Mimi's mortgage plan

Mimi09

I thought I'd do a log to keep me motivated, as I keep meandering away from the mortgage free goal!

Back in 2004 I came across a book that explained how you could pay off your mortgage in 7 years - which was a revelation to me and which I embraced . During the next 2 years we paid off £13k worth of credit cards and overdrafts and started saving for a years maternity leave and mortgage payoff.

The birth of DD1 didn't quite go to plan, I ended up having to leave my career, sell our house and relocate back to England. Our income was reduced by two thirds and the cost of living was much higher. For the following 4 years we were in a bit of a financial tailspin, living and breathing hospitals, so the mortgage pay off went out the window.

In 2009 baby 2 came along and I was finally able to get my financial head together. We opted for a 5 yr fixed as the interest rates were predicted to climb. I started a business and any excess money I put into savings for a lump sum payoff when renewing mortgage. By 2011 we had £10k in savings, however this had to be put towards adapting the house for DD1.

In April 2011 I got the bit between the teeth to become mortgage free again. Our £106k mortgage now stands at £95k due to the maximum 10% overpayments for the past 5 years. We have £ 4k in the bank and £31 in the 'Mickey Jar' (DD1 wants to go to Disney World).

Looking back, we would almost be mortgage free now, had the original plan panned out. However, I'm quite chuffed as we've done quite well despite the huge costs involved in equipment / medical care that we're encountering.

New goal is to be MF in 8 years.... Dec 2019.:D

originalmiscellany

Better late than never to get cracking on your MFW ambitions
Sounds like there's been a lot of uncertain factors in your life, and you've done well to get where you are today.
Look forward to seeing you progress here!

Sepa74

You've done so well! OK OK, maybe you would be mortgage free if things had gone to plan, but life doesn't! I think you've done amazingly to clear the debt, and then deal with the problems your DD1 has had. It must have been heartbreaking, and a real emotional rollercoaster. But it's so great that financially you were in a position to obtain the support she needs and now that things have settled down you can start focusing on the mortgage again.

I look forward to hearing how things go!

Mimi09

Thanks Sepa, the last few years have certainly been a learning curve. Thankfully on an even keel at the moment, a chance to regroup......

As we're tied in to a 5 year fixed, with 3 more years to run, the plan is to make an appointment with the bank this week and reduce the term to 10 years. Hopefully I'll be able to make small overpayments on top. It will stretch things, but , fingers crossed, do-able.
I don't like making plans so rigidly now, I'm a bit wary of what's waiting round the corner!!

Apart from that, I really do have to get on top of my supermarket shopping - which really is out of hand.:o All payments in cash from now on.

Hopefully I'll be able to reign things in when school starts again, I didn't factor in all the little trips and outings for this summer. It has been fab though, found loads of new places to visit:)

dimbo61

Just ring the mortgage centre and ask ! about reducing the term
I did this with by fix and it cost us £50 to reduce the term from 22 to 10 years.

Mimi09

Started a spending diary today to crack down on grocery shopping. Didn't spend anything today:), and managed to pick a couple lbs of sloes to make sloe gin for christmas presents.

DH gone into hospital for surgery today after mashing himself , so I'm putting off reducing the term until I know he is well enough to go back to work. Half pay after 6 months, which wouldn't be enough to cover the mortgage.

BaconandEggs

Hi mimi,

What are the advantages of reducing the term as opposed to simply making the overpayments?
I can see there would be an advantage if there was a maximum amount that you could overpay. However, if there isn't and you make the overpayments, the advantages of a longer term would be that you could reduce your payments if needed? I'm new to this - so would be interesting to hear.

Mimi09

Hi Baconandeggs,
We're already making the maximum 20% monthly overpayments, but it really doesn't seem to be making much of an in-road in reducing the balance as its only around £150. Pay any more and we would be penalised.

I've started putting a further £400 in an ISA each month with the intention of paying a lump sum off the mortgage when the fixed term finishes in 3 years.

It would be more cost effective to be paying off the mortgage than having the money sitting in an ISA. (where its too easily accessible;) ) Also, psychologically, If I knew we only had 10 years to go, I'd be much more motivated to chip away at it to reduce it even further.

BaconandEggs

Ah ok that makes sense. That is another good point - about being tempted if the money is in the account.

Phelpsie001

Good luck with your journey!!

I will keep checking in

Mimi09

OUCH! BIG spend day today. OH birthday soon, spent £65 on microbrewery kit, hopefully it will pay for itself in the long-term. Spent £50 on glass bottles/jars for christmas presents - chutneys, oils and sloe gin. Another £45 on gin......I have my own little production line going on in the kitchen! Recieved £400 rebate, which will help me until payday. Its been a very expensive month, definitely have to tighten the belt in September.