Mortgage Free before 32 - Optimistic?

GB2408

Funkygibbon wrote: »

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

Hi,

Yes I have but I would need to pay off a chunk to achieve the target LTV ratio needed to make it worthwhile. I won't have that until I pay myself a nice dividend in June, at which point the rate would have to be even better to make it worthwhile.

So I have accepted the fact I will probably have this mortgage until the end of it's fixed term (August 2013), and will just overpay the maximum I am allowed until then.

GB2408

EllaBeagle wrote: »

I´m intrigued to know too

Don't worry I'm not a dodgy investment banker or anything

Needhelpsaving

Wow - what a great salary - fair play to you.

I would OP the 10%, stick the rest into a savings account and then in Aug/Sept 2013 hand over all of your saved (OP) money to halifax by then you should have about 40/50% of your mortgage - based on your salary and bonus thingy. Based on what you have said, you will definatley have it paid off well before you are 32.

getmore4less

With a rate of 6.7% paying the penalty of 3% will pay for itself in less than a year if you can find 3% savings even quicjer if you are paying tax on the savings.

pawlala

GB2408 wrote: »

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 was MF at 33, got another mortgage and aim to be MF2 at 36. Easy peasy lemon squeezy!

Sepa74

Hi... another consultant/freelancer here, sounds like we have very similar situations, except my interest rate is a LOT lower than yours! Fortunately I bought my flat when I was permie, and before the credit crunch, thank heavens!

I have a different strategy from you -at the moment I'm taking out what I can until I hit the higher tax rate and leaving the rest in the business. Frustrating when I could be overpaying and 'earning' 3% interest, but 0.5% business savings account interest is better than paying 40% straight to the tax man.

Like you I am paying lots into my pension because I want to have a decent standard of living when I'm older. Leaving money in the business also gives me a cushion against falling ill or in case I don't get any work for a period of time. I'm also thinking about children, which would obviously involve an extended period of time off, so that is another reason it makes sense to leave money in the business - at least until the cash pile gets really big, when I might rethink my strategy.

It's interesting reading about all these high-profile people who are paid through a company to avoid / minimise tax, which is of course exactly what you and I do. I don't know about you, but I couldn't work as a straight self-employed person - I wouldn't get any contracts - too much danger of being caught in the EU worker regulations. And of course it's swings and roundabouts - job security: nil; sick pay: nil; pension: nil; employer provided health insurance: nil; employer provided life insurance: nil; I pay a significant amount to protect myself if I get hit by the proverbial bus or get a serious illness because the only safety net I have is what I provide for myself, plus whatever benefits I would receive from the government.

GB2408

Sepa74 wrote: »

Hi... another consultant/freelancer here, sounds like we have very similar situations, except my interest rate is a LOT lower than yours! Fortunately I bought my flat when I was permie, and before the credit crunch, thank heavens!

I have a different strategy from you -at the moment I'm taking out what I can until I hit the higher tax rate and leaving the rest in the business. Frustrating when I could be overpaying and 'earning' 3% interest, but 0.5% business savings account interest is better than paying 40% straight to the tax man.

Like you I am paying lots into my pension because I want to have a decent standard of living when I'm older. Leaving money in the business also gives me a cushion against falling ill or in case I don't get any work for a period of time. I'm also thinking about children, which would obviously involve an extended period of time off, so that is another reason it makes sense to leave money in the business - at least until the cash pile gets really big, when I might rethink my strategy.

It's interesting reading about all these high-profile people who are paid through a company to avoid / minimise tax, which is of course exactly what you and I do. I don't know about you, but I couldn't work as a straight self-employed person - I wouldn't get any contracts - too much danger of being caught in the EU worker regulations. And of course it's swings and roundabouts - job security: nil; sick pay: nil; pension: nil; employer provided health insurance: nil; employer provided life insurance: nil; I pay a significant amount to protect myself if I get hit by the proverbial bus or get a serious illness because the only safety net I have is what I provide for myself, plus whatever benefits I would receive from the government.

Yes it does sound very similar - I try not to think about the tax paid once I go above the higher tax bracket. It stinks!

Who do you do your business banking with? 0.5% isn't a lot but it's something. My business savings account I use to set aside VAT/Corp tax etc so it has a fair whack of cash in there that could be gaining interest.

I try not to leave too much in the business, just enough to pay myself a healthy amount for 3 months (in case of sickness, gaps between gigs etc), more if I plan on taking a holiday. The rest is taken out (including into savings).

I bank with HSBC (Premier) so I get a dedicated bank manager and IFA, and together we agreed what I want to achieve when I retire - a £40,000 salary (after taking 25% of my pension tax free upon retirement) plus the proceeds of any property rental/investments. I think that is easily achievable if all goes well (touch wood).

Luckily I am getting 5 or 6 job offers a week at the minute so I'm reasonably confident I could walk out of this gig and into another by next week.

samtoby

GB2408 wrote: »

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

:eek:I need to do myself some consulting!:rotfl::rotfl::rotfl::rotfl:

GB2408

Well I have a meeting with HSBC this weekend to discuss what mortgage tehy can offer me.

The effective end date of my Halifax fixed term is August 2013. Without overpaying I know how much will be left on the balance of the mortgage by then, so I need to see what that figure would be at the same point if I switched to HSBC (taking into account the early repayment charge I am liable for).

I am now credit card debt free as well. I do use my credit card day to day instead of my current account as I get points back for spending on it, and I repay it in full each month so don't pay interest.

So if overpaying by £1000/month, plus a lump sum where possible, I will be on track to be mortgage free in less than 6 years

Won about £700 this month as well... I know gambling is a mugs game for most, but I always return a healthy profit every month. Not good for those that like to watch and account for every penny in advance, but I enjoy it and I'm good at it - So I don't see a reason to not do it!

I am reading other threads for support, but some of them make me cringe... Some people are complaining that they're husbands spent an extra £2 or £3 on something. My word, I feel deeply sorry for them! Being told what they can and can't spend, and effectively given pocket money I think is extremely condescending. I certainly would never let anyone tell me how to spend my own money.