Mortgage free by September 2014 (or before!)

SmileyG_2

originalmiscellany wrote: »

First time I've read your profile/thread today. Makes interesting reading. Well done on getting your mortgage down to under 48k - it's nice to see your regular posting where the amount keeps on dropping, really encouraging. It's also great to see how you've gone from a 2014 end date to Sept 2012 - very well done!
Have added you to any other updates, as an inspiration to us all. Well done.

Hi OM

Even though I'm on track to clear by September 2012, like most of us it's hard to try and strike a balance between excedding a target and acheiving it. I could clear the lot tomorrow, but it leaves me with no savings, and I've tried to keep my savings seperate from the MFW plan. The dilemma will come when I finish my fixed rate mortgage and go to 2.5% SVR; nearly all of my savings will either match or exceed that rate and I then have to decide what to do.

Watch this space.

SmileyG

SmileyG_2

Happy Easter all .....

Well having talked about it for sometime, I finally got round to looking at my buildings and contents insurance and guess what? It looks like I've been paying too much. I probably knew this all along but £40pm is now £257.56pa and £40 cashback to come!

The annual premium comes out of my investment cash but the £40pm I no longer pay will replenish it in 6 months!

Why didn't I do this before now?! Usual inertia, but it will give me an potential extra £200 towards my investment fund between now and September 2012. Anothe lesson bought, but one hopefuully I can teach to others (although probably not in the MFW thread;))

SmileyG

SmileyG_2

My April update .......

1. An overpayment of £50 left my account on 16th May, reducing the mortgage balance to £47,770
2. My Investment fund is now £15,051 (see below)
3. My value for the endowment is £26,541
4. Overall current deficit is now -£6,179

My overpayments since Jan 09 will also save me an estimated £1,279 before my original target MF date of September 2014.

My overpayment reserve is £7,770 well over 22 months of regular mortgage payments .

September 2012 remains my target date for mortgage freedom. The spreadsheet tells me that no more overpayments are required to do this, but I need to monitor endowment and investment progress carefully to achieve it.

The plan is

· Overpayments stay at £50pm; this comes out of income and will remain at this figure unless interest rates change or investments/endowments underperform.
· Predicted Endowment value remains at £29,790 at September 2012 (see below)
· Investment value of £18,569 at September 2012 (see below)
· No increase in current interest rates (unlikely!)

This pays off a mortgage at September 2012 of £46,378 with £1,981 to spare.

Investments continue to improve since my last post. :j
The market has recovered its falls in early March, but the shares/cash ratio (56.2/43.8) still does not indicate a need to change strategy. This is further justified by the fact that I have manged to unlock another £20pm to invest just be finding cheaper buildings and contents insurance (see previous post).

Although the endowment valuation was a little below expectations, I am now waiting for the projections for 2014 and I will then backflush these values into the Sept 2012; I still believe it's on target to reach the value quoted above at September 2012, based on a 6% return.

I have decided to continue my overpayments to the mortgage at £50pm for the forseeable future.

I'm afraid that my diary looks very boring now until my fixed rate ends in November 2011; I will then re-determine the best approach for clearing the mortgage.

Although I don't tend to post on other diaries, I do read them. All I can say is that I marvel at the different approaches to acheiving the same end, well done to everybody and good luck for the rest of 2011

SmileyG

SmileyG_2

The life assurance company has updated my valuation and given me projections for the endowment. The news is positive....
Valuations are:
Surrender value = £26,636
Projected value at 4% growth in September 2014 = £34,000
Projected value at 6% growth in September 2014 = £35,800
Projected value at 8% growth in September 2014 = £37,600
However, my investments are now at an all time high. Valuation at 29th May is £15,120.

My updated repayment targets were:

Outstanding mortgage at September 2014: -£44,550 (although scheduled to run to November 2020)
To be paid by: Endowment (£35,800) and Investments (£8,750)

And then I looked at September 2013 ....

Outstanding Mortgage at September 2013: -£45,476
Predicted endowment value at September 2013: £32,700
Predicted investment value at September 2013: £22,057
Estimated surplus: £9,281

However the September 2012 targets are now....

Outstanding Mortgage at September 2012: -£46,378
Predicted endowment value at September 2013: £30,055
Predicted investment value at September 2013: £18,558
Estimated surplus: £2,235

A surplus of £2,235 is nice as my mortgage reverts to a variable rate of 2.5% in November 2011, and it should cover me for any rate changes until September 2012, but it might not cover me for any setback in the investment fund. That's when the overpayments would kick in.

On the overpayment front, I am planning to overpay my mortgage by £50 per month for the forseeable future.

Like most people here approaching MF, I am starting to get impatient to finish the task, but you can't hurry time....

Hope everyone else’s MFW projects are going to plan.

Keep the faith!!!

SmileyG

Engeroosi

Where and how do u invest?

SmileyG_2

Engeroosi wrote: »

Where and how do u invest?

When I first started a plan to pay back the mortgage in 2001, money was extremely tight, so I set myself a budget of £500pm for all my house and mortgage expenses.

Expenses included:
Monthly mortgage payments
Endowment premium (endowment started in 1989)
Bulidings and contents Insurance

Any surplus was originally paid into a cash ISa as a contingency against higher interest rates, but as rates fell, the return on the Cash ISA fell but I had more money to save/invest.

Having dabbled in the stockmarket since 1984, I had survived one stockmarket slump and learned much which enabled me to take advantage of the two subsequent slumps in 2002/03 and 2008/09.

I currently have a surplus of around £80pm, which I save in a cash ISA. This is available to add to my investments but only when my strategy permits.

Of my investments,
39.6% is currently sitting in a Fixed Rate Cash Isa
4.7% is in an Instant access Cash ISA
18.2% is currently invested in 2 single company shares
20.7% is invested in a global growth investment trust shares
16.8% is invested in 2 income investment trust shares (yield is around 4.2-4.5%)

I try to keep the cash element between 40-50% of the total investment. If the cash element rises to 50% then I try and look at investments that are undervalued and buying those shares readjusts the ratio of cash to shares.

I buy shares through an online platform (lots of them around!). It enables me to transfer cash from my current account to buy shares whenever I want. Dividends remain in the cash management account and can be transferred back to my current account whenever I want.

The overall return on investments has varied. From June 2008 to June 2009, the capital element fell by -17%, but this was offset by dividends and interest of +5%. Current estimated return in the year to June 2011 is capital growth of +9.7% and dividends and interest of +3.5%.

I said in previous post that investements are just one leg of a four legged table called "mortgage freedom". Existing mortgage payments and overpayments are just as valid and should always be considered; these are risk free. But if you can "borrow" the money against the mortgage at 2.5% and can manage the risk, it is possible that investments can speed you towards the MF date. But if you are risk averse, don't do it.

A long post I know, but hopefully it gives you some insight.

SmileyG

SmileyG_2

Just updated my figures in post #2.

Lots to discuss, but the good news in brief........

1) Mortgage below £47,500
2) Endowment value above £27,000
3) Investments rise above £15,200

Most importantly
4) Less than £5000 to go to mortgage freedom!!!

Will update over the next few days.

SmileyG

[Deleted User]

Wow well done thats fantastic!!
Dont know a lot about investments tbh but glad it is working well for you by the looks of it!

SmileyG_2

My July update .......

1. An overpayment of £50 left my account on 16th June; together with my regular payment on July 1st, it reduces the mortgage balance to £47,430
2. My Investment fund is now £15,310 (see below)
3. My value for the endowment is £27,359 (see below)
4. Overall current deficit is now -£4,761

My overpayments since Jan 09 will also save me an estimated £1,284 before my original target MF date of September 2014.

My overpayment reserve is £7,750 well over 22 months of regular mortgage payments.

September 2012 remains my target date for mortgage freedom. The spreadsheet tells me that no more overpayments are required to do this, but I need to monitor endowment and investment progress carefully to achieve it.

The plan is

· Overpayments continue at £50pm; this comes out of income and will remain at this figure unless interest rates change or investments/endowments underperform.
· Predicted Endowment value has now increased to £30,055 at September 2012 (see below)
· Investment value of £18,390 at September 2012 (see below)
· No increase in current interest rates (growing more likely!)

This pays off a mortgage at September 2012 of £46,286 with £2,159 to spare.

Investments continue to improve since my last post. :j
I made a major decision in the last month and have sold around £1,300 worth of shares. The share holding in question was not giving me the captal return that I hoped, so despite the >5% yield it was time to junk it. Replacing the income is proving tough, but I don't see the market going anywhere at this time, so I don't feel the rush to buy anything else. The investment portfolio is now 47%shares/53% cash.

The endowment valuation was well above expectations. Even so the projections for 2012 still looks challenging based on a 6% return projected into 2014, but it's the best data I have. That's why the £2,000 surplus is important!

I have decided to continue my overpayments to the mortgage at £50pm for the forseeable future.

I'm now waiting the invitation from the Nationwide to take out a new fixed rate on the mortgage. Imagine their response when I tell them that I intend to pay it off (or have it offset ; more to come on this!) by September 2012 so I'll hang around on the 2.5% in the meantime!

I've being reading other diaries, I'm amazed at the lengths that people are prepared to go to get rid of their mortgages.

Keeping the MFW faith

SmileyG

SmileyG_2

Hi everyone...

Just popped in to say I'm currently getting my head around my investment strategy. Suffice to say the last week has knocked a hole in my investment fund and probably the endowment valuation too.

It's been challenging, but the move to sell some of my investments last month has reduced the effect of the carnage of the last 5 days, and may provide me with an opportunity to profit in the near future.

Hopefully, I'll be able to update tomorrow but there is certainly no rush to change strategy.

Meanwhile, the scheduled overpayments will continue...

Keeping the MFW faith

SmileyG