Would love to be Mortgage Free - just seems so far away..

Title says it all really - just maybe need some words of encouragement on my journey!

Fortunatley, OH and I are of the same mind to do with money, which means one less stumbling block.

We owe (gulp!) £191,137.20 on a house that has been valued at £199,950.

I know how terrible that looks, we paid £232,000 for the house in October 2007 - which was about THE worst time to buy a house as I think it was pretty much the peak of the market. But these things happen, and I guess we just have to accept it and move on.

The upsides to this are:-

We are on Nationwide base rate of 2.5%, so pretty low interest at the moment.
The figures above do not include the fact we have already overpaid £16,670.80 in 5 years, so the amout "owed" is £174,466.40. I like to think of them as separate pots, as this is our entire savings pot as well.
We owe £9k on OH's car - no idea what this is worth.
My car is owned outright.
No other debt (apart from floating balances of about £200 each on one credit card each, normally paid off each month, mostly - sometimes allowed to ride for one month, never 2)
Our repayments are set at £1085.64 per month, but we pay £1550 each month.
OH earns £58k, I earn £24k (part time) - and we are lucky to only have to pay £320 per month for childcare.

We have a pretty comfortable lifestyle, to be honest - but I just need some encouragement to up the overpayments as I guess we could afford anothe £200 without too much sacrifice.

It just seems so futile overpaying, as the house is falling in value faster than we can save at the moment, sometimes I would like to have a really nice holiday or more pocket money.

Also, a lot of our friends cannot understand why we do what we do and keep saying "why don't you go abroad on holiday?" "why don't you buy x and y and z?" But they are all in debt up to their eyebrows, whereas we have at least some savings (add to that that we have paid off around £25k in uni debt and £10k car loan for my car since 2001). Are we the insane ones or are they (think I know the answer to that... but insanity is relative)

Our daughter does not go without, but I do use eBay and Freecycle for her clothes and toys - basically the CB is spent on her and I don't think she does without at all - one of my friends was outraged that I should think that second hand stuff is acceptable when we could afford new stuff.

BUT - it just all seems so futile - should we just be enjoying ourselves? I'm looking for some inspiration peeps!

(just read all that back and realise how awful it sounds - we are relatively so so lucky - I should add that we both work in the construction industry so the axe could fall at any time and we are trying for another brat so I could well see a significant drop in income in the next year)

Any encouragement?

The people who mind don't matter, and the people who matter don't mind
Getting married 19th August 2011 to a lovely, lovely man :-)

Replies

  • StuartGMCStuartGMC Forumite
    2.2K Posts
    AB
    Seems you need to both sit down and do a thorough review. Put in place some data to help prove the value of what you are doing then go forward from there. Just look at the interest you've saved via the OP already.

    Don't forget, the value of the property is irrelevant in terms of the debt you have to repay (the mortgage). No matter what happens to the market in terms of the prices, you have to clear that loan. If you are not needing to move in the next 5yrs then you may well find prices will then have risen back to the amount you paid; in the mean time your good efforts at OP will have reduced the amount of capital outstanding.

    Remember, the OP means the LTV is still in your favour so in future when you may want to change mortgages you can do so.

    How's your household budgeting spreadsheet in terms of detail? If you schedule in the foreign holiday at say £3500-4000 per year, then also include things like the amount to save per month for replacement car(s) etc you don't have to take out a loan etc.

    Why are you missing cc payments? You are just throwing money away as you will incur interest on the items bought in the following bill as they are charged from time of purchase.

    What emergency funds do you have? As you note the likelihood of redundancy may be high, do you have your 6months of outgoings set aside already? In addition, remember your OPs should mean your lender will treat you better in that eventuality regarding changes to repayments.

    I am sure that with a little time spent together on the numbers you can look at your complete picture of mortgage, pensions, savings, investments etc and then have a detailed plan which will show what your annual outgoings are, the required savings you should make so you never have a loan to buy anything again, and you can then also look to improve on areas where you do spend.

    If you are presently drawing out cash for your outgoings, think about stopping that and using the credit card for everything. This will mean you can see where the money is going, but you do need to clear the balance each month!

    If you read my thread you'll see some of the thoughts I've posted in the past year, and if you don't have a spreadsheet, PM me and I'll send you the same one I've sent to others.

    I hope that encourages you to look positively and to move forward?
    Best wishes
  • fudgecatfudgecat Forumite
    289 Posts
    Part of the Furniture 100 Posts Combo Breaker
    Forumite
    Hi ab7167,
    Yes property prices are falling, but ultimately they will return (could be a long haul...) and when they do you will be in a pretty good place. Remember, the reason that the the financial world went into meltdown is partly your friends and colleagues attitude to spending, debt and having everything new - just because you can.
    You are nibbling away at your indebtedness, setting a wonderful example to your child and you will be able to say to the next generation that you did not consume for consumption`s sake. Not only are you doing the right thing, with the right attitude (in MHO), but there should be more like you. My kids had 2nd hand and car booted items and both look in charity shops, reduced bins and customise their 2nd hand clothing - often being asked where they bought items. They were Gok-ing before he was!
    Without sounding too po faced about the whole green thing, each foreign holiday adds to CO2 emissions as well as debt! Hang in there and the best of luck.
    Debt September 2020 BIG FAT ZERO!
    Now mortgage free, sort of retired, reducing and reusing and putting money away for grandchildren...
  • slevinslevin Forumite
    20 Posts
    your friends seem to think that buying x y and z leads to happiness. achieving ones goals (more so goals shared with a partnet) leads to more fulfiment ultimately than a quick shopping fix.
  • tessie_beartessie_bear Forumite
    4.9K Posts
    Part of the Furniture 1,000 Posts Name Dropper Mortgage-free Glee!
    Forumite
    we paid off our mortgage a couple of years ago...i think long term stuff is so much more important than trying to buy the latest stuff that is soon out of fashion or u get fed up with....keep going im sure u are barking up the right tree iykwim......good luck
    onwards and upwards
  • Lynn11Lynn11 Forumite
    674 Posts
    Yes it is good to overpay what you can and reduce your mortgage. It is a long haul and sometimes I feel like giving up especially this past year as I am on a lesser wage than previously (was made redundant) but the main thing is that we are surviving and still managing to save and overpay £200-£250 every month. Hopefully if we continue we can pay off our mortgage slightly earlier than schedule when I should be 55. Hopefully if I manage to get a few wage increase and nursery fees reduce then we may be able to move to another bigger house and have another child - but time will tell if we can able to afford this.

    I do think you are doing the correct thing and overpay any some amount you can and try to increase if possible every year. I have tried this and was doing well until this year when we have had unexpected things happen but at least we are still overpaying something towards the mortgage and have a bit of leaveway if needed (hubbie also in construction industry) and was under redundancy threat last year when I was but he survived. Good luck
    MFIT T2 Challenge - No 46
    Overpayments 2006-2009 = £11985; 2010 = £6170, 2011 = £5570, 2012 = £1290
  • ab7167ab7167 Forumite
    680 Posts
    Right, inspiration has returned!

    Forgot to say we each have £300 pcm going into a pension (some employer funded contributions). All our savings are in the mortgage as it is with Nationwide and we can have it back at anytime, so we figured with interest rates on savings accounts being as they are, our money would better work in the mortgage.

    So the £16k savings is our entire savings apart from pension. I think we have about a 3 month cushion, given that we owe £9k on the car and our essential outgoings are about £1900pcm. Which sounds a lot, so I think another bash at the budget would be a good idea!

    At the moment we don't have fully joint finances either, everytime one of us gets a pay rise, we work out proportion of bills and adjust amount going into joint account, but I don't know what OH does with money he has left over and vice versa. Maybe this is the next step - pool our resources for the common good.... Not that I want to get into a discussion about the relative merits of joint / separate accounting in relationships. That way lies DOOOOOOOM - it works for us at the moment, let me say that only.

    As for foreign holidays and fast cars - neither of us are that bothered - in a 10 year relationship, we have never been abroad together, and have had a series of cracking holidays in Cornwall, Norfolk and Dorset (to name a few). Plus with an 18 month old angel (ho ho ho) to consider, nothing on Earth would entice me onto an aeroplane for several enclosed hours! OH has a nice car as it was partly paid for by his company in form of car allowance. I am a devotee of bangernomics for cars, I've had several cheap cheap cheap cars, and all of them have done me proud. You don't get much depreciation on a £300 car!

    Off to dig out our budget figures and sit down with a glass of wine. Oh, the Saturday nights of a 30-something mortgage free wannabee....

    Thank you to everyone who replied - if I can't find a way to up our overpayments by £200 per month, I will be very annoyed.

    Plus - we started our mortgage on 21st July 2004 (previous house to this one)- how do I work out when we will finish paying it off if nothing changes / if we increase payments by £200pcm? We kept term at 25 years when we bought this house and all overpayments reduce term (of course!)

    The people who mind don't matter, and the people who matter don't mind
    Getting married 19th August 2011 to a lovely, lovely man :-)
  • Lynn11Lynn11 Forumite
    674 Posts
    If you use one of the many mortgage calculators you can enter your current mortgage amount, number of years you have left on your mortgage, your mortgage rate and also if you make an overpayment of £200 it calculates your normal amount you would pay as well as your new mortgage term and how much interest you saved. It is an eye opener.

    I use the moneypages.com which I found on this website.
    MFIT T2 Challenge - No 46
    Overpayments 2006-2009 = £11985; 2010 = £6170, 2011 = £5570, 2012 = £1290
  • aloisebaloiseb Forumite
    700 Posts
    Part of the Furniture Combo Breaker
    Well done you! I wish we could manage to be so organised about our finances. I have to say, we used to find it easier when we only had one child.
    Ah, those were the days.....
    1) max. of only 3 new pairs of shoes at any one time (shoes, pumps, wellies every time the feet grew)
    2) bedtime was bedtime.....at around 7.30 - where do evenings go once preteens start watching The Apprentice with you?
    3) now we have 2 lots of music lessons, book weeks, school trips and all the rest, somehow I am having to do 2.5 jobs for us to pay the mortgage, as well as try to keep on top of the house, and niceties such as organising the paperwork get done only rarely, on my "Housework Day." (ha!)
    4) ditto, husband out doing overtime a lot (aka looking for a bit of peace and quiet!)
    5) and of course, house is now much too small, especially when they both have friends round. Speaking as one who has just had her kitchen and living room stomped on by wet grassy feet all afternoon..(but what an excuse for not having a clean kitchen)

    So, yes, do get as much of the mortgage paid off as you can, while your brain cells are still with you! I wish we had.

    (and 6,000,000 cheers to anyone who is coping with MORE than 2 kids..I know there are lots of you and I can almost hear you laughing at my feeble attempts)
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