Not Yet Started but wanna be free!

leedom

As strange as it may seem and I know I should walk before I can run but I want to be mortgage free as soon as I can but haven't even started my payments yet as still waiting for the house to go through!

Quick plot:

Will have a mortgage of 126K over 22 years
Have taken a 2 year fixed deal (so I know the payments and can definately afford them)

I earn 42K and my wife about 19K

Looking to leave my current job (RAF) in next couple of years (probably just before the 2 years fixed deal is finished)

Will get approx £55K lump sum and a 12K a year pension
- hopefully secure a job or around 30K

Other than the mortage we owe about 12K

As I like to have at least an idea of a plan, I was just wondering what people would suggest as to the way forward so as to pay off my mortgage as quickly as possible. I was thinking:

Pay off other debts first as they will have a greate interest rate
Then, depending on house prices in a couple of years plus we will be having some work done it would be nice to think the house could be worth around 155 (currently 145) - of course it could go down!
- as far as mortgage is concerned I was thinking of then paying off what is needed to get onto an offset mortgage so what is left of my lump sum works for me.

Of course, lots of ifs and buts but just wondered if anyone had any advice.

many thanks

abouttimetoo

Hi & welcome to the board Leedom :hello:

There are a few others here who are already plotting to be MF before they have started their mortgages so you are in good company.

Yes, general advice would be to pay off your debts with a higher APR than your mortgage first.

It looks like your current LTV (loan to value) is about 87%; generally the better deals are available for the lowere LTV's so that is also something to focus on for when the time comes to come off your fixed deal

I don't have an offset mortage but lots of peope on here have lots of good things to say about them.

You don't mention what interest rate you will be paying on your mortgage but remember that as attractive as being mortgage free might seem the aim is really to maximise your worth to become mortgage free. For some people this means that if they can get a higher interest rate on their savings then they will save rather than OP (overpay) their mortgage. Other (me included) could get a better interest rate saving our OP's but prefer to have the satisfaction of see the mortgage balance going down rather than going up

Although lots of people recommend ISA's as savings plans, again you need to work out whether this is finacially better for you than OP'ing, also, if you are a higher rate tax payer don't forget to take that into account when looking at savings interest rates.

Other thoughts (assuming your debts are out of the way)

• does you mortgage provider allow you to overpay? If so, is it free to do so, is there a maximum or minimum sum required or is there any percentage limits?
• could you get any OP's back if you needed to. Some providers will give you them back, some won't, some will allow you to suspend normal payments until your OP's are used up
• Would you prefer to reduce the terms as you OP or keep it the same (an option if you get reach the OP limits but then this means you could be tied into the payments
• what emergency savings might you need
• do you have any child costs that need to be accounted for
• use and abuse cashback sites such as Topcashback and Quidco, don't ever buy anything on-line without looking at them, even buying something second hand on ebay can bring you cahback. If you've never used them you'll kick yourself for not knowing about them before now
• use sites such as Groupon to buy heavily discounted things from meals to holidays to anything for that matter
• get spreadsheets, the more the better is the mantra on here :rotfl:
• play with the overpayment calculators on here
• join the various challenges and read other diaries for motivation

Re your other debts: are they at the cheapest rate possible? Have you thought about stoozing or slow stoozing?

Hope you don't think this is a cheeky question but also work out why you have those debts, if they are a result of exceptions and unusual for you then not much of a problem but if they have become a way of life for you then you need to revisit why and do an income and expenditure, particularly if you may be earning a lower wage when you leave the RAF

What plans do you have for your lump sum when you leave?

Phew, I think that is more than enough from me now, hope you are still awake

Very best wishes with your plans and congratulations on your new home

Regards
ATT

leedom

Many thanks for the reply/info.

I will certainly look into anything and everything when the 2 yr fixed is due to end. I am aware that the better deals are for the lower LTV so will concentrate (If I can) on overpaying this year too.

Don't have any plans for the lump sum; some people pay a chunk off their mortgage some keep it and offset so will look into it all closely when the time comes.

As far as other debts - car loan and credit cards - guess I should look at best way forward on these too!

Thanks again