Starting the mortgage free path

bownyboy

So I've decided not to make use of the 10% yearly overpayment option in January and instead build up savings, investments and pensions going forward.

I will work towards being mortgage neutral, which gives me more flexibility, should I need access to cash rather than it all being tied up in the property.

Getting older and seeing that sometimes life can change dramatically very quickly (illness, redundancy etc) means I'm feeling exposed with not a huge amount of savings to fall back on, hopefully this plan will address this.

bownyboy

Now updated my signature to reflect new end date for mortgage free. Gone from August 2018 to December 2021.

I've opened at stocks and shares ISA and will look to fill that up each year rather than paying extra off the mortgage each January.

bownyboy

Yet another month flown by and time for an update:

• January 2013 - £118,289 / £418 / £13.95
• February 2013 - £117,302 / £393 / £13.11
• March 2013 - £116,372 / £390 / £13.00
• April 2013 - £115,439 / £386 / £12.90
• May 2013 - £114,508 / £383 / £12.79
• June 2013 - £113,574 / £380 / £12.70
• July 2013 - £112,541 / £377 / £12.59
• August 2013 - £111,690 / £374 / £12.48
• September 2013 - £110,744 / £371 / £12.38
• October 2013 - £109,795 / £368 / £12.27
• November 2013 - £108,843 / £365 / £12.17
• December 2013 - £107,887 / £361 / £12.06

Savings of £7250 so effective balance of £100,637, not long till I break through the psychological barrier of £100k!

gallygirl

bownyboy wrote: »

• December 2013 - £107,887 / £361 / £12.06

Savings of £7250 so effective balance of £100,637, not long till I break through the psychological barrier of £100k!

£12 barrier under threat as well :T:T:T

bownyboy

gallygirl wrote: »

£12 barrier under threat as well :T:T:T

Yep, another mini target that helps on the long journey!

bownyboy

So I recently read The Millionaire Next Door after the recommendations on the savings and investments thread. Its a good read (could be about a quarter of the size, there's lots of repetition).

It was good to read that we're following most of what they preach which is don't get sucked into spending for spendings sake. Save and invest early and watch compound interest help you along.

It's what lead me to change my approach and to not throw everything at the mortgage. I'd rather have a cushion and a chance for some investment growth.

From January I'll throw the maximum in my Vantage S&S ISA which is £980 a month. With an expected interest rate of 5% that will give a pot of £300k after 15 years.

Now who knows if I can keep that level up. But I'll be 55 then, mortgage will be paid off and could look to semi-retire!

bownyboy

Starting to get itchy feet on the mortgage. Our 5 year fix finishes June 2014, we're on 3.99%. From reading other posts it seems you can start looking when you've got 4 months or less remaining.

Have been reading up lots on where interest rates are going. I know alot can happen between now and next June, but at the moment I think I would go with a tracker for the following reasons:

* Much lower rate (for now!)
* No tie in
* No early redemption penalties
* Unlimited overpayments

Means I can keep options open see how things pan out and then jump on another fix if rates look like they are creeping up.

alwaystryyourbest

bownyboy wrote: »

So I've decided not to make use of the 10% yearly overpayment option in January and instead build up savings, investments and pensions going forward.

I will work towards being mortgage neutral, which gives me more flexibility, should I need access to cash rather than it all being tied up in the property.

Getting older and seeing that sometimes life can change dramatically very quickly (illness, redundancy etc) means I'm feeling exposed with not a huge amount of savings to fall back on, hopefully this plan will address this.

Just thought I would pop in,and say well done you are doing rearly well,
But I wanted to ask you what mortgage neutral meant, ??

bownyboy

alwaystryyourbest wrote: »

Just thought I would pop in,and say well done you are doing rearly well,
But I wanted to ask you what mortgage neutral meant, ??

Thanks . By mortgage neutral I mean that instead of putting all the money into monthly and yearly overpayments, I'm putting it into savings and investments. So they will come a point when I could in theory pay the mortgage off completely.

I've decided I need this flexibility of having control of my finances rather than it going straight into the mortgage.

bownyboy

Happy new year everyone!

Can't believe its already 2014 - I started my mortgage free journey 3 years ago this month. In that time I've paid off approx £45k from the balance and shaved off just over 6 years.

It's payday, a new year and new balances and also targets. From my last few post's you will have read that I'm amending my approach for 2014. I'll continue the monthly £500 overpayment, but anything over this will go into investments instead, to help build up a pension and retirement pot.

If I continue with £500 a month overpayment then my end date will be in December 2021.

Current status is now as follows:

• January 2014 - £106,929 / £35 / £11.96

Great that I've broken through the £12 interest per day! Savings are now at £8,667 so effective mortgage of £98,262, so through the psychological £100k barrier as well!