need to pay a single overpayment or have a whacking great salary to do it! (Although a decent salary and/or contact in the building trade will help)

If you live in the south, you can use the method but it'll take longer. In the North you can easily get a 3bed terrace for 100k, right? Where you wish to start with this is up to you, you could start with a 50k flat, its each to their own but this is where I started.

My house was the most disgusting thing Id ever seen, it had been uninhabited for 5 years, had textured, flowery wallpaper, concrete floors, a kitchen from, I think pre-WW1 and a heating system from when they were invested, amongst other cosmetic faux pas. It was on the market for 100k, it had had no offers in 8 months (not surprising) and was nested amongst 3 other houses that had all sold for £120-150k in recent months. I chipped the vendor to 90k and bought the house.

Need to spend £20-25k to make it immaculate with loft conversion to get a 4th bedroom but should sell no prob this time next year for £150k (It might be worth noting at this stage my mortgage was £80,000 at the start and I put down 10%) So, the house stands me at £110-115k with what Ive spent. Great, Ive made £35-40,000 profit. I dont pay Capital Gains as its my main residence.

I pay £40k off mortgage (so mortgage is now £40k), and buy another house for the most I can afford, probably about £110-120k and do the same again, sell this one for £160k or whatever the market dictates. If you do this 5 times, by the fourth you'll have no mortgage and your property will be worth between £150-£200,000+ depending on how good you are at it and you'll have no mortgage, as it was only 80k in the first place. You can keep on going if you like, why not get to £300k+!

There are still a lot of areas where huge profits can be made, and you can definately make money with the right purchase. I go into the estate agents and say 'find me a house somenoe has died in, or where the owner has gone into a home' or tell them you want a huge project to work on and to find the worst property on their books IN THE BEST AREA!!!! Dont ever buy an ex-council, or in a dodgy area cos it just won't work. The key is to find the wosrt house in the best street!

Good luck!

PS. This isn't all positive, theres a downside to living in a contruction zone for 5 years!!!

surfcat · 20 April 2006 at 10:43PM

The other downside of course is that houses prices don't always go up. They are part of an economic cycle, and as their growth has outstripped wage increases for a number of years now, an almighty crash is somewhat inevitable. Couple that with international pressures on rising interest rates (USA, Japan, Eurozone, Norway, Australia and many others) which removes the supply of cheap money, and your mortgage payments will be increasing also.

Neither would you want to be bringing up a family on such a buiding site.

Apart from all that, it sounds quite fun.

missk_ensington · 21 April 2006 at 10:47AM

The house being a building site isn't too bad so long as you always make sure you have one room which is normal!
Id beg to differ that the prices dont always go up, if you have the right house they do. A house which has had no improvements for 40 years and stinks and is really shoddy and disgusting, in a street which is in high demand will nearly always make money unless you are a) colour blind b) hopeless at interior decor!

The people who make no money are the ones who don't know their market, they just pick any old house in their budget and think renovation means painting the walls magnolia. If you have a partner in the building trade, you can renovate cheaply and efficiantly, otherwise you just have to search around and play trademen off against each other by saying you have been given a better quote by someone else!

Thefunkygibbons · 25 April 2006 at 9:21AM

In reality, this is taking a risk to be mortgage free

However, over paying your mortgage is a tax free, risk free way of getting risk of the mortgage

missk_ensington · 25 April 2006 at 10:29AM

Yeah, overpaying is great but my mortgage penalises for this in the first 2 yrs, and in reality, what most people could practically afford to overpay is a p1ss in the ocean and would take years, unless you can affprd to overpay a grand a month (which I certainly cant!). I don't think this is a risk if you're good at it, although after watching a program not long ago with 2 blonde women doing up houses and seeing how much they could make in 6 months (they lost about 30k or something like that) then I can see where the risk factor comes from!

I guess the bottom line is, you have to have good knowledge of the market and buy the right house and do it up in a certain way-for investing, not nesting. Its all too common seeing people getting too personal and wasting money on wet rooms, and hot tubs and not sticking to the task in hand-making as much money, as cheaply as possible.

Wickedkitten · 25 April 2006 at 11:38AM

Surely if this was actually that easy, everyone would have already done it already.

missk_ensington · 25 April 2006 at 11:47AM

A lot of people simply can't be bothered- I'm not saying it's easy never having your house tidy in every room! Also, a lot of people work long hours and don't have the time to get quotes, look into building issues, pick wallpaper and oversee the running of a development. But, for people who work part time, of are self-employed, or have a partner at home, it is do-able.

I'm not saying there isn't a risk, and a lot of epople are put off by the risk, and also a lot of people are incapable of doing a renovation well. I'm sure youve seen enough telly programs to know that some people just aren't good at it. I recollect one girl on a programme spending £3000 on hand painted tiles for a downstairs loo! They weren't even nice! Needless to say they went over budget and ended up making a loss.

The trick is, see what the peak price you can get for a house is. If you see a £20,000+ potential, i.e, a house is on the market for a lot less that the others on the same street, then you need to view it and work out how much its gonna cost and don't go over budget! Its all too easy buying extravagent extra's and blowing your budget on things that won't actually increase the value.

Im not saying everyone is good at this, if they were we wouldn't be bombarded every night with house makeover programs and such like, but if you think you know your market and have an eye for a bargain, it might just be what you're really good at!

Wickedkitten · 25 April 2006 at 11:59AM

missk_ensington wrote:

A lot of people simply can't be bothered- I'm not saying it's easy never having your house tidy in every room! Also, a lot of people work long hours and don't have the time to get quotes, look into building issues, pick wallpaper and oversee the running of a development. But, for people who work part time, of are self-employed, or have a partner at home, it is do-able.

I'm not saying there isn't a risk, and a lot of epople are put off by the risk, and also a lot of people are incapable of doing a renovation well. I'm sure youve seen enough telly programs to know that some people just aren't good at it. I recollect one girl on a programme spending £3000 on hand painted tiles for a downstairs loo! They weren't even nice! Needless to say they went over budget and ended up making a loss.

The trick is, see what the peak price you can get for a house is. If you see a £20,000+ potential, i.e, a house is on the market for a lot less that the others on the same street, then you need to view it and work out how much its gonna cost and don't go over budget! Its all too easy buying extravagent extra's and blowing your budget on things that won't actually increase the value.

Im not saying everyone is good at this, if they were we wouldn't be bombarded every night with house makeover programs and such like, but if you think you know your market and have an eye for a bargain, it might just be what you're really good at!

I'm going more by the fact that you are going to need a total of £34k just to get the house to the point where you can sell it which is almost 4 times the amount of your deposit so how are you going to manage to get that kind of money from the beginning?

Not to mention everytime that you sell the house, and buy another you are going to have to pay fees both ways, and eventually stamp duty.

I'm not saying it couldn't work, but it sounds like it would take a bit more than buying some deads persons house every year and flipping it.

missk_ensington · 25 April 2006 at 12:33PM

We've done our house up for 10k (3 bed) which included a kitchen at cost from a kitchen firm my partner has worked for (£1500 my partner to fit it) bathroom £400 my partner to fit it. Tiling, well my partner is a tiler by trade. Decorating we shall do ourself, or at the very least strip the paper and paint the basics ourself. Carpet-scour around and find the cheapest, decent quality carpet. Furtinute we already have. Curtains, I can keep the swags/tails from the current house and just have the actual drop re-made.

Gardening, I can do myself. Going to returf the grass, and plant some flowers and a veg patch (its a rural setting) put some hanging baskets up. If you're prepared to do work yourself you can save alot, although admittedly for the most success you need to have some contacts in the building trade, but if your partner's a builder or tiler or kitchen fitter, you can easy do it for 10k. If not, you just have to get a lot of quotes and haggle for the best prices, but materials cheaply/second hand/ ex display (we've just got a Rangemaster Range cooker, retailing at £1800 at MFI in the sale at the moment, for £600 ex-display from a kitchen firm.

This does require a lof of effort, Im not suggesting you can sit on your backside and rake in the cash! It takes A LOT of research! but if you have the time to do it, its actually quite enjoyable!

charlies_mum · 25 April 2006 at 1:13PM

Great way to make money,unfortunately I have been trying to buy a house for the past 6 months that requires modernisation, and every viewing has about 50 other people with the same idea !!

If anyone knows anywhere up North or in the Midlands where you can still buy these properties, I would love to know

Sallys_Savings · 25 April 2006 at 1:26PM

charlies mum...we're the same...whenever we go to view there have been so many people been to see it too.
Ideal houses for modernisation are being snapped up alot quicker now than say 10 years ago when they would sit on the market for a while.
It is so easy to overspend as one of the posts says...my father has an exact same house as my own but modernised to a higher spec and we've worked out (after valuation) that hes spent about £15,000 too much. :-(
Good luck to you all who are going down this route .

How to be mortgage free in 5 years NO MONTHLY OVERPAYMENT (if you live up north)

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