Mortgage Free by October 2021

cheekymonkey20

I plan to be non mortgage debt free by 01/05/2008. Paying £1000 a month off our debts, after this I want to pay £1000 to our mortgage. We are on interest only at the moment but I think when we come to change it over in 2010 we'll go back to repayment, which for us is £770 per month. But if we stick to the interest only blag we will pay our mortgage of £137k off in 11 years 5 months.

So our mortgage free date is 01/10/2021. Which is 13 years away WOOP! Rather than the normal date which is 01/07/2042, knocking off 24 years WAYHAY:money: :j :beer: :T

We are just debating whether or not to put the extra £1000 into a few Fixed Rate Monthly Savers. I know i can get 8% net at the moment with Abbey as we have a Pheonix pension, and put it into a 1 year bond every 12 months, letting the interest grow, or pay it straight into the mortgage.

How have other people done this?

cheekymonkey20

Just had a play around with some figures....

£12,000 a year into a Fixed Rate Monthly Saver at 8% net gives £960 interest

Then each year put it into a 1 year bond, meaning that at the average net interest at 5.2% it would mean the following, every year after that topping it up with the savings from the FRMS.

End of 1st Year - £12960 from FRMS
End of 2nd Year - £673.92 interest gained Total in bond £13,633.92
End of 3rd Year - £1382.88 interest gained Total in bond £27,976.80
End of 4th Year - £2128.71 interest gained Total in bond £43,065.52
End of 5th Year - £2913.33 interest gained Total in bond £58,938.84
End of 6th Year - £3738.74 interest gained Total in bond £75,637.58
End of 7th Year - £4607.07 interest gained Total in bond £93,204.66
End of 8th Year - £5520.56 interest gained Total in bond £111,685.22
End of 9th Year - £6481.55 interest gained Total in bond £131,126.77

Plus the £12960 saved in year 9

GRAND TOTAL OF £144,086.77

So we will be debt free by May 2019 instead if we did it this way!?!?! And just pay it off in one lump sum.

If we change it back to capital and interest in 2010, and then whatever we have paid off on the mortgage will be deducted from the £137k balance on top of the extra £7086.77 we will have saved extra.

Am i right here or just mumbling up figures?!

dimbo61

:beer: First of all well done on clearing most of your debts except the mortgage.
Is your interest only mortgage fixed ? What is the rate ?
There is know way of knowing if the abbey fixed rate saver at 8% before tax is going to be around in 1 years time let alone 10/15 years. You write about pheonix pension !!!!! confused and you cant get at your pension until your retire.
You do not want to be using your lump sum and pension to pay off a mortgage.
You would be better off overpaying on your mortgage OR saving into a TAX free cash ISA £3600 EACH ( you & OH ) depending on which one gives the best return for your money. IE ISA at 6.5% tax free or mortgage at 5.99%
The very best way to be mortgage free is to overpay and fill ISA,s each year. GOOD LUCK

cheekymonkey20

You can get a 10% FRMS from abbey if you have a policy with Pheonix life, thats who i make my pension contributions too.

Its an exiting thought! He He!

setmefree2

Good Luck:T:T:T