Mortgage-Free Wannabe Welcome and Explanation

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  • I had a 53 k mortgage in February 09 by repayments I should have that cleared by next Christmas. Mortgage free at the age of 21 will hopefully open up lots of doors for me.
  • Hi all. I got my mortgage late in life with no financial help or deposit and at the grand old age of 47 I have a £250K mortgage. The property is now worth about £320k. I was made redundant from a well-paid job last March so immediately reverted to interest only. I get occasional freelance work but earn nothing like before. I have no debts, a £3,600 ISA and £10,000 in an easy access savings account in case work dries up completely.
    My mortgage deal ends in December and I revert to a low variable rate (I'm with C&G).
    Mortgage when started: £250,000
    Current mortgage (18 Nov 2009): £249,000
    Mortgage free day: Gawd knows
    Has anyone been in this situation and recovered without robbing a bank or winning the lottery??
  • pawlala
    pawlala Posts: 1,416
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    with a typical 25 year mortgage you would be in your 70s by the time you paid it off. Unless you can guarantee that you will earn a quarter of a million before then I would seriously take advantage of your rise in value and downsize :)
  • millkins
    millkins Posts: 12 Forumite
    edited 29 November 2009 at 8:20AM
    it's great to see so many people motivated to paying more off their mortgage every month. i took my mortgage out in aug 2006 for £93,000 i now owe £81,000 and aim to have fully paid for my house 10 years early in 2026.

    when i first looked at my mortgage repayments and realised that approx £385 was interest and only £115 capital instead of being disheartened i began to pay double the capital each month (my mortgage provider sneakily reduced my monthly repayments as a result!!) so i set up a standing order (i believe most providers will allow you to do this) for the extra each month.

    i now have an all in one mortgage which is great (although going to the ATM and reading that you are £81,000 overdrawn is never nice!!). it allows me to see exactly what i spend on my car each year (by simply creating catergories and assigning each transaction to a category), my food shopping bills, the cost of socialising etc. i would highly recommend this type of mortgage for those with self control (i can withdraw up to £5000 and pay just 3.75% on it).

    good luck one and all!!!!
  • udydudy
    udydudy Posts: 559
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    I am normally a big fan of martins advice, Even this one is great for the common man who does not want the headache of managing finances.

    Correct me if I am wrong Martin, I prefer not repaying my mortgage at all as long as I can earn more than my mortgage interest rate elsewhere. Also in the longer term I believe that not paying your mortgage(if you can fix) and saving in a Cash ISA is excellent. I have been doing it for the past 5 years and fixed all my Cash ISAs (the last one in Nov 2008 with the great Northern Rock).

    My Cash ISAs earn me 6.05% (average of all of them some earn 6% and some 6.1%) until 2012(again average some mature early 2011 and some in late 2013).

    I had some good time when my mortagage was tracking at a rate below base. My mortgage now is at SVR of 4.24% and I still do not see any reason to repay the mortgage. Even now I would rather save this years allowances in Cash ISas though in flexible ones which I know earn ridiculously low rates. My outlook is more longer term as I am in the process of fixing my mortgage for the next 3 years at 4.49% and would rather lose the approx 1.5% interest in a Cash ISA(Earning 3% instant access or 3.5% 1 yr fixed)

    This is due to the long term benefit of tax free income from the Cash ISA and also benefiting from higher interest rates in 3 years time.


    Ofcourse i would pay any excess saving over the ISA allowances towards my cards(currently on promotional balances) and then towards the mortgage. The basic idea being to take full benefit of the ISA allowance and only then pay the mortgage unless the mortgage rates go sky high before I fix it.


    Would like Martins view on this.....
    Mortage When Started £171499
    Current Outstanding(29Nov2009) £169499(Paid £3000 in the first year fromexcess savings over ISa allowance)
    Mortgage Free date: God knows when!! unless i win a lottery!!!...
    :beer::beer::beer:
  • black_taxi_2
    black_taxi_2 Posts: 1,816
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    udy--every 1% rise in interest rates is about an extra £100 monthly payments.
    i think we could be talking 4% rise in interest rates over next 2 years, taking it to 8%.mainly due to weakness of sterling.

    id try and get a fixed rate/but im not a financial adviser----keep your money in cash isa---lower payments--switch to over-payments mortgage
    £48515 interest £181 (2009)debt/mortgage-MFIT/T2/T3
    debt/mortgage free 28/11/14
    vanguard shares index isa £1000
    credit union £400
    emergency fund£500
    #81 save 2018£4200
  • udydudy
    udydudy Posts: 559
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    black_taxi wrote: »
    udy--every 1% rise in interest rates is about an extra £100 monthly payments.
    i think we could be talking 4% rise in interest rates over next 2 years, taking it to 8%.mainly due to weakness of sterling.

    id try and get a fixed rate/but im not a financial adviser----keep your money in cash isa---lower payments--switch to over-payments mortgage
    I agree that the interest rate rises that will happen irrespective of in 1 yr or 2 years time. 0.5% base rate will only last another 3-9 months then they have to go up once the credit markets stabilize.

    I am happy to fix today(if my lender offers!!) but then they want a 70%LTV I am at 90%.

    My logic is that Savings rate will always rise with interest rate rises. and also when interest rates were at 5% + SVRs were not that high anyway.
    And at that time on could switch to better %age above(or below in my case then)base rates. Today the variable rates are 2.5-3% above base which looks good today but will not look good after a 2% increase in base rates.

    Unfortunately my lender would not give me a fixed rate without my LTV being 70%(i.e. in August). NOt that it worrie dme as I just came off, like I said, being 0.24 below base!!! it was nice paying 0.26% on our mortgage. and earning 6.05% on my savings!!. net monthly interest income despite mortgage being 5 times my savings....


    unless my SVR goes up by 1.76% it does not make sense breaking my ISAs. and my main worry is not short term it is the tax wrapper that I lose in the long term.

    My moot question to Martin was if ISA savings rate are bigger than the mortgage rate or even equal is it wise to repay mortgage rather than build your ISA nest egg first and them throw whatever you have at the mortgage. At least thats what I have been doing fo rthe past 4.5years.

    Being a finance background person am asking opinions on the specific situation as i do not want to get cocky and miss something I may have overlooked.

    I am not so worried on the interest rate scenario per se as I understand that part pretty well. sorry to be immodest on that front ... used to be an Investment Manager:A so comes naturally to me, until i hated that career and quit 9 years back!!. Am I glad i did ma not be rich today but sure happy and no stress.
    :beer::beer::beer:
  • black_taxi_2
    black_taxi_2 Posts: 1,816
    Debt-free and Proud! Mortgage-free Glee!
    Forumite
    investment manager---stress must be tested every hour--
    £48515 interest £181 (2009)debt/mortgage-MFIT/T2/T3
    debt/mortgage free 28/11/14
    vanguard shares index isa £1000
    credit union £400
    emergency fund£500
    #81 save 2018£4200
  • udydudy
    udydudy Posts: 559
    First Anniversary Combo Breaker
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    black_taxi wrote: »
    investment manager---stress must be tested every hour--


    Looks like u know quite a few...:beer: life no fun without stress.... high risk high reward..when its calculated risk its always high reward...:beer::beer::beer::beer:

    Like they say Redundancy is time to discover your true self and enjoy life!!!! it will not be too far when you get your !!! behind the desk and start working again!!!
    :beer::beer::beer:
  • Welshlassie
    Welshlassie Posts: 1,731
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    Udy Martins advice is to fill your Cash ISAs each year before OPing your mortgage.
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