Mortgage-Free Wannabe Welcome and Explanation

rhuba

I would like to declare myself officially a Mortgage-free Wannabe!

Purchased the house just over 3 years ago with a mortgage of £123,500. We've been overpaying from the beginning as we got a 2 year tracker a week before all the trackers got pulled and our monthly payment went down by over £100 before we even started repaying!

Recently upped our monthly overpayment from £250 to £300 and in Jan of next year, plan to up it again to £500/month.

Our current mortgage debt stands at circa £102K and we have decided that our goal mortgage-free year is 2019 - by the time we're 35.

Good luck everyone! So looking forward to being completely debt free!!

Rhuba x

96Wally

Hi AM new to this site so please excuse if this has already been asked before but..

my present mortgage has outstanding balance of £13652, due for completition in 3years, presently in off set account where my £18000 of savings is off setting the balance and therefore the interest i am being charged is a 1.25%, basically next to nothing. After 6th April i plan to move the total of my 2012-13 ISA allowance into my cash isa but was wondering if it would be sensible to make a lump sum reduction to my mortgage of about 10,000 then either reduce my repayts from £900 per month to about £200 (i am over paying at present) and save the rest or to carry on paying he £900 and clear it sooner

Sparkle_66

Hi
My previous 5 year fixed rate mortgage for £37500 came to end in April 2011 (I had intended to overpay but never actually did and could kick myself). However when I remortgaged again for £34000 last April (another 5 year fixed rate) I considered how much I could comfortably afford to pay each month.

This meant I was able to reduce my term from 20 years to 15 years. In addition to this I am overpaying by £43 each month (total repayments £300 pcm) which doesn't seem much but will knock another 3 years off my mortgage. When I remortgage again in 2016 I will do exactly the same, try to reduce the term again even it's just a year or two and keep up with the overpayments. Hoping to be mortgage free within 9-10 years. Good luck to everyone who has finally had the LBM.

The recession maybe difficult but there couldn't be a better time to take control of your finances. I've swapped supermarkets from Morrisons to Aldi saving £30 a week, fixed my gas & electric til 2014 last August, took out a new home insurance policy with my existing insurer for £100 less than renewal quote. Time to stop being complacent with money. Many thanks to :money: for bringing us this money saving site.
Regards
Sparkle

Sepa74

@Wally...

With your low interest rate, I would be tempted to put as much away in savings as possible as you will definitely earn more interest on your savings than you are paying on your mortgage.

You can get 3 - 4 % on savings over three years now.

I would consider doing this for all of the stash in the offset except for an emergency fund of 3 - 6 months of expenses (not income!).

You still have time to fill this year's ISA too if you're quick.

Don't forget that being MF is not the goal, it's maximising your wealth and ensuring you and your family are financially secure in the long term.

tall_paul68

I have a nice dilemma and looking for some advice, we owe around 105K on a mortgage and tied in for another year or so without been able to overpay.

I have around £55K in savings (isa's and savings accounts) no other debts to speak off apart from interest free car loan.

Would like to be mortgage free in 5 years or so and could afford to pay an extra £500 a month on the mortgage or perhaps save £10k a year if all goes well, would it be best to try and build up savings to have enough to pay it off outright or start to overpay when able.

thanks

Paul

altheap

OMG!!! i need help MSE! I currently live in an inherited house and have no mortgage as it was paid off with the inheritance money. BUT now I've been asked to get a mortgage to help a relative who has no pension and a mortgage left on their home. I need advice as to what to do, I'm not in a great position to pay a lot of money but was wondering what are my options. Can I get equity out of the house, I'm 31? Should I get a secured loan instead? and also I do not want to include my partner because one of us needs to be financially stable since I have a young family and you never know what the future holds!

pixnmix_2

carlbruce1985 wrote: »

Hello, please help




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

Carl, do I understand it right, that your mortgage is an interest only one? If so, you are not paying anything off the mortgage sum itself in your monthly repayments, just the interest on it. Your overpayments are paying off the sum. It would be wise to get an accurate sum left owing figure from your lender and arrange to change to a repayment mortgage if possible. That will mean you pay a bit of interest and the lump sum together.

Sepa74

@Paul

Hi Paul, the answer depends on your mortgage interest rate. If it is a low rate eg below 2% then you are probably better putting your money in a savings account, but if it is a high interest rate, then you are better off over paying as much from the mortgage as possible.

Always remember that it is good to keep ISAs as they provide a tax free income stream that is very handy in retirement.

Sepa74

Hi altheap,

This sounds like an odd situation. I can understand wanting to help a relative, but as you say, you need to look after your own family and ensure neither you nor your children end up in the unfortunate position of your relative!

Getting a secured loan IS taking equity out of the house - it reduces the proportion of the house that you own. It also puts your house at risk should you be unable to make the payments.

It might be helpful if you explain the relative's situation in a bit more detail and then people can consider ALL the options. You may find you get more answers if you start a new thread as not so many people read this one.

sparky0107

Hello everyone hope you can give me some advice about the best way to go forward with overpayments on my mortgage. I have the following mortgage set up:-

Loan 1 £25730.96 term left 8 years 4 months @ 4.242% Interest only

Loan 2 £24034.00 term left 8 years 4 months @ 4.242% repayment (originally interest only)

Loan 3 £16984.18 term left 8 years 4 months @ 4.242% repayment (originally interest only)

Loan 4 £840.54 term left 5 years 10 months @ 4.242% repayment (originally interest only)

My monthly mortgage payment is £592.11

Total outstanding £67589.68 all the loans are variable and were originally endowments, which I have kept paying into, so I have 4 endowment payments but only 1 interest only part of the loan left (hope this makes sense)

I have made 2 monthly overpayments of £210 to the Interest only part of the mortgage. Can you advise me if this is my best option to reducing the term of the mortgage and achieving my mortgage free date.

There are no financial penalties or restriction on how much I can overpay. I originally wanted to overpay by £150 per month but find I can comfortably pay £210 per month. I can also keep the repayments at the same level while reducing the capital on them.

Can anyone tell me which would be the best way to go pay off the interest only side or concentrate on the repayment side.
Thanks in advance for any replies and advice