Early-retirement wannabe

coyrls

Marine_life wrote: »

Essentially that's right.

Although in some cases there is a pure arbitrage i.e. I could invest money now for 5 years and get around 2,25% completely risk free. Over the same period i could get a fixed rate mortgage at around 1,25% (at 60% LTV). Remember I am Germany not the UK.

There are some timing considerations (i.e. when I want to sell the house) which would prevent me doing that but otherwise there is (very little) risk consideration involved.

That's where the psychology comes in or:

a. Having a mortgage at all
b. Paying any interest at all (to a bank - which I hate doing)

Yes, I understand but you would also need to take account of the tax you would have to pay on your 2.5% interest but if the fixed rate terms align, I agree it's minimal risk. I think it's historically rare to be able to get a higher interest rate on savings than you get charged for a mortgage.

sav500

coyrls wrote: »

I think it's historically rare to be able to get a higher interest rate on savings than you get charged for a mortgage.

You get the mortgage interest rate on your savings with an offset mortgage and pay no income tax.

gfplux

Do not underestimate marine life's point about the psychological effect of not having a mortgage on your home. This might also be a generational thing. Having been retired for 17 years at 52 I became mortgage free in my mid 40's (late 1980's) this fact became like a foundation or keystone for me giving me a freedom (in my mind) to plot and plan my exit although corporate change still got me earlier than I expected. Being mortgage free was not about financial strategy but about the spirit of the age.
Perhaps another example is overdrafts, I have never had one and my upbringing had taught me they were a sign of failure, today from what I read it is a very common feature in many people's lives used well or badly in their financial strategy.
Another, credit cards I have had and still have a number of credit cards, some of which had credit limits of 5 figures (by my request over time during the 70's and 80's) giving me potential credit lines. I have always paid the ballance off. Today it is considered "clever" to tart interest free cards with transfer balances.
Being born at the end of the Second World War I am from a more cautious and perhaps less adventurous generation.

atush

I must admit although I have reduced my overpayments to mtg substantially due to the very low rate I am paying, I still overpay by a bit to reduce term.

greenglide

And of course refusing to overpay during periods of lower interest rates could back to bite you if / when we return to "normal" interest rates.

I remember the 80s when mortgage rates were forever being adjusted and we always tried to keep the payment the same when interest rates went down knowing that it would help in a few months time.

Of course high inflation at the time meant that the true cost of the mortgage was coming down rapidly so when the £35,000 mortgage was fully paid around 2008 or so it didnt really make much difference!

And then the house fell down (actually demolished because of mining subsidence)

atush

That is what we did, we kept them the same while it dropped. But at one point I then doubled it up.

but then dropped it back a year or so ago to help pay University expenses from income rather than savings. I had invested for it, but I like how they are doing so I didn't want to sell so am using cash savings and income instead.

I have been doing this since the previous downturn.

Marine_life

its finally time to make a big admission......










I will need to work an extra week in October :-)

That means working a week beyond my 50th birthday which unfortunately means my countdown is now back up to 31 days to go or 21 business days.

oh well....we will survive :T

atush

Why do you need to work it?

Are you being conscientious, or are you being forced to as you may have not retired early enough? I vote for conscientious.

Or is it punishment for not filling out your assessment lol

melanzana

Re mortgages. I had mine paid off when I was 47.

It was a 20 yr stint and it just happened that way. I never had to top up or remortgage thankfully. So it just happened by default.

I have to say the day it was finished was a great day. I felt I had achieved something great, on my own, a female too, when mortgages weren't that common for us, back in the day! Specially on yer own.

Anyway, I wish everyone well who is either there, or on the path to early retirement.

I am nearly three months in now, and it's just like a day had passed. I cannot figure out how I worked at all....there is just so much to do!

Off to Cordoba and Granada soon. I'll have to get this travel bug out of my system. It's great isn't it?

Don't sweat too much, go for it, I can thoroughly recommend it. Once done, you will wonder what the hell you were worrying about. Honestly!

Goldiegirl

I was always very comfortable with my mortgage, but my situation was slightly different to many people.

I had a staff mortgage from my employer, and as I dealt with mortgages on a daily basis, my own mortgage didn't feel like a big worry - it was just an everyday thing.

I would have paid it off at the end of the mortgage term in 2006, when I was 46. However, I opted to take a further advance for home some home improvements, so take advantage of the low interest rate that was part of my benefits package.

I was made redundant in 2009, but I kept the mortgage staff rate as part of my redundancy package.

I paid off the mortgage in full in 2011, mainly because I didn't think much of the administration - they had made some errors, so I couldn't be bothered with it anymore.

Although I haven't yet put it in writing to my current employers, I have made them aware that my last day with them will be 18th December 2014.

It has been my intention for some time to completely retire, but recent events have confirmed that now is the right time.

I've been diagnosed with a chronic health condition, and one of the best things I can do to manage it, is to avoid stress.

Although I'm only working two days a week, it't a short sharp intensive burst of work, and I just don't need it anymore.

Apart from my illness, which I hope to manage by diet and lifestyle changes, I'm fit and well and looking forward to my retirement.

I've counted up, and I have 22 working days left. Probably less as I think I've got enough holiday to have two days off.

I agree with Melanaza - there seems to be a lot of angst about making the final decision. There comes a point when you know it's right, and you go for it.