Mortgage free by the time I'm 40

cha97michelle

Fantastic going. Unexpected windfall?

Sounds like you are being rather organised this morning.

LittleBit_2

cha97michelle wrote: »

Fantastic going. Unexpected windfall?

Sounds like you are being rather organised this morning.

Bonus at work :j:D

cha97michelle

Impressive you were so motivated to pay it off the mortgage. We just cashed in DHs overtime so i was looking at paying some into DS2s child trust fund but the mortgage is also very tempting. I wish we didn't need to spend so much so i could do it all. Maybe if we could not eat or something. :eek::rotfl:


Congratulations on your bonus.

wantabetterlife

Well done on the overpayment Little Bit :j:j

setmefree2

Yay well done on that OP :T:T

LittleBit_2

cha97michelle wrote: »

Impressive you were so motivated to pay it off the mortgage. We just cashed in DHs overtime so i was looking at paying some into DS2s child trust fund but the mortgage is also very tempting. I wish we didn't need to spend so much so i could do it all. Maybe if we could not eat or something. :eek::rotfl:


Congratulations on your bonus.

We didn't pay it all in actually paid about 2 thirds into the mortgage. The rest is to get DHs account out of the overdraft, to buy DH a 30th birthday present, and we are also going to go out for a nice meal just the 2 of us

cha97michelle

Still good going then, and nice to get a treat too. Even more in common. My DH is also 30 this year. He has decided he wants a weekend away with me though for it and has already roped in his parents to babysit. :j Thanks DH.

I suggested he might want to do a boy type activity like car racing or whatever and he said he would prefer to spend it with me.

His birthday isn't till September but i think we might do the break in August as his brother's fiance is due to have a baby in the same week and as it is their 1st i think MIL would rather be there for that. Also we'd have DS1 starting proper nursery school in September so don't want to upset his routine either.

Enjoy the meal and i hope DH enjoys his 30th and isn't too depressed by it . Some i know have been. I saw it more as great - i can just be me and look at what we have achieved so far. Hopefully DH doesn't get too maudling by it. We are likely to get car envy here and that is expensive. :rotfl:

LittleBit_2

I don't think DH is too bothered by turning 30. I think it's different when you are settled and have kids. If he was single and still living with his parents then I imagine he would be a bit depressed :rotfl:
I think we will wait til the end of the month for our meal out, as we are away in Devon over his actual birthday and I want to see how the holiday spending goes :eek:

LittleBit_2

So far have had a nice bank holiday, although DS1 is being erm lets say challenging :rotfl: He really is being a monkey at the moment, I'm hoping it's his age. He is so lovely most of the time, but then can be a real terror.
On Friday we pottered about at home and did some jobs around the house, but not as much as I wanted to get done. Saturday we went to to Roundhay Park in the morning and let DS1 have a good run around (the dog loved it too). We were sat in the cold and rain eating ice cream, but it was good fun. In the afternoon we went to another nearly new sale and I got the boys some summer clothes, and some things in bigger sizes for DS2.
Yesterday we went to a National Trust woodland park which was lovely, although cold and wet again. We didn't do the Easter Egg hunt as we have enough already and didn't really have time as I'd only paid for a few hours parking.
Today I made us get up early to go to a car boot sale as I wanted to get some more jigsaws for DS1. We got 2 lovely ones for £1.50 and DH got a security light for outside (which we have needed for ages) for a fiver DH has also been to collect the dining table we won on Ebay, so we now have somewhere to all eat together. We got it for £40.66 and the one we were going to get was £170.99 so that's another £130.33 I'm going to send across to the mortgage :j I think I'm getting obsessed!!
I have also been listing on Ebay like crazy, and currently have 29 items on there, and I'm going to list some more tonight too. I find that if you let the items finish on a weekend, or between about 7 and 10pm in the evening they tend to go for better prices.
Right I'd better stop waffling and tidy this house while the boys are asleep. I'm sending DH out with them later so I can clean in peace

MadysonBelinda

MAKE REGULAR OVERPAYMENTS
You don't have to have a flexible mortgage to make overpayments: most lenders will allow you to overpay – usually up to 10 per cent of your mortgage balance a year.
You should also be able to make regular monthly overpayments, although some lenders will only let you pay off a lump sum at a certain time of year.
Some deals with Alliance & Leicester, for example, only allow you to pay extra in January. According to David Hollingworth at mortgage brokers London & Country, you can knock seven years and three months off the term of a 25-year, £200,000 mortgage by making regular overpayments of £250 a month.
Based on a 5.5 per cent rate, your monthly repayments would rise from £1,228 to £1,478, but you'd save £55,567 in interest over the term. "If you could afford to pay off an extra £500 a month, you'd save £82,772 interest and pay off the mortgage 11 years and one month early, so it's well worth it," he says.
Hollingworth advises checking whether your mortgage calculates interest daily or annually before you overpay. "If you are on daily interest, the overpayment reduces your debt straight away, but if your interest is calculated annually it may not count until the year-end."
And he cautions: "Making a £50 a month overpayment on an annual interest mortgage is a waste of money – you're better off paying a £600 lump sum at the year end."
MAKE LUMP SUM OVERPAYMENTS
Jill Shaw says her financial freedom came about more by accident than design, as she has received several redundancy payments and demutualisation windfalls over the years, but each time she has reduced her mortgage.
If you're lucky enough to earn a bonus, or come into a cash windfall, you may wish to follow her example.
Making a £25,000 lump sum overpayment two years into a 25-year £200,000 repayment mortgage (at a 5.5 per cent rate) for example, would cut five years and one month off your mortgage term, and save you £51,512 interest. Again, check with your lender if there is a good time to make the overpayment.
If it only counts it in January, for example, you don't want to overpay in February.
USE AN OFFSET MORTGAGE
With an offset mortgages you set up a savings or current account with your lender.
The money in those accounts is then set against your mortgage debt to provide a daily interest calculation.
Assuming you have a £150,000 mortgage, for example, and £20,000 worth of savings, you'd only be paying interest on the £130,000 difference. This has the same effect as making a £20,000 overpayment, with the difference that your savings are still accessible, should you need them for some emergency. Offset deals have typically been more expensive than ordinary mortgages, but the costs have been coming down.
David McIntosh of Intelligent Finance says that as a result, where offset mortgages used to be recommended only for those people with substantial savings, now households with savings worth at least 8 per cent or 10 per cent of their mortgage balance could benefit.
"As rates have become more comparable with standard deals, offsets have become suitable for more people - those who keep a healthy cash balance, self-employed people, professionals who get lumpsum bonuses and anyone with commission-based or irregular income," he says.
A couple with a £200,000 mortgage paying 6.04 per cent on IF's offset tracker 90 until February 2011, and then reverting to a variable rate of, at present, 7.25 per cent, would have a monthly mortgage repayment of £1299, according to McIntosh.
However, he adds, if that couple also had joint savings of £20,000 and an average current account balance of £3,000, they would pay off their mortgage in just 21 years and six months, knocking three years and six months off the term of their loan and saving them £71,238 in interest. Adding to those savings would obviously cut the term further, and save more interest. So becoming mortgage-free isn't just a dream: plan your finances carefully and it could become reality.
Overpaying her loan by £3,000 a month

Could you pay off £128,000 in three years? Angela Duignan reckons she can. She plans to overpay her mortgage by £3,000 a month, through a combination of upping her earnings and obsessive money-saving schemes.
Like many, she has a cheap fixed-rate mortgage coming to its end, and faces the prospect that when she remortgages at the end of November the monthly repayments on her house in St Leonards on the Sussex coast will jump from £847 to £1,100.
An IT consultant, Angela quit her job with East Sussex County Council a year ago, with the aim of trebling her earnings as a freelance. Since then, she has paid off an £18,000 debt built up to pay for MBA studies and helped pay for her recent wedding to Mark.
Although she is now living at Mark's house near Horsham, her aim is to clear her mortgage on the St Leonards property, which she shares with her parents, by the end of 2010.
"I'll be 40 in 2010, and I want to be mortgage-free before I'm 41," says Angela. "I've seen my parents struggle financially in their retirement and I want financial security in my old age. Paying off the mortgage will also give us options. We want children, and I'd like to try a different career to IT. Being mortgage-free means you're no longer tied to the job."
Angela has joined the Mortgage Free in Three years challenge, set up on moneysavingexpert.com. "There are around 70 of us, and every month we submit how much we've paid off, which is posted up as a running total."
Martin Lewis, the creator of moneysavingexpert.com, says: "There is very little better you can do with your money risk-free than paying off your mortgage and it's not a surprise this board has flourished.
"However, it should be remembered that clearing your mortgage isn't right for everyone. You should ensure you've got rid off all other debts first. Plus if you've a cheap mortgage you may still be better off saving."
Angela is obsessive about following the website's money saving tips. "I keep a list of freezer contents stuck on the door so that I don't waste electricity on leaving the freezer open longer than it needs to be," she laughs.
"Initially Mark thought I was nuts, until I reviewed all his finances and he discovered £200 a month extra in his account. All these little sacrifices are worth it, because they will give us so many more options."
Using offsets and their bonuses

Lesley and Alasdair McKenzie hope to be mortgage-free within 10 years, with time to spare before their five-year-old son Ross starts university.
They also have three-year-old twins, Rhona and Catherine, and were horrified when they realised the cost of all three children being at university at the same time.
"The minute we discovered we were expecting twins we decided we had to pay off the mortgage as soon as possible," says Lesley "We had moved back to Scotland from London, but [three years ago] there were still 18 years to run on the mortgage and we reckon we can shave five years off that."
Lesley is a part-time pharmaceutical recruitment consultant and Alasdair is a management consultant, so both are paid a combination of salary and bonus.
"If we get decent bonuses, we may be able to pay off the mortgage faster," she says.
The McKenzies have opted for the offset mortgage route, gradually adding to their savings so that their interest charges are reduced while increasing the proportion of their repayments that go towards reduce the capital, and thus cutting the term of their mortgage.
"We reckon on paying around £25,000 less interest overall," says Lesley. Making lifestyle sacrifices does not appeal, however."
"There has to be a balance between a sensible approach and not having a financial noose around our necks."