** Jock_Tight** mortgage free diary

Jock_Tight

Hi all......

I thought I would create a diary to detail my journey to being mortgage free having signed up for the MFiT-T2 challenge: No 165.

Our MFW journey actually started over two years ago, well before we stumbled upon this great website.

A bit of background:

We moved to our current property in Aug 2003 (just married) and took out a mortgage of £80k over 25 years. The interest rate was fixed for two years, so we could find our feet and get the re-decorating/gardening out the way. Two years quickly past and none the wiser we opted for another 2 year fixed rate deal. As the second fixed rate deal came to an end we looked at the outstanding balance and were in shock! :eek: Despite paying the mortgage for near on 48 months we had just scratched at the surface only reducing the mortgage by £6k, that’s interest for you!! The balance was £74k with 21 years to go (ending in 2028).

During this time I had build up some good savings and had sold some shares received in a company share scheme. We looked around for mortgage options and offset mortgages caught our eye. The online offset calculators showed how we could shave years off the mortgage! :cool:

We decided to pay £10k into the mortgage and took out an RBS offset mortgage for £64k over 15 years. With the savings we had left and money ‘loaned’ to us by our parents we offset the full £64k so were now paying 0% interest, every penny we paid in was now reducing the capital. Estimated mortgage completion was now 2017; we had saved 11 years off the mortgage. :j

A spreadsheet was created and with monthly payments (full capital) this showed us exactly when we were set to be mortgage free. The spreadsheet allowed us to see what further monthly and yearly overpayments (no limit with RBS) would make. [note: each time we make a monthly mortgage payment we take the same value out the offset savings account and stick in a high interest account / max our cash ISA allowance each year]

We sat down and looked at our finances and set a monthly overpayment amount to stick to (setup by direct debit). With these additional monthly overpayments we were now on target to complete by mid 2013, saving a further 4 years! :T

I then had a thought, “wouldn’t it be great to be mortgage free before I was 40” (on Jan 2013) so I set about looking at the spreadsheet again and tweaking the figures so we could complete by Dec 2012. This is going to push us though!


In the 2 years we have been on the offset mortgage we have paid off just over £23k, the plan is to clear the remaining 40k mortgage balance by Dec 2012 (3 years to go!).

I’ll update this thread periodically with the progress we make, wish us luck!!!


Regards,
Jock_Tight (I’m a Scot who is watching his spending )

Jock_Tight

The other reason for striving towards being mortgage free is that its equivalent to a 38% pay rise for me in December 2012 :j

black_taxi_2

yeah--mortgage free---gives you freedom for so many choices

work--less hours
banks--no more loans
leisure--more time

dimbo61

Well done Jock
doing the same thing and nice to see dad and mum helping out
aimimg for 16-11-2011 myself

pammyj74

wow, thats great. you're doing fab. it is amazing how much we pay in interest compared to capital, shocking and shouldnt be allowed to be so high :mad:

RosieTiger

Good luck with your plans !

Kaz2904

Someone on here used to have a signature that said something along the lines of ......."There are two types of people in this world. Those who understand compound interest and those who are doomed to pay it."
That summed it up for me quite nicely! I sahall keep my eyes peeled for your name on the MFIT-2 challenge but I must admit to having become a little lost by the sheer volume of posters on it. The first was much less popular but then it's a sign of the times that more and more people are wising up to the fact that you don't *have* to pay your mortgage for 25 years, you can choose to clear it much quicker!

setmefree2

and

deefadog

Yes good luck :beer:
One thing i would like explained as i think i am having a blonde moment - If you offsetting 100%, why don't you just pay the mortgage off and start saving?

Jock_Tight

deefadog wrote: »

Yes good luck :beer:
One thing i would like explained as i think i am having a blonde moment - If you offsetting 100%, why don't you just pay the mortgage off and start saving?

There is a catch

A chunk of the money in our RBS savings account which is offset against the mortgage is a 'loan' from a parent (which they get back at the end) so we cant just pay the mortgage all off. 'Our' money in the savings account which is being offset serves as our backup/rainy day money which we have access to if required. If we paid this into the mortgage we would have no access.

However by the end of next year 'our' money will have been completely removed from the offset savings account (its being removed each month as we make a mortgage payment/overpayment) and deposited elsewhere making interest. At that point the remaining 'loan' money offset against the mortgage means we get a 0% interest mortgage for free! :cool:

Regards,
Jock

deefadog

I see Awesome position to be in :beer:

Best of luck!