The Anti Debt Man Diary

goldmercury

Hi folks - been lurking on these boards on and off for years. Got my first mortgage (and only) back in 2007 and have always wanted to pay it off early after reading these good forums!

A few things got in the way before I could start overpaying the mortgage (wedding, credit card debt, house improvements)

However I'm now debt free and in credit by a good few £1000. Apart from the mortgage.

Currently work two jobs and the wife works part time.

Original mortgage is £140000 at 6.09% I can get out of this deal in June next year.

I plan to look for the most competitive interest rate mortgage that allows any amount of overpayments and hopefully fix this for 3 and a bit years.

I'm planning on overpaying my mortgage by £1k/month for the next 3.5 years. And to buy £1000 worth of either Gold or Silver per month as well.

The way things are going we could have inflation or deflation. No-one knows. So sinking £1k into my mortgage and the other £1k into metals should be a good hedge.

This is quite an extreme amount. As I currently earn around £1900 salary and another £800-1000 with a part time business.

Basically I've worked out all my expenses and after it's all said and done I will have no money of my own at the end of each month.

Has anyone went this extreme with overpayments? Can it be done? I almost feel like I'm about to start a prison senteance for the next 3 and a half years. However I'm trying to tell myself it will be worth it.

I'm not so sure though! Life is short and I could be wasting the best years of my life by restricting myself. Luckily the wife gets to do what ever she wants with her salary - she just pays the council tax and buys the food so there is some relief there!

wantabetterlife

HI GM, welcome to the board and congrats on getting rid of the debt.
Personally i would like to leave my self a little leeway when it comes to the budgets, we are in this for the long haul. If i thought we could completely clear our mortgage in 2-3 years i would be more inclined to go hell for leather but for us its just not possible.
At least your wife has her own money so she can still have treats. Maybe you could try it for a couple of months and then re-evaluate and see if your are happy to continue putting all your spare money into the mortgage.
Whatever you decide, goodluck

dimbo61

First question is what does your mortgage revert to at the end of the fix?
If its only 2.5% SVR then it may be worth just staying with that as you have flexability.
If not and you want a long term deal look at offset mortgages with either First direct ( tracker) or YBS ( 3/5 year fixed offset) only my views but you will then have the option to overpay and build up savings in the offset
Know nothing about gold/silver except the wife likes it for xmas/birthdays/etc

adwat

Hi, I've been pretty extreme in paying back the mortgage only because it's the quickest way to do it. Very much looking forward to having my first monthly salary that none of goes to the bank!

viola_brandywine

Hi GM. I have tried being extreme with my overpayments but after a few months of that I settled on a happy medium. I have found that if I overpay too much I just end up using my credit card (and then have to pay that back the next month).

Sepa74

Hi there,

Welcome to the forums. I like your plan, although definitely wouldn't want to cut things as near to the bone as you will have to to achieve your goals... but I really wish you the best with it. And if you find you want to take things easy for a while and relax a little after a year or so, you can always do that, you don't have to be so careful forever - you have that freedom now that your only debt is a mortgage!

One thing about your plan is that I know gold particularly is riding high at the moment and showing no signs of coming down to earth, but do you really think they will earn you a tax and risk free 6.09% over the 12 month timespan you're looking at? It's a bit of a risk. I am a very conservative investor, but I think many people would agree with me that 6.09% risk and tax free in the current economic climate is a nice little earner whatever your risk appetite.

Your inflation and deflation fears aren't going to materialise in 12 months - it will be 3 - 5 years at least - but that 6.09% is guaranteed. I would be VERY tempted to put a little less into metals and a little more onto your mortgage for 12 months so you have the best ltv ratio possible for when you remortgage.

If you put it all on your mortgage you would only need to get a £116,000 mortgage. If you put 3/4 on your mortgage and 1/4 into metals your mortgage would be £122,000 (less, in fact, allowing for your standard payments plus interest saved by overpayments).

Here are some questions for you... are you absolutely certain gold hasn't hit a peak? Silver has already started to slide a little. Are you absolutely certain the price will be over 6.09% higher this time next year? What about capital gains tax issues if you want to sell it to get the best ltv ratio on your mortgage? What about the risk that the current sky high prices reflect a bubble and your metal investments could be worth a lot LESS this time next year when you come to remortgage?

It's really important to spread out your investments as you plan, but that remortgage date next year is a short-term goal not a long term one and that 6.09% is 100% guaranteed, so I do think a little less into metal and a little more onto the mortgage might be worth considering.

RosieTiger

How you choose to invest is clearly a personal choice, but I would make sure you have considered all options before settling on your approach.

On the extreme OP point, just remember life is for living too. I also think that the extreme route is quite akin to dieting, take it too far and you will go the other way, so better to get a balance.

themull1

If it was me, rather than buy gold/silver, i would just overpay more on the mortgage, you will probably save more in interest anyway than you would on a fluctuating gold/silver price.

goldmercury

dimbo61 - thanks for the suggestion about just sticking with my current deal - I may just do this as it runs out in June next year and will give me some flexability.

Sepa74 - I do believe metals have hit a peak but have a lot higher to run. I see a big pull back in metals over the next 6-12 months. Silver will take longer to rally again but gold is where it's at. We are already seeing inflation in food/energy - I see the metals as a hedge against the overpayments (£) in my mortgage.


Thanks fr all the replies

cha97michelle

Going at it with no room for treats is not sustainable for 3 years in my opinion. I know i get completely fed up after a couple of months of no treats, so i try now to treat us all as cheaply as possible with what we have.

Best of luck whatever approach you decide upon. Maybe a couple of months of hard slog with the 3rd month with some slack would work well for you.

spandles

Maybe you should keep your discussions regarding investing in gold and silver to the appropriate forums. This is for those looking to pay off their mortgages not invest in metals.