Mortgage-Free Wannabe Welcome and Explanation

thriftybabe

This is my first post as a MFW however thought I would put in my case of how we have reduced our mortgage. We had a mortgage of £230k in December 2004 and since then I have made it my goal to reduce it drastically. Whilst the way I have done it would not suit most people it has definitely made myself and hubby happy! It is now sitting at £21k. How we did it - we have our own limited company and are able to take lump sum dividends every year. I have been doing this from the start and still keeping mortgage payments to the same level thereby overpaying every month. We sold our Florida property last year and had £80k of proceeds which we put into our mortgage. The property was costing us £2-3 k every year any way and the work involved in running it was too much therefore we thought that was the best thing to do. We also cashed in stock ISA's, 2 endowment policies and some shares. You may think we are mad however I was paying over £12k in interest every year which I was not making from all my investments. We are still overpaying our mortgage by £800 a month and I am hoping to M Free by April of next year or sooner depending on business dividends. That means by next year we can invest our monthly mortgage payments into something else with no debt over our head. I realise that i am very lucky that we have been able to do that due to our business and it is now given us piece of mind should anything happen to our business at least we will have our house that we do not need to worry about.

orinoco

OK. I am going to declare myself a mortgage free wannabe!

Our remortgage goes through at the beginning of October and at that point will stand just over £135,000.

We have no credit card debts and my student loan FINALLY gets paid off next April, so the mortgage will be our only debt.

As we have young children my wife isn't working at the moment so we are reliant on my £32,000 income.

I would like to aim to get my mortgage paid off in 10 years (before my 41st birthday in December 2017!!). Realistically with finances as they are at the moment I feel it may be more like 2022 but I'm setting myself the 2017 target as my wife will probably go back to work at some point in the interim.

So here goes....

[Deleted User]

Yay, a whole forum just for people like us!

We bought our place in May 2002, just after I'd cleared my student loans and assorted other debts that had piled up as a result of several misspent years - which whole episode left me with a loathing of borrowing in any shape or form, so I've always looked upon the mortgage as "not our money".

In January 2003 we remortgaged from the 25-year 100% mortgage we'd initially chosen for its lack of a redemption penalty to a fixed-rate product with an overpayment facility (though it was in a sense back to square one, as we borrowed back all the money we'd paid in the first few months to carry out repairs) - and proceeded to overpay by as much as we could afford. In January 2005 we remortgaged to a 9½ year term (3Yr fixed), and at the moment we're paying the maximum overpayments we can without incurring penalties. There's about £59k left on it now (initial value £107,650) - at our current rate, we're on course for paying off the mortgage in March 2011, though it may be sooner if we can remortgage to a shorter term still and their no-fee 2Yr fixed rate next January. My goal is to get the whole lot cleared on or before December 2010 - aside from the nominal £1 so we don't have to look after the deeds.

robp

What a great site, well done Martin (and contributors of course!).

Hello All.

We recently got married, sold our individual houses and bought a new home together.

My house was sold first and that enabled us to put down a nice deposit. With us both being self-employed it felt a little more awkward to get the best mortgage deal, but eventually we found one with NatWest (2yr 0.25% off current rate deal) that suited our needs.

Having just sold the other house, we now have another pot of money to start paying off the mortgage. We have started by paying the max 10% (£35k), which has reduced our term (25yrs) interest by £95k.

This has given us the bug, so we are now trying to maximise our savings until May 2008 when we can pay the next 10%.

By using the Virgin One calculator, it reckons we could pay off our mortgage in 4 years once our 2years with NatWest is over. I'm rather scepticle about this, so will probably go with a flexible option instead.

Hopefully all of this will help provide a solid future for us, along with pensions, investments and our slowly progressing French house renovation....

Good luck to all!

Moneygoes2money

bevrmn wrote: »

we chnged our mortgage in 1989,and borrowed £33,000, endowment mortgage. We missed some endowment payments, and the lender wrote saying that they would change the mortgage to repayment. However, it was only approx 2 years ago I realised they did not change it, and we have been paying interest only, so we still have a debt of £33,0000 !! it is due to finish in 2014, but we will still owe £33,000, any ideas how to sort this out ?

Contact your mortgage lender and ask them what the monthly payment will be if you switch all of your mortgage to repayment. If you can afford the monthly repayment then switch to repayment.

However, if you cannot afford the monthly payment, you have a couple of other options. Firstly, switch all of your mortgage to repayment but increase the term of the mortgage until the monthly payment is affordable. In other words, ask your lender to extend the term, not ideal but at least you have all your mortgage on repayment then in the years ahead you could overpay, which will reduce the term of the mortgage.

Secondly, if your endowment policy is still in force, you could switch part of your mortgage to repayment so you have part interest only (endowment) and part repayment. How much should you put on repayment? As much as you can afford. As the years pass, you could switch more and more to repayment so that eventually the whole mortgage is on repayment. What do you do with the endowment? Well, it depends who it is with and how it is performing but generally I would advise to keep it going to avoid loss then when it matures, you could you use the money to make a lump sum payment on your mortgage (if you have a mortgage at this time) or enjoy the money!

You will have received a letter from your endowment company with projections as to what the endowment may pay out when it matures. Have a look at this letter and post details of the projected pay-out on this forum for more advice.

Hope this helps.

egon

We have just started with our morgage. But I am trying to reduce it whenever I can. OH is always trying to put some money aside for rainy days. Whereas I am trying to spend it on the morgage. We have a repayment morgage over 25 years. We can pay 10% a year on top of that. So, whatever money I can scrap together, I pay towards it.

I am hoping to free some more cash after xmas. With just moveing and xmas is in a month time, we want everything to settle first.

kirsteenatom

Hi - I would love to join in. I have been travelling for several years so started the whole settling down thing rather late (in my mid 30's). As of December 2006 I have a mortgage of £186,000 (and a new son as of February 2007).

I have no idea whether I can overpay on my mortgage, or when I can change it without penalty to do so - I guess I am going to have to check it out.

We have massive monthly mortgage payments of £1200 plus another £100 (we have a mortgage and loan combined so that it isn't quite a 100% mortgage).

Would love to get some tips and find a way to reduce this our only debt!

Kirsteen

dollypeeps

congratulations Kirsteen (even though a little late) on your little boy and my what a big mortgage repayment! I feel a bit of a fraud now wanting to increase my small mortgage payment (£224) and rounding it up (£230) but I suppose our aims are the same even if the amounts are different!!
Good luck

dollypeeps

hazelize_uk

Definately getting there!

January 2006 £43,898
January 2007 £31,400
January 2008 £17,500

WOW! apart from paying extra chunks I became obsessed with keeping it a round figure!! everytime they add a bit of interest i'm compelled to round it off again meaning i'm paying even more extra payments than planned! Calculations still look good for 2008 which is my aim

For the final push we are now trying our hand at a spot of spring cleaning the Ebay way!

Wish me luck x

kazzys51

hi all, just joined is there a calculator that works out in more detail when your mortgage free im doing it on paper at the moment and it takes ages and sometimes not accurate i like my five year plan u see! so that i can work out where i'll b in a years time thanks karen