Transmuting my mortgage debt

the_alchemist

I've been following this forum avidly for quite a while now, and am in awe of how well so many of you are doing. So today I decided to take the plunge and make my own thread.

Introduction
I got my first mortgage in 2009 when I was just turning 33. It's a joint mortgage with my husband, but he and I have very different attitudes towards money, so we keep our finances more or less separate. I pay him a set amount each month, and he uses it to pay most of the bills, including the mortgage. We currently owe a whopping £187,736

Overpayments
I have not yet overpaid a penny, but that's going to change next month. I've asked my husband to change our direct debit so there's a £100 overpayment, to cover which I'll pay him an extra £100 a month. Much to my surprise, as I thought overpaying wouldn't be his sort of thing at all, he's chipping in another £50.

Other debts
I have a few other debts, but they're student loans and a 0% credit card, so I'm not in a vast hurry to pay either of them off before late summer, when the 0% deal finishes. I've just started putting money in an easy access savings account for that purpose, so it'll be there when I need it. I'll avoid debt in future, unless I decide to start stoozing.

Savings
I have £12,392 in ISAs, and I'm going to continue saving until I have £20,000, then put all my other spare money into my mortgage.

Target
I would love to be mortgage free by 40 - not sure that's at all realistic, but I'm going to see how it goes.

the_alchemist

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the_alchemist

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adwat

Hi alchemist, that's an impressive target you're setting, it works out at ~£2000pm payments to clear £187k in 10yrs (assuming 5% interest), gulp! Best of luck and welcome to the MFW!

Lois_E

Welcome alchemist. :hello: I like your username.

There seem to be a lot of people starting new diaries this week. I hope your journey goes really well. Do you have any specific plans for how you're going to manage such an ambitious target? It'll be exciting to follow how it goes for you.

the_alchemist

Lois_E wrote: »

Welcome alchemist. :hello: I like your username.

There seem to be a lot of people starting new diaries this week. I hope your journey goes really well. Do you have any specific plans for how you're going to manage such an ambitious target? It'll be exciting to follow how it goes for you.

Thank you!

Well, my big plan is that for the past seven or so years (on and off) I've been writing a novel, which I'm sending out to agents within the next week.

Over the past few years I've won/earned a thousand pounds through writing competitions and getting short stories published, which (1) gives me hope that I'm not being ridiculous in hoping to get my novel published and (2) gives me hope that if I submit more stories then I'll make decent amounts of money out of it.

Plus I suggested to my husband that throwing his some of his savings at the mortgage might be a wise move, and he said he'd think about it.

Other than that, I have an OK income given that I only work four days a week, and not that many expenses: e.g. we're not ever planning to have children, we prefer UK holidays, I'm vegetarian and like cooking from scratch, making my own lunches etc.

Because it's been an odd and expensive few years - buying the house, getting married, and I also took a few months of work - I don't yet have a feel for what my regular spending patterns are like on my current income, so how much I can overpay.

In the short term, I have a lovely collection of historical costumes which - alas - are size 8, whereas I'm now firmly size 12 (and healthier for it and planning to stay that way), so I'm going to be making friends with Ebay. And there are various other small things like that I'm planning.

dimbo61

The more you can overpay at the beginning of the journey the less interest you pay and quicker you will be mortgage free

gelato_cat

Best of luck. We're a similar age - I want to be mortgage-free by 40 too! Maybe we can have a joint party when we're done! LOL... :beer:

the_alchemist wrote: »

Other debts
I have a few other debts, but they're student loans and a 0% credit card, so I'm not in a vast hurry to pay either of them off before late summer, when the 0% deal finishes. I've just started putting money in an easy access savings account for that purpose, so it'll be there when I need it. I'll avoid debt in future, unless I decide to start stoozing.

Savings
I have £12,392 in ISAs, and I'm going to continue saving until I have £20,000, then put all my other spare money into my mortgage

Re your savings and the cash you're stashing to pay off your debts, is there any way you can offset these against your mortgage to save yourself a bit of interest?

If this is not possible, have you ensured that you have chosen accounts with a good rate of interest?

Sorry if I am trying to teach you to suck eggs!

Suze

the_alchemist

Suzey wrote: »

Best of luck. We're a similar age - I want to be mortgage-free by 40 too! Maybe we can have a joint party when we're done! LOL... :beer:

Sounds great to me!

Suzey wrote: »

Re your savings and the cash you're stashing to pay off your debts, is there any way you can offset these against your mortgage to save yourself a bit of interest?

If this is not possible, have you ensured that you have chosen accounts with a good rate of interest?

Sorry if I am trying to teach you to suck eggs!

I've got pretty decent rates of interest (3.5% on this year's ISA; 2.8% on accumulated ISAs from previous years; 2.7% on my non-ISA savings; plus some in a stocks and shares ISA). Offsetting is possible, but I'm (perhaps stupidly) reluctant to lose the tax-free wrapper on my ISAs, and I want my non-ISA savings to be very easily accessible for emergencies.

You make a very good point though - technically I would be a bit better off off-setting my savings. I'm going to have a think about it.

Tesco_points_addict

Good Luck and welcome to the 'want to be MF by the time i'm 40 bandwagon'! If only I were as young as you it might be easier!

TPA

gelato_cat

the_alchemist wrote: »

Sounds great to me!

[Party when we reach our target] :beer: :j

the_alchemist wrote: »

I've got pretty decent rates of interest (3.5% on this year's ISA; 2.8% on accumulated ISAs from previous years; 2.7% on my non-ISA savings; plus some in a stocks and shares ISA).

What rate is your mortgage?

the_alchemist wrote: »

Offsetting is possible, but I'm (perhaps stupidly) reluctant to lose the tax-free wrapper on my ISAs, and I want my non-ISA savings to be very easily accessible for emergencies.

It depends how you decide to prioritise it, really. If your objective is to pay as little interest to the bank as possible, and your ISA interest rate is lower than your mortgage interest rate, then the maths speaks for itself.

In terms of having readies available, if your savings are offset then they are still available whenever you want them. You'd just need to pay mortgage interest on whatever amount you need to withdraw.

Looking forward to reading about your progress!

Suze