Mortgage Free by 01/01/11...so goes the plan

wynnvegas

Hi Folks,

Just happened upon this website and been inspired by a lot of the activity and suggestions. I've decided to jump right in and kick off the challenges beginning tomorrow to get rid of the rubbish we (me, really) keep buying (and invariably throwing away after a few months of sitting in a cupboard).

We don't go ridiculously overboard and only really have student loans (probably £22k between us) and our mortgage (down from £100,000 6 years ago to £44,000 now). I'll have a wee shot of this SOA (whatever that stands for :doh::)) but I'm confident that by starting with a renewed sense of purpose tomorrow and with the advice from the many experts here, we'll go beyond my original goal of having the mortgage paid off by age 30 in July 2011 and get it done on or just before Hogmanay 2010 - needless to say, if it comes off, the drinks will be on me!

Cheers, :beer:

Billy

dimbo61

Well done on clearing £56,000 off the mortgage in 6 years years but unless you are earning some very serious money each month trying to clear £66,000 in 16 months would be some going and one hell of a new year party!!!
Good Luck any way and think long term with both the mortgage ,savings, and pension.

wynnvegas

Sorry Dimbo - I wasn't clear. It's £44,000 in 16 months so £2,750 net a month which is tight but doable. The student loans will take care of themselves in time but I might have a good bash at clearing those if it ever makes sense to do so.

Thanks for the support!

Billy

wynnvegas

ok - the addiction is getting serious now!

I've used a chunk of the money in the bank (what was a big part of the just in case fund) to take the mortgage down to £42,000 - monthly payments now need to be £2,625 and we'll be into the 30s at the beginning of September!!

slowlyfading

sounds like a good plan - good luck

setmefree2

and

wynnvegas

Slightly ahead of the curve now - the mortgage free date (or, after reading some additional info on this board, as it is now the mortgage down to a quid date) is now 01/12/2010! As of this morning, 14 months to go...

Thank you all for the continued support and comments. Reading everyone else's journey helps in a motivational / friendly competitive way!

[Deleted User]

Congrats on your progress with your MF journey wynnvegas - it's amazing how quickly you can cut the duration of the "death-grip" by overpaying. Welcome to the club!

wynnvegas

Almost down to the final year now! Can't wait for next Monday to roll along!

wynnvegas

Morning All,

This attempt at a diary seems a long time ago - I've been inspired to revisit it for the remaining 50-odd days (and the subsequent saving period beyond with the plan being to build our next and final house) so I'll attempt something insightful on an almost daily basis to hurry things along...

Cheers,

Billy

wynnvegas

I'll start with a long overdue introduction.

Me, Billy and my girlfriend, M (as she's a superhero and needs to protect her identity during daylight hours) have been together for just shy of 14 years. I'm 29 and she is a few months younger at 28. Neither of us grew up anywhere fancy and neither did our families have a lot of money. This remains pertinent as we've got a slightly more keenly developed sense of the value of money than a lot of our friends which has led us to, among other things, this site.

Since we met at secondary school, I blindly followed her to University as I had no better plan of what to get up to after school. No-one in my family had ever bothered with the idea of any kind of further education so the idea of what uni entailed and the potential rewards during and after it seemed properly alien but go we did. M studied Biology, Chemistry and Education whilst I had a crack at Human Resource Management and Business Law. M is now a teacher and I run the HR department in a local IT company.

When at uni, we worked part-time in Sainsburys which gave us enough money and cheap food to live on and pay rent and such. I knew then that paying rent was a particularly rubbish habit but getting our own place at that time wasn't an option. I made my first daft financial decision by accepting the student loan that was available to me albeit it didn't go completely to waste. Having never been abroad other than a 10-day jaunt to Spain with my granny when I was 12, and having been inspired by a girl at work who had done something similar, I decided that we should make use of the 10 week summer holiday. In 2001, we did just that and fired off for 12 weeks to Hong Kong, Singapore, Bali, Darwin, Cairns, Brisbane, Sydney, Fiji and LA which gave us a proper taste of travelling. Accepting the student loan the following year was an easy decision!!

Having graduated in 2003, we gave ourselves a pre-real life present (having used my new found legal expertise to sue our first and most creepy landlord) of a 12 week jaunt round America. We hit San Francisco, San Diego, LA, Vegas, Miami, Orlando, Birmingham, Memphis, Nashville, Cleveland, Chicago, Philadelphia, Washington, New York and Boston. We loved pretty much all of it but Vegas stood out a mile. Having previosuly stated we'd never think of going to the same place year after year, we relented for Vegas and have never regretted it. Our first 5 day trip has now become an annual 3-week trip and 2010 marked our fifth holiday to Vegas. Vegas helped our mortgage plans a good bit as I had promised M that our bi-annual trip could become an annual summer trip with Easter and October holidays to Europe thrown in once we'd paid off the mortgage. Nothing better than a wee bit of blatant blackmail to get a reluctant spendaholic on side!

Anyhoo, I'm getting ahead of myself. We had saved up around £5,000 (a lot of money to us) to stick a deposit down on our first house. That was blown out of the water by my little brother who stole my first car and wrote it off so, after doing an hours worth of online house hunting, we popped along to see the only two that were fixed price and in our c.£100,000 price range. The very first house we saw we liked (M loved!). Our visit was a Sunday afternoon and by Sunday evening we were with the financial advisor planning our commitment. By 12pm Monday, the house was confirmed as ours - and people say buying a house is stressful!!

At that time, with absolutely no money whatsoever but us both in decent, stable jobs, only Northern Rock and their brilliant idea of offering us a 120% mortgage were in the game. We went for a 105% (at I think 7.99% over 25 years in April 2004) mortgage at £105,000 which, at that time was just as well as we had no idea at all how much money it took to set up a house. We quickly burnt through the £5,000 in buying beds, furniture and appliances and we had to take our suite out on 0% interest for 12 months as we hadn't properly budgeted for that either. Other than a general notion that I didn't like owing anyone over £100,000, we hadn't really looked at overpaying, reducing our term, properly budgeting or anything like that.

We managed our £800 mortgage payment quite comfortably but it pains me yet to think about how much money we managed to waste each month on CDs, DVDs, books (M) and computer games (me). I think my only extravagant purchase in the following couple of years was my laser eye surgery £1,200 with 0% credit for 12 months and M's was her (very nearly new) Corsa. The budgeting had really kicked in for the car as I have always been against paying interest. I said to M that we'd save up for her car and buy it outright which proved pretty insightful as, by paying cash, we managed to knock another £600 off the price.

Our tie-in with NR came to an end in 2005 but it wasn't until 2006 that we next decided to move the mortgage (now £90,000). I had a notion that paying the thing for 25 years didn't make that much sense but when we moved to HBOS, we asked about reducing the term to 15 years. It gave us a bigger payment (I think about £1,000p/m) but that was still manageable and wold potentially see us mortgage free by 40. With both our parents in their mid-late 40s at the time and neither set being close to paying off their mortgages, we thought this would be a great achievement. We went for the fixed-rate deal at HBOS and squirrelled away money into a seperate account as we knew we could pay 10% off. This week's lesson from my mistake will be about the lesson we learned when trying to pay a chunk off by cheque with HBOS! We stayed after the fix as the interest rates on the variable mortgage weren't that different (stupid, I know) and, then, like a fated intervention, on my favourite website in the whole world (Hot UK Deals), someone posted a mortgage (the first and only I've ever seen on the site). I thought about it for a couple of days (would it be wise to go outwith an IFA and his fee?, would a non-fixed mortgage be a smart move? did I really have any idea what I was doing?!) but then decided to take the leap of faith.

The mortgage that had been advertised was a fee-free, overpayment happy, no redemption mortgage with HSBC at 0.89% above BoE base rate. The fee free bit was enticing as the normal £1,000 or so for a few bits of paper has always seemed ott. We obviously cut out the IFA cut as we wandered straight into the bank ourselves and the risk of getting a variable mortgage in August 2008 was overcome by my belief that interest rates wouldn't go up that much and the knowledge that even if they did, we'd be able to (just) afford a rise up to 12%. The requirement was that we had to move all our accounts to HSBC and sign up for their premium account at £12 per month - this was offset by the extra 0.1% we got off our mortgage rate which we would retain even if we cancelled the premium account a year later. So, in August 2008, we signed up for this time a 10 year mortgage term with the notion of paying it off in 5 years with a fair wind.

The single best thing about this account was when I logged in for the first time, I was met with the savings account, current account and mortgage. That £70,000 staring me in the face was the biggest incentive to start overpaying so we cracked on with it right away. We worked out that, by budgeting a bit tighter (albeit still not denying ourselves anything of note), we could get to mortgage free status between my 30th (July 2011) and M's 30th (October 2011). We were assisted no end in our cause by the collapse in interest rates at the end of 2008. The 6.39% we had initially signed onto quickly became (and remains) 1.39% which dropped our monthly interest from something like £270 to £70, all of which went into the overpaying pot. In the year between starting this mortgage and finding MSE, we knocked £26,000 off the total owing which was a fair achievement.

Finding MSE proved to be a real godsend to the financial planning. I found the debt free wannabe board first and had a look at the SOA planners (where, god bless the people on the DFW board, the constant reiteration of moving to PAYG, ditching sky, switching utilities and not splurging on days and nights out was driving me crazy after a couple of days) and, upon posting my intention to be mortgage free by 30, I was pointed to the MFW board. Between my shiny new SOA, budget planner and spreadsheet fanaticism and the inspiration and challenges on this board, we worked out (to a monthly tolerence of £3.80) that we could clear the mortgage just prior to 2011 ringing in. This is where this diary began and, despite my abandonment, where I'll pick up life from 2009 to date tomorrow.....

Cheers,

Billy