Mortgage-Free Wannabe Welcome and Explanation

robinwood002

thanks so much

Jessikita1983

House purchased in January 2008 for £92000
Original mortgage £88400 (£527 over 35 years)

Balance now: £77107.40 interest 4.1% (85% LTV rate, approx 8 months before we hit £72800 so we can go down to 80% LTV rate) interest calculated daily, unlimited overpayments - no penalty.
Standard payment £373.84 over 30 years - Monthly overpayment - £476.16

Kept it over 30 years as my job/income is not stable. Didn't want to back ourselves into a high standard monthly repayment.

Hope to be mortgage free by the time I am 35 (7 years)

JonR1

If you're fortunate enough to be on a low-rate tracker mortgage, consider doing what we did: check the mortgage rate against the savings rate, and if the latter is higher, invest the endowment cheque until the expiry date for the tracker agreement. We saved £300 in the first year - then, without prompting, our bank offered to extend the tracker period for an extra year: another £300!

de1amo

i have just read martin's post but find myself in a quandry because i live abroad but my mortgage is in the uk.-i pay 2pc apr on İO which equates to a mortgage payment of 92quid a month -my savings abroad earn 9pc less 15pc tax.--i save 1k a month in the uk from an old occupational pension and i export money to the higher interest rates(at the moment the pound is very high in value against my local currency) BUT the debt is in the uk and i know one day i will have to pay the outstanding!--is there any advice!

uptomyeyeballs

I have a tracker with C&G and am allowed to pay up to 100% extra by way of regular monthly payments. I've opted to pay £300 extra per month, which reduces the mortgage (currently £65.5k outstanding) to 9.5 years instead of the 22 years remaining. Most months i'll also have a cash surplus, so should I save up say £5k chunks and pay it as a capital payment? This will reduce things a lot quicker, so could end up being mortgage free in 5-6 years?

abouttimetoo

uptomyeyeballs wrote: »

I have a tracker with C&G and am allowed to pay up to 100% extra by way of regular monthly payments. I've opted to pay £300 extra per month, which reduces the mortgage (currently £65.5k outstanding) to 9.5 years instead of the 22 years remaining. Most months i'll also have a cash surplus, so should I save up say £5k chunks and pay it as a capital payment? This will reduce things a lot quicker, so could end up being mortgage free in 5-6 years?

Hi Uptomyeyeballs, you don't say what your interest rate is so I'm going to make some assumptions here but I also have some questions for you

• is the £300 is the equivalent of your 100%
• where does the £5k figure come from i.e. has C&G said capital repayments must be of a certain amount
• have they said what the charge or implications would be if you exceeded your 100% per month
• have you got any other debts with a higher APR
• are you able to formally reduce the term a bit? If so this would 'force' your normal monthly payments to be higher which will give you increased flexibility to make higher overpayments so maybe not need to build up capital repayments as if your interest is charged daily (which is pretty likley) than the sooner you can overpay the better it is and the less interest you pay
• have you got some emergency saving s built up
• can you earn more interest on your overpayments via some sort of savings product than you pay on your mortgage
• remember that although you wish to be mortgage free the aim should be to increase your wealth in whatever way possible to allow you to pay off your mortgage

Hopefully some food for thought

Regards
ATT

abouttimetoo

de1amo wrote: »

i have just read martin's post but find myself in a quandry because i live abroad but my mortgage is in the uk.-i pay 2pc apr on İO which equates to a mortgage payment of 92quid a month -my savings abroad earn 9pc less 15pc tax.--i save 1k a month in the uk from an old occupational pension and i export money to the higher interest rates(at the moment the pound is very high in value against my local currency) BUT the debt is in the uk and i know one day i will have to pay the outstanding!--is there any advice!

Hi Delamo, sorry, I don't really know the answer but didn't want to read and run. Can I suggest that you either post your question as a new thread so that it doesn't get lost in this one or alternatively consider posting on the mortgages or tax thread.

What I would say is that at it's most basic this is all about increasing your wealth in the best way possible with the aim of using some of that to pay off your mortgage. If that means that you earn more interest on your money abroad than you are paying in interest on your mortgage then that would be one way to save up the funds.

Do you have any other repayment vehicle in place to pay off the IO mortgage?

Is there a reason it is IO? Have you considered converting it?

Sorry, more questions than answers

Regards
ATT

uptomyeyeballs

abouttimetoo wrote: »

Hi Uptomyeyeballs, you don't say what your interest rate is so I'm going to make some assumptions here but I also have some questions for you

• is the £300 is the equivalent of your 100%
• where does the £5k figure come from i.e. has C&G said capital repayments must be of a certain amount
• have they said what the charge or implications would be if you exceeded your 100% per month
• have you got any other debts with a higher APR
• are you able to formally reduce the term a bit? If so this would 'force' your normal monthly payments to be higher which will give you increased flexibility to make higher overpayments so maybe not need to build up capital repayments as if your interest is charged daily (which is pretty likley) than the sooner you can overpay the better it is and the less interest you pay
• have you got some emergency saving s built up
• can you earn more interest on your overpayments via some sort of savings product than you pay on your mortgage
• remember that although you wish to be mortgage free the aim should be to increase your wealth in whatever way possible to allow you to pay off your mortgage

Hopefully some food for thought

Regards
ATT

Hi there abouttimetoo. Thanks for your comments and questions.

The £300 is slightly less than 100% extra. It was a nice round number. Another £27.81 per month would be double. That would help a little more.
The £5k lumps would be approximately equivalent to yearly savings. Need to check on penalties though, may be on >10% of balance.
C&G won't allow monthly over payments to exceed 100% extra.
I have no other debts other than my mortgage.
The idea of formally reducing the term is an interesting thought, but I think there might be a fee, and it could be less flexible if my circumstances change.
Yes, I have an emergency saving pot.
I am currently 51 years of age, so have limited earning time. I'd need 2.49% nett or better to make savings more attractive than payment, but I also want to retire early if I can, so want to clear mortgage as quickly as I can, but without resorting to too frugal a lifestyle. ;-)

I reckon that in 5 years i'll be close to paying it off if I can get the balance down to c. £32k. I'll have somewhere near that in savings by then. A few months either way doesn't concern me too much.

Cheers

carlbruce1985

Hello, please help

At present i am using this site


money saving expert overpayment calculator

Now i have most probably got this wrong but i have been completing some calculations within the desired boxes and wanted to check if i have been doing this right.


In the fields i have


Mortgage outstanding - £128672 which is for the Reeds


31 years left on mortgage


5% interest rate as an average, i know that we are currently on a smaller rate.


Mortgage type - Interest only


Recurring overpayment of £150 per month


The result hopefully show that the mortgage will be completely paid off after 30 years.


Is this correct? I'm basing this as i would like to make the overpayments to be mortgage free at around age 55. I have completed the same fields for Metropolitan place but the Mortgage outstanding is £209700 and the overpayment would be around £250 per month


Thanks


Carl

gingeralan

We just purchased our first home and moved in about 2 Weeks ago. We arranged it on a 25 year term but are over paying by around 55% of the contractual monthly payment. We are allowed to make unlimited overpayments even while we are tied in without penalty.

I also had the thought of using any cashback made from my top cashback account to clear the balance even quicker! while 2024 is the current target I would prefer 2022, but we shall see how things pan out,I don't wanna force my finances too much. Really looking forward to owning our home outright.

Good luck everyone and I am sure we will all get there.

Jan