Mortgage free in 6 years instead of 25

alfiesmum

Mortgage free in 6 years.

This is how we’ve done things so far. I need a push, so I’m jotting things down. If anybody reads through, hope you enjoy and maybe get some ideas.

Moved into our home in 2007, mortgage £86,000. 10 yr fixed rate at 4.98%. 25 year term.

Only after discovering MSE, I learnt about overpaying. We sat down and decided to really go for it. We were going to save up enough money to pay off the balance when we came out of fixed rate in 2017. Started ploughing every spare penny into ISAs. We’re now at the 4 year point of this mortgage where we owe £26,000, and we plan to get rid of it by March 2013, even earlier than planned. So we have 22 months to save the remaining £18500 we’ll need, and so far we‘re on track to complete the final stretch! From the original 25 year mortgage it saves us over £60,000 in interest alone.

To do this I will admit, has been hard work. We have had to look at every aspect of our lives, and apply money saving tips learnt from Martin and the posters on these boards to EVERY part of what we do. Three main principles: Getting Organised First, Up The Money Coming In. & Lower The Money Going Out. Save it all in the mortgage pot.

alfiesmum

I began by making exact spreadsheets of outgoings and income. You have to know what you’re dealing with, no use guessing. Get the paperwork out, and write down what you spend. Set up separate bank accounts or pots if possible. Contact mortgage company, get exact balance, allowed overpayments etc. Use mortgage calculators to go through various scenarios, and how they’ll best work for you.

A real motivator for us was printing out a whole prediction of your mortgage if we had let it run it’s natural 25 year course. Got it from http://www.bankrate.com/calculators/mortgages/mortgage-calculator-tool.aspx
It’s in dollars, but that doesn’t matter, amounts are the same. Just pretend it’s a pound sign. It shows how little of the capital you are actually paying off in the early years, so the sooner you start to overpay the better.

Internet banking has been a very worthwhile tool for us. I think being able to shift across small amounts, and seeing them build up, has made all the difference. If I had to go out to the bank (in the wind and rain!) every time would I really transfer £20 here and there? I’d like to think so, but realistically, very probably not!

alfiesmum

We had a massive clearout on eBay, and it turns out I have a flare for it. So I became self employed buying and selling. (the added bonus of this is I pay N.I and am building up my state pension too). Average £300 per month into the pot, for an enjoyable few hours per week. Money from this goes straight cross into mortgage pot, never see it.

OH never turns down any overtime at work. Brings in an extra £200 -£300 per month on average. This goes straight across to mortgage pot, only leaving in what we need to pay the bills.

Any items that have not been used for 6 months or more, go to car boot sale every few months. The takings are bagged and banked Monday morning, and straight into mortgage pot. Around £150 a time, every three months or so.

Any gifts we get from family, we get money. They know what we’re doing and support us 100%. Birthdays, Christmas our wedding etc. Mortgage pot.

For us, the key to making it work is that I transfer the money immediately from our regular accounts across to the account that is solely used for mortgage. Without internet banking I doubt I would be able to keep such a tight hold on things, so I’m grateful I made use of it as soon as it became available. It’s true if you’ve never had it, you’ll never miss it.

alfiesmum

I reviewed all the monthly bills. I changed suppliers where possible on gas, electric, phone. Did the same with all the family’s mobile contracts. Cancelled unnecessary outgoings like the gym, and dog insurance (if dog is sick we have money for that in emergency funds). This took a while, and can be frustrating as it involves other people doing their jobs too, but worth it once the new amounts are coming out every month. It saves us £110 per month.

Birthday/Christmas cards are bought in bulk, pressies are bought from charity shops and car boot sales. We put a £5 limit on buying stuff for each other.

Clothes and everything else is bought second hand in charity shops (although more often than not it’s brand new with tags still on it for a couple of quid!). We then save the difference. Don’t buy stuff if you don’t need it. It’s only a bargain if you needed it anyway remember.

Dog food comes from online supplier saving £20 per month. Their toys are from charity shops (Bear Factory ones are really strong). Needed a new dog bed, got it for 99p (as it was local pick up only) on eBay. Saved us around £20 compared to Jolleys prices.

Everyone takes packed lunches to work/school saves approx £130 per month.

When food shopping we only get what we’ll need. If something we usually buy is on offer, we’ll stock up though. Became members of Costco and buy loo roll, washing powder in bulk. Their own brand of washing powder is £15 for 400 washes - nothing wrong with it either, works fine.

Haircuts and treatments are done at home for pennies compared to salon prices. And the amount of hair hubbie has left now it's not worth the trip out to be honest with you...

bugslet

Well done alfiesmum. It must have been tough at times but a great focussed approach and you have really slashed your term:T. Thanks for breaking down your approach!

I'm managing a humble 9 years off my mortgage term, hoping to increase the overpayments in 2013 and it's posts like yours that inspire the rest of us.

LilB_3

What a great thread! :T

I'm in the process of doing all these things and it amazes me how much things can cost and where we can save - it's truly inspirational too.

Getting the OH on board isn't proving too difficult but you do sometimes feel that it's going in one ear and coming out the other!

alfiesmum

That's really nice of you to say, thank you. Were it not for the MSE site, I wouldn't even know overpaying exsisted. I can hardly believe it's saved our family literally tens of thousands of pounds, it's amazing really. I've just emailed this to hubbie at work, and his boss wants me to go in and sort his finances out now. Could be a new enterprise eh!

bugslet

I take it you will be explaining your hourly rate? We all know how expensive consultants are!:p. Play your cards right and you could be mortgage free by November 2011!

alfiesmum

bugslet wrote: »

I take it you will be explaining your hourly rate? We all know how expensive consultants are!:p. Play your cards right and you could be mortgage free by November 2011!

I was thinking maybe August actually, then I can have the summer off!! :rotfl:

CathT

Great read Alfiesmum, thanks for this. It just goes to show that organisation and determination are key factors in the mortgage free dream.

[Deleted User]

Great read- I too am hoping to get it paid off much quicker and shall check through to make sure Im doing all the things you mention!
Only think I can think of is ebay which I havent ventured into yet!...not sure I have anything worth selling anymore! :rotfl: