How to be mortgage free in 5 years NO MONTHLY OVERPAYMENT (if you live up north)

missk_ensington

Rochdale (The surrounding villages, not Rochdale itself), Stalybridge, Ashton U Lyne, Lytham St Annes (rather more St Annes than Lytham these days, but the area is predominantly old, retired people which often equals, without being nasty lots of sales where the house needs a lot of work), Blackpool, parts of Preston, Bolton to some extent? Yorkshire: Todmorden, Hebden Bridge and many others still have room to make money. Area's surrounding Rochdale are becoming popular as commuter towns to Manchester city as well as having beautiful lanscapes and hills and lakes, if you buy in the right place. (My house is 3 bed terrace, and has a freshwater stream at the bottom of garden, a canal a bit further on, and is surrounded by green hills and sheep, with shops and everything 2 miles away and I only paid 92k)

It can be done, but you have to research it!

climbgirl

What you're talking about is essentially property developing, even if you are living in the properties at the time. And as others have pointed out, it's not as easy as you make it sound! Sure, you've had a good run with the (one?) house you've done and sold on. But you have to know what you're doing, both in terms of picking the right house, and making the improvements. Great if you can do the work yourself, but I bet most people don't fall into that category! Not to mention the enormous time and effort you have to put in (on top of full time work, that's pretty damn tough)

There are also so many factors at work that you can't control, the property market etc. It's not as simple and as risk free as you make it sound...

ChrissieI

If you are thinking of doing this I would like to say just think it through properly. My husband is a painter/handyman and very good at all DIY. When we brought this house it needed a lot of work we brought it because it was the only one in this area we could afford and we wanted to get on the housing ladder. After spending a year and a half living in a building site. I am so glad it is all finished I can make my bed and get dressed without finding dust and rubble on every thing. Trying to keep clothes clean to wear for work was differcult. At last I can cook a meal in a clean kitchen. We planned to finish it sooner but there are so many un foreseen things that can happen plaster falling off walls old pipes that leak and cause damage I could go on but I wont. My husband can fix all these things but they take time. This is not an easy task if you are living in the property. I could not face doing it all again for a very long time. (But may be thats just me).
So I would just like to say that yes it can be done but its not for everyone.
The thought of moving and doing it all again would feel me with dread. I will be staying put and throwing money at my motgage and only moving on when I have paid off a large amount of it.

missk_ensington

Yes I only have the one property, however my Mum has used this method and currently lives in a £400,000 Penthouse Suite in Lytham, and has 11 rental properties and a restaurant. Her house has no mortgage, and she loves her house so doesnt want to carry on so she's on to buying other properties and renting them, rather than selling. The rent covers the mortgage with a little left over, the mortgage is decreasing over time, and the value is going up.

One thing still sticks though, all her rental properties started off as hovels and are now luxury, professional rentals. Every property has gone up by at least £40,000, most have doubled, some tripled (although this was during big boom). However, she's still doing it, just (Oct last year) bought 2 houses by the formula I have suggested at £120,000 a piece, she's considering selling these to release some cash (she might have a lot of equity but its all tied up-she jokes she's worth more dead than alive!) they have been valued at £165,000 and £171,500.

Not saying this theory is fool-proof, but is an alternative for people who are scratching their heads wondering how to decrease their mortgage quickly when they can't manage massive overpayment every month.

ChrissieI

missk_ensington wrote:

Not saying this theory is fool-proof, but is an alternative for people who are scratching their heads wondering how to decrease their mortgage quickly when they can't manage massive overpayment every month.

If they cant afford overpayments on their mortgage how can they afford to refurbish a property.

roswell

um nice idea the one short fall is Capital .. if you dont have the capital to overpay or if your struggleing with your morgage payments anyway most people would need to borrow to invest and there for increasing the risk for what is possibly a non guarenteed return. Good if you can do it but bad if you get it wrong.

overpaying your morgage is a guarenteed return with minimal risk and also allows you not to over streach yourself if something un expectyed happens eg illness / unemployment.

missk_ensington

Yeah I understand what you're saying, but if you overpay say £5,000 on your mortgage, you'll get £5,000 back. If you throw £5,000 into developing the property you can get £10,000+ back. Obviously if you're struggling with your mortgage in the first place then this option isn't open to you, but then neither is any option!

A lot of people obviously have money to overpay because I've seen it in other threads, I'm suggesting an alternative place to channel those extra funds. ALso, some mortgages penalise for overpayments-mine does for the next two years, but I am allowed to move house and keep my existing mortgage without penalty. So hopefully if I sell for £140,000 and buy for the same amount, less fee's and duty, so instead of having a £90,000 house with £80,000 mortgage, I'll have £140,000 with an £80,000 mortgage, and I'll do this every year until I'm at where I want to be, we all have personal goals, mine is to only have a mortgage for 20% of the value of my house by the time I finish uni.

If anyone watched Phil and Kirstie: Where best to invest, last night, that gave some good tips on where you can make money.

ard123en

"we all have personal goals, mine is to only have a mortgage for 20% of the value of my house by the time I finish uni."

must be a really good grant you get most of the students I know just want to finish uni with less than a 10k over draft

me_and_the_cat

I do have to take issue with a comment in the opening post about not buying an ex council house. The first house I bought was a three bedroomed ex council which was almost at the limit that I could buy on the salary I was on at the time.

I was very lucky - I bought in the right area ( it was commutable to London in under an hour), and the house doubled in value with me doing nothing to it apart from putting paint on the walls in three years.


I then had things happen in my life that made me think 'life is too short' and decided to use the house price rise to my advantage. It didn't matter to me where I went in the country but my aim was to have a little or no mortgage. I managed to buy in mid wales and now am mortgage free. Ok the house does need some work but this is what I'm saving for.

Like people further up the thread have said lots of people see a 'cheap' house and have the same idea. Around where I live now there are lots of houses that are being snapped up by builders to sell on or new houses and the prices are at least £100k, which I can't afford. I've just read another thread that said some of the cheapest houses are in mid wales - is that taking other factors into consideration or just purely based on house prices?

I don't want to live in a building site - so barring meeting my knight in shining armour I've managed to get myself into a bit of a catch 22. Can't afford to move but can't afford to fully modernise at the moment. I'm sure if that's good or bad yet ......

Sorry to ramble ......

roswell

had the op purchased 5 ex council houses in the right area`s for under 20k pre 2002 she would have made more profit that the purchase`s / sales she has made so far as most council properties have more than trebbled in value thanks to the over inflated prices of "Private" properties more people are now willing / need to buy ex council to get on the ladder, you will also find that the people who live in these area`s dont care what car you drive or what your credit card bill is , there are lots of very nice people living on what is now mostly private owned ex council estates.