Mortgage Free before 32 - Optimistic?

GB2408

Hi All,

This is my first post so be gentle...

Just wondering if I am being too optimistic in hoping to be mortgage free before I am 32 and if anyone else has managed something similar?

I am 26 and live on my own - When I was 23 I got shafted by Halifax on my mortgage rate (100K mortgage). I overpay but at present I have about £95K outstanding on it.

I accrued credit card debt totalling around £10K by the time I was 25 but through some hard work and discipline, as of next week that will have been completely paid off (Step 1).

I am very fortunate in that, despite skipping college and university, growing up in a working class family in Yorkshire, and never receiving a bean from my parents (through choice), I do pretty well for myself.

I earn in the region of about £75K - £80K (compromising of PAYE salary and dividends) and even after lumping about £800/month into my pension (director pension, reduces my corporation tax liability) I plan on paying myself a healthy £10K dividend every 3 months or so on top of my normal salary.

Going back to my poor mortgage, I can only overpay by 10% of the outstanding balance per year until next August 2013. So until then I plan on saving/investing where ever possible.

It is 65 months until my 32nd birthday - On top of my current monthly payments it means putting aside ~£1K a month for overpaying.

Optimistic? Foolish? Any reason why I should not focus solely on mortgage repayment?

buttyb

If you have the money-go for it! Just started it and its addictive!

Good luck!

GB2408

Thanks... It will be tough as I am very intent on having a good lifestyle, I am planning for the future but a lot of people on here seem to forget about the now!

joedenise

You say you are planning on paying yourself about £10K every 3 months so I can't see any reason why you can't clear your mortgage very quickly. (I don't even get that a year!)

Denise

GB2408

I will only save/invest money that I cannot overpay on my mortgage (once I have overpaid the 10% allowed per year).

I really don't understand it when people put money into savings accounts (for long term savings, not for specific reasons like cars, holidays, emergency etc) instead of overpay. The pathetic rates offered on savings accounts compared with how much interest you save on your mortgage are a world apart. It just doesn't make sense to me...

alfiesmum

Do the Halifax allow you to reduce the term of the mortgage, thus upping the monthly payments, and you'd still have the 10% overpayment each year too?

samtoby

What on earth do you do for a job x

GB2408

alfiesmum wrote: »

Do the Halifax allow you to reduce the term of the mortgage, thus upping the monthly payments, and you'd still have the 10% overpayment each year too?

No they won't budge on anything unless I want to fork out the 3% early repayment charge to change my deal

The rate is horrendous; 6.74% For the first couple of years, out of my £600/month mortgage (full repayment mortgage), £540 of it was interest!

Edit to add - That 6.74% is fixed for 5 years and was taken when the interest rate was up at 5.5%.

GB2408

samtoby wrote: »

What on earth do you do for a job x

I'm conscious of saying too much in case someone reads the forum that I know (and reads the nitty gritty of my finances, of which I tell nobody I know).

I am a consultant... That should be vague enough

Funkygibbon

GB2408 wrote: »

No they won't budge on anything unless I want to fork out the 3% early repayment charge to change my deal

The rate is horrendous; 6.74% For the first couple of years, out of my £600/month mortgage (full repayment mortgage), £540 of it was interest!

Edit to add - That 6.74% is fixed for 5 years and was taken when the interest rate was up at 5.5%.

Have you done the calculations to see if the 3% early repayment charge is cheaper?

EllaBeagle

samtoby wrote: »

What on earth do you do for a job x

I´m intrigued to know too