Mortgage free by 2020

jimmyjones_2

Here’s another mortgage free wannabe ;-)

I am 31 years old and took out a 25 year 153k 100% mortgage in 2006.

Been bumbling along for the last 5 years without overpaying but it is time to start paying this beast off, I aim to be mortgage free by 2020.

My current balance is £133,865, I have £15k savings and no other debt.

The mortgage is a base rate + 0.35% tracker with an offset facility. Since interest rates are so low right now I have my savings split between an ISA and instant access account to maximise return. When interest rates increase a bit I will move it all to the offset account.

I am not actually planning to overpay but to add £750 a month to the offset account until it overtakes the principal – then pay it all off. It is going to take some serious willpower not to dip into this fund but I want the flexibility of having pot of money in case of redundancy etc.

My spreadsheet suggests that if I save the £750 a month I will be mortgage free on 01/12/2019. It will be a challenge to keep saving £750 every month when Interest Rates increase and hard to resist the temptation to spend my savings but if I stay focused 2020 is achievable!


Wish me luck



I would be interested in anyone who has taken a similar approach of keeping the money in the offset account rather than actually overpaying – did it work for you? I obviously need some emergency savings so maybe I should keep X thousand in the offset account then overpay the rest to remove temptation.

Engeroosi

At your current interest rate it would be better saving money in an interest paying account rather than the offset account. If you put whatever you can into the savings account, which may be more than £750 per month then you know you always have the money there if you need it but will power is important!!!

Jonbvn

OP,

You have a super low rate tracker there. It would be madness to OP or offset it at all. far better to put all your spare cash into savings starting with cash ISA's.

If circumstances change, you can alway move movey into your offset account.

jimmyjones_2

Thanks for the advice, actually my savings are sitting in interest paying accounts at the moment. At some point when interest rates rise I will move it all, or at least the non ISA savings to the offset account.

I could probably get a better deal but savings are sitting in an Intelligent Finance ISA (2.5%) and Intelligent Finance ISaver (2.49%).

It is going to take some self discipline to resist blowing some savings - found myself eyeing up a £1500 macbook pro's today :eek:

jimmyjones_2

It has been a pretty good few months work wise with a pay rise, small bonus and referring a friend to work for my company for a cool £4k .
That has allowed me to increase my savings pot to £24,250 and increase monthly saving target to £1100 which brings my target MF date to Jan 2017 :cool:. My effective mortgage balance is now £102,700.

2 big holidays are planned for next year, 3 weeks snowboarding in France and 3 weeks in SE Asia so will need a few dips into the savings.

My spreadsheet has got even more geeky, it now gives numerous stats including:-
Principal Reduction this month: 1,624.43, £53.40 per day
Interest this month: £76.17, £2.50 per day
% of principal paid this month: 1.58%

The Cash ISA is full this year so considering putting some money into a Stocks and Shares ISA since my savings are earning a pathetic 1.49% after tax. I guess I shouldn't really be complain about savings rates when my mortgage rate is so low.

Hurdler

Hi there and welcome. Funnily enough I had a good chat with a financial advisor yesterday - I have a similar amount to pay, super low rate but not on an offset mortgage.

I am considering a career change to a job which will pay me peanuts so my aim is to overpay as much as I possibly can now so that when the big drop happens, it's not such a shock to the system!

I have an emergency fund as well which is earning some interest but really not very much!

I'll watch your progress with interest !

jimmyjones_2

Its a new tax year and time for an update. I have been rearranging my finances a bit over the last few months to make my savings work harder:
- Transfer my IF ISA to National Counties Building Society 3.7% 90 day notice
- Fill a 3.5% AA Cash ISA for the new tax year.
- Move bank to first direct and open an 8% regular saver.

I didn't save any money out of my Dec pay packet but managed to spent 3 weeks skiing instead which was amazing - my mortgage free plan wan never supposed to significantly affect my lifestyle after all!

my current stats are:
Savings Pot: £28,955.29
Mortgage Balance: £124,420.15
Mortgage minus savings: £95,424.86
Monthly Mortgage Interest: £92.66
Monthly Savings Interest: £75.67
Monthly Saving Target: £1100

Assuming no change to base rate, the savings interest will cancel out mortgage interest by the end of October this year :-)

I have also been tweaking my spreadsheet and with wild assumptions about pay rises and bonuses and my projected MF date is now 1-May-2016. Holidays, impulse purchases, work on the house and base rate changes will make that date impossible but it is good to have something to aim for.

jimmyjones_2

Happy days, this month I have reached a milestone on my mission to be mortgage free... I will earn more interest on my savings than I pay on my mortgage! Long may the low base rate last

According to my spreadsheet, I will me MF 1-Apr-2016 but that does have some aggressive assumptions about pay rises and bonuses and an unchanged base rate.

Current Mortgage Balance is £121,400 and Savings are £36,150 so the effective balance is £85200.

Next milestone is 1-Mar-2013 when 50% of the mortgage balance is paid (or sitting in savings).

Good luck to you all on your MF missions!

jimmyjones_2

Fellow MFW Wannabe's,

This month I am effectively mortgage free! I have more money in savings and investments than my mortgage balance

I am 3 and a bit years ahead of my original plan at the start of this journey. When I started out it was really inspirational reading this forum.

I probably won't be MF for long, me and my partner are looking to buy a house together but I am going to enjoy the MF feeling before our joint MFW journey starts.

Good luck to you all.

apple_muncher

Congratulations! Enjoy the next stage in your life journey.

juliejim

Brilliant ! Good luck with the next venture!