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

Froggy-G

wynnvegas wrote: »

If i got this level of service in all other aspects of my life, the world would be a happier place!!!

Cheers,

Billy

Indeed Billy..

Froggy

wynnvegas

Disaster!!!!

Just met with the second of three (and much more like it this time) Financial Advisors who has pretty much rubbished my ideas of saving up a massive lump sum and then lopping it all into a fancy dan house project. That much I expected as I knew it wasn't particularly feasible but he did say, with the plans we have, that it makes no sense at all to pay the mortgage off at the moment as, with the rate at 1.39% atm, we could borrow back into the equity we have and place it in an offset account where we can chip away at the offset mortgage amount to the tune of £3,000 per month but still have the money sitting for when we did find a plot we like - that and we'd be in a very strong negotiating position as a cash buyer with no chain or such like. I did ask for this type of concerning confusion when I signed up for these meetings but now the thought of not being mortgage free (even for just a wee while) is gnawing away. If only good sense would take over from stupid goal achievement!!! We'll see what contestant number 3 has to say to things before making any rash decision like not paying the mortgage off...

Cheers,

Billy

black_taxi_2

should of asked financial advisors how much of there mortgage they still have to pay?your in a great position

CHEER UP

RosieTiger

Also depends on what you consider MF - we are working on a plan in which hopefully we end up with as much in savings as we have in mortgage debt, partly for the same reason the IFA has told you. As far as i'm concerned, nett assets less nett debt being equal is the same thing !

[Deleted User]

Hey Billy
yes, as you see I live in an area with stupidly high house prices therefore £128K would just about cover 2 hours of my time! :rotfl: sounds like novemebr will be a spending month- enjoy it! you will never get the same feeling as paying off your first mortgage again so make the most of it Ill say

not sure I have any advice re: whether to keep mortgage open or not- quite honestly Im the sort of person who is quite *ahem* impulsive (dont tell mrtyo I admit to that!) and would pay it off just to know I had no mortgage at all, but as others have said having the same in savings is I guess the equivalent in many ways and you could just pay it off then if you needed? see what the other IFA says perhaps?

tyo

wynnvegas

Morning Folks,

Disaster averted. Whilst it did make sense what IFA2 had to say, I called HSBC and they are quite categoric in their insistence that any new borrowing I ever do will be at the advertised rate - no special treatment which, for once, is very helpful as it now makes it 100% that I should clear off the mortgage. Black Taxi, Rosie Tiger and TYO - thanks for the comments and the advice - isn't it daft thinking of the difference between being mortgage free in principle (i.e. having more money in the bank than mortgage balance) and being mortgage free in reality. The sensible part of my brain tells me there's very little difference between the two as the security point has been reached but then the nagging bit (presumably the same bit that gets me up at 6am bright and early every weekend day!) is there shouting Do it! Pay it all off now!

Still, as of Thursday morning, it will go. The lovely girl on the HSBC call centre desk this morning was in the right frame of things and was gushing in her congratulations so they're not all so bad.

IFA3, in a similar mode to IFA2, was all for borrowing again in relatively short order. We're apparently cash poor but asset rich at the moment which is quite a sombre way to look at things - he also used the stupid demographic chart term DINKY which didn't improve my mood a lot - but his view of the world was that we should do one of three things:

1. Buy land (no mention of offsetting but a combination of the two IFA suggestions here seems somewhat sensible were we to do it). Borrow back into our equity to the tune of 65-70% of the land cost and mortgage the rest at (offset) somewhere around the 3% mark.

2. Buy a new house. Move into said house and rent our current house out. Pay down the mortgage on the new house whilst enjoying the bigger space and potentially better location as an interim to building our house.

3. Buy a new house. Rent the new house (or even houses!!) out for the next few years and take the profit at the end of that time.

Option 1 is probably one of the smartest if I can get over my aversion to borrowing more money. It gives us some degree of security that the land prices won't race too far ahead of us to make our "forever house" dream unreachable but then it's borrowing somewhere in the region of £150,000 that we will see very little for until maybe 3-4 years down the road. That may even be optimistic as we'd still have to budget all the planning and permissions stages before we got to an actual build. I'm guessing (totally in the dark) that land prices won't go up that much in the next year but this is based on my estimate of the housing market which I understand is a different kettle of fish. Tricky one!

Option 2 is the one M has ruled out. She is of the opinion that roughing it in our current house and then moving to the self build is a better option that having an intermediate step. She quite likes the notion of being a landlady and isn't keen on our tenants living in a better house than we do so this option ticks that box at least! Probably not a goer.

Option 3 is one that keeps cropping up from all quarters. This one is reliant on making a bit of money from the house value in a few years but not in the traditional sense of house prices rising in that time. IFA3 was all for screwing people six ways to Sunday at this end of the deal and offering 75-80% of the actual house value to people who, for whatever reason, are having to sell in a hurry. I absolutely see the sense here but, ethically at least, it's a hard one to consider. I suppose it's only business at the end of the day and that some folk will have bought their house for less than the 75% price offered but deliberately profiting from a breakup, a lost job or anything of that nature doesn't sit well with me. This option makes some sense as the tenant pays a massive percentage of the mortgage so, assuming no non-tenanted months, it's a winner with a far less initial investment. Seriously considering this road although I'd be happier taking on repossessed properties or something as opposed to beating some poor soul down and damaging their prospects of getting back on their feet.

At no point were any of the IFAs of the opinion that chucking a couple of thousand pounds into the stock market every month and playing a bit of that game was the way (or even part of the way) to go. I admit to not having dabbled for a few years but I did have a few years where I did quite well out of my share dealing. This will likely form a wee bit of my strategy. I think, for the moment at least, we'll have a bit of a blowout in November (actually, I'm off to see a man about an Iphone today!!), do the boiler / bathroom project as planned in April, take M's auntie and sister on holiday in July (whilst the scaled down kitchen project is going on), have a crack at putting a £20-25k reserve fund in place in the latter part of 2011 and then make some of these decisions at this time next year once we're not quite so cash-poor! Procrastination rules!!!

Cheers,

Billy

pencekeeper

The lovely girl on the HSBC call centre desk this morning was in the right frame of things and was gushing in her congratulations so they're not all so bad.

I make my final payment on Wednesday, and to be honest I've already thought it will be nice if they say congratulations or something similar when I make my "how much is the redemption figure" call rather than simply matter of factly giving me the information and saying goodbye. I'll make it clear I'm happy about it and hopefully get someone nice.

I can't believe by the end of the week mate we're both going to be MF.

wynnvegas

Hi Pencekeeper,

It has seemed (at points) a long time coming. We're both really pleased for you and I hope that you're able to have a good bit of fun before you start to wind down the working life a bit. It's slightly unreal that it'll happen this week but all in a good way. Even when mumping and moaning about all the options we have ahead of us, it's a lovely thought that most of the hard work to get financially free is behind us. Should all really be downhill from here!!

Cheers,

Billy

pencekeeper

Cheers Billy.

Being mortgage free is a huge life changer, particularly at our age (I'm 34). Our circumstances in other respects are very different, but I'm sure we'll be raising our glasses in the next few days to come

RosieTiger

Billy, nothing wrong with procrastination, I think you've made the right choice. Sometimes it's better to sit and wait and if in doing so you build up a nice cash reserve it seems pretty sensible to me.