Mortgage Free? In my dream, or maybe a reality!!

chella71

hello, lurked for a while but now I feel it's time to come out and give it a go :scared:
Would love to become mortgage free but feel that it is going to take years which is why starting this diary, I'm hoping will help.

History is;

2002 took out first mortgage £100,000(approx)
2009 moved with £100,000 of original mortgage and had to borrow another £40,000
October statement 2010 ;
First mortgage 94,639.49 @0.19% above base rate (good deal so we've been told!) payments £366.04 per month 23 yrs 3 months remaining ( yikes )
Second mortgage £38,133.49 @ 2.09% above base rate 23 yrs 3 months remaining!! payments £181.62 per month
I am 38 yrs dh is 46 so you can see that this mortgage would take hubby up until nearly 70 to pay off!!
Having browsed this site it really has brought me up to speed on how much of a difference overpayments can make soooooo can only pay off an extra £75 per month at the moment but I now understand that anything is better than nothing
We have decided to pay this amount off of the smaller mortgage as this one has the higher interest rate so hopefully in the long run will save us more.
If we had any extra money spare per month do you think we should still pay this off of the £38k mortgage.
Sorry very new to all of this and hope to learn along the way.
Me 38 self employed
hubby 46 employed
ds 9
dd 5
Hoping to be mortgage free even if in 20 years but would love to do it in 10!!!!!!!!

Chella

cha97michelle

Definitely pay all off the 2nd mortgage at the higher rate. It will make a lot more difference to that one than the other. The 1st one is on a cracking rate.

chella71

thank you cha97michelle , I know you're right it's just the thought of that 'other' mortgage rumbling along for another 23+ yrs
Chella xx

cha97michelle

It is the snowball effect though. Better to overpay all you can to the bigger rate, and then once it is clear you can tackle the other. Once you start it won't be that many years. Read some diaries, see how we are all doing. We are not all huge payments, and we are all noticing the effect of what we are doing.

chella71

Definitely words of wisdom there yes will hopefully pay the first one off before the 10 years as to be honest £75 is not overstretching ourselves but we are aiming to extend at some point and I really don't want to have to borrow any more money for that but just need to work out what we can actually afford as being self employed means that things can change from month to month, just hope the base rate stays the same for a bit longer so that we can make the most of it with the overpayments.
Thank you so much for your advice its just nice to be in similar thinking company x

CathT

hi chella,

lots of fab advice to be had on here! definitely overpay the bigger interest one first. You will soon see the difference your OP's are making.
Welcome to this addictive world!

chella71

Thank you CathT I am so looking forward to a difference in our statements, we only get them annually in October so hoping things will look quite different this time next year xxxx

determined1_2

Hi and welcome to your MF journey!

Congratulations on making the choice to tackle the mortgages.

The only thought I have is how are you going to meet the payments if the base rate does rise when you say you only have £75 spare at the moment! They may not rise soon but they will do at some point. If you don't already, it may be an idea to build up some savings?

Apologies if you've already said you've got a measure in place.

Determined1

chella71

Hello Determined one and thank you !
I wouldn't say we only have £75 per month 'spare' tbh I think as I'm just on the start of this journey I could probably do with a money makeover!!!! Reading the forum and how disciplined most are I feel quite wasteful with my spare money, but I also enjoy life too.
Hubby actually pays the mortgage and would easily be able to cope with the mortgage rate going up to 3 or 4 % again, the excess at the moment is saved towards a holiday to Florida with our children in 2012 :j It's always quite hard to work out what order to do things in as I quite like having a cushion of saving but know that some of them aren't doing so well at the moment. We have ISA's that we got at an introductory rate last year of 4%, this money will eventually go into an extension. I also have another pot of money ( just over 1000, but I put into it each month too) that we keep for home improvements as this house we bought cheap 18 month ago and there had been nothing done for over 20 years and even then I think it was all done on the cheap so we are plastering and re-wiring at the moment which is the equivilent to burning money :mad:
I am also aware at the moment that I need to start a car fund as finished paying for my car in March when it was 3 years old, need a reliable car for my work so wouldn't really want to own this one for more than 7 years.
I also run my current account at a surplus (Iknow, I know ) and at the moment its not running much below £500 each month but with interest rates so naff I never know what best to do with it as may need it again in a hurry!!
Anyway thank you everyone for all your help and support and hopefully with a bit of 'training' from you guys I'll be mortgage free one day sooner than 23 yrs!!
Also hope to up the overpayment in the New Year , writing it down here might help me to stick to my goals!

Chella

LilacPixie

Another idea, a regular saver, your 2nd mortgage is 2.59%. The kids regular saver with Halifax is 6% gross. It may make sense for you to use the childs to save.

Jock_Tight

Another simple money earner is the Halifax/BoS reward current account.

You can have 3 in total, 1 sole in each name and 1 joint.
Simply pass £1000 through the 3 of them once a month and back to your normal account and pick up £5 reward on each account. £15 per month, £180 per year for 2-3 minutes online once a month...easy money