NOW MORTGAGE FREE! In the big house - here we go again !

Flower1976 · 5 January 2015 at 3:48PM

Hello there!

We have previously been mortgage free having repaid the mortgage on our old house in February 2011. However, we moved house in July 2014 and needed to take out a new one for £90400. £400 is the admin fee.

I really don't like having a mortgage and it is my aim to clear it as soon as we can. I am hoping that this diary will help us stay focussed and allow us to look back on what we have achieved. A little company along the way is welcome too !

Our mortgage is on a 5 year fixed rate at 3.09% and we are allowed to overpay 10% of the start balance each year without charge. We have online banking with Nationwide so we can always see our account and make overpayments easily.

As at 31 December 2014 our balance was £87350 and we had made overpayments of £2026.90 including the £400 admin fee. Our contractual payment is £432 and we intend to pay £200 minimum each month hoping that it will be cleared by July 2027.

Our short term goal is to reduce the balance to £84000 by the end of July 2015, at the end of the first year of our fixed rate. This is how we intend to do it:

Jan £300 (no water to pay for so will pay this towards the mortgage)
Feb £524 (no council tax or water)
Mar £200
Apr £200
May £200
Jun £200
Jul £200

I have already made an overpayment of £20 for January as we received an interest payment that i was not expecting. :j We get paid on the 20th each month so we will make our next overpayment on 20 Jan.
Hopefully all will go well!
Kind regards to all.
Flower

Flower1976 · 6 January 2015 at 11:13PM

Small overpayment of £15 transferred to mortgage today as son's school trip was cancelled so we received a refund of the amount paid.
Total so far for Jan £35.00

Flower

pinkteapot · 7 January 2015 at 8:13AM

Congratulations on the big house!! We moved to our big house last Feb and went from an almost paid off £35k mortgage to £245k. So I sympathise!! Our house is absolutely worth it though and assume yours is too.

Good luck on your MF journey.

ourcornercottage · 7 January 2015 at 8:25AM

Ditto here we went from 40k to 150k in June 2013. Plugging away with overpaying though. I started a diary a month ago and it really helps and motivates my money saving/ not wasting generally.

Good luck

Flower1976 · 7 January 2015 at 8:39AM

Thanks for the encouragement pink teapot and corner cottage. We love our big house - a lot more space for our family and right where we want to be. I will have a read of your diaries !
Flower

johnboyinsole · 7 January 2015 at 4:33PM

Hi everyone,

I'm interested in reading this post because this kind of thing has been on my mind a while.
I bought my first house 3 years ago. I love the house and intend on owning it for a while. However it isn't my dream house and ideally I'd like to live here as long as I can whilst I pay off the mortgage and move to my dream place in a few years. Unless circumstances change, I'm not really interested in going up the ladder, I'd rather just go from the bottom to the top (top in my eyes anyway).
I'm interested to know how you all made the 'mind' leap from being nearly or completely mortgage free to almost starting again. Did you do any contingency planning or preparations for taking on a new commitment?

pinkteapot · 7 January 2015 at 4:48PM

How 'loose' is your budget at the moment?

We bought our first house very conservatively - small mortgage relative to salaries. As a result, we overpaid significantly and after three years had got the mortgage down from £100k to £35k. Then we moved to the big house!

The first house was meant to be for longer, and we slightly regretted not buying bigger straight away. Though the new house would have been slightly beyond our possible maximum when we bought the first house.

I was nervous taking on a big mortgage (£245k when we took it out). At the last house, if either of us had lost our jobs it wouldn't have been a problem. Now it would be, though we have emergency savings that would cover us for a while. We just had to get in the "f*** it!!" mindset and just go for it. On balance, it's absolutely worth it as far as we're concerned. Worth having the larger, nicer house, with the trade-off being the reduced feeling of security.

What helped us a lot is that we've bought in a hugely popular area where very little comes up for sale. There's always demand, so if anything goes wrong and we need to sell, we'll be able to well before the savings run out, so long as we don't overprice it. This really helps. We did look at some very rural houses which were lovely but would be harder to sell if the need arose.

So I guess our contingency planning comes down to "buy something we can sell easily if it all goes wrong"!

I also became aware that in the first house we were going to end up mortgage-free by our late 30s. I would then have had to come up with a seriously good investments plan for our money from that point on. By ploughing money into a bigger house we've postponed having to worry about that. :rotfl:

Come retirement, we could have this house plus some savings, or the smaller house plus some other investments, etc. Six of one, half a dozen of the other, but no matter what the housing market does, this house will always fall and rise relative to other houses. It's worth about twice as much as a nice bungalow in our area and that relationship should always be the case (roughly), so we'll be able to downsize when the time comes and free up some equity.

PrincessLou · 7 January 2015 at 5:30PM

*Subscribed* :hello:

How much did you pay off the first time round and how long did it take you?

Flower1976 · 7 January 2015 at 8:19PM

Hello Johnboy and Princesslou and thank you pinkteapot for returning.

We originally bought a 3 bed semi and we had intended to stay there - we bought it for £87000 in 2000 but had saved a deposit of £14000 so only needed a mortgage of £73000. It wasn't at the top of our budget but we were quite cautious as first time buyers. After a couple of years we started to make overpayments each month. When we finally repaid it less than 11 years later, I had no intention of moving. The children were almost 6 and 4 and it was lovely to have the extra money and the security.

We realised that we were outgrowing the old house. We continued to save into ISAs, regular savers and work sharesave accounts and had intended to save enough over time to buy a bigger house without the need of another mortgage. But we soon realised that due to increasing house prices and lower interest rates it was best for us to sell our house and use some of our savings for a deposit plus fees for a new house.

We have now moved to a 4 bed detached in the same road! It is our dream family home and we intend to stay here for a very long time.

I have worked part time since the children were born and my husband has got a better paid job. We have kept some savings and continue to pay £600 a month into work sharesaves so feel we are putting ourselves in the best possible position for our family and for the future.

Very interesting to hear your journey too pinkteapot. I think I remember reading some of your posts on the 'waiting to exchange' thread!
Flower

pinkteapot · 8 January 2015 at 10:54AM

Hi Flower. I completely empathise with that sense of outgrowing the house! My thread is here: http://forums.moneysavingexpert.com/showthread.php?t=4852190

Though I don't update as often as I should.

There is however a kitty picture at the end of p4.

Will be reading your thread too!

Flower1976 · 9 January 2015 at 10:33AM

Just read your diary pinkteapot. You have done really well in your first year!
Flower

NOW MORTGAGE FREE! In the big house - here we go again !

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