Mortgage Free in 10 years....

Gurj247

Hello one and all,

I thought that i would put together a specific Mortgage-Free Wannabe diary to look at how I can over pay as much as possible on my Mortgage to reduce the term.

I have recently bought my first family home (in Jan 2012) and want to start making a dent on the overall mortgage of £119500 which we have fixed for 2 years @ 3.34%.
We currently pay £588 per month on a repayment mortgage.

I have currently made no overpayments on the mortgage as it being our first house there have been a number of things that we needed to buy as well as things the wife MUST HAVE...

Overall my wife and I simply don’t believe in spending money we don’t have, we do our best to live within our means, although there are always exceptions to this :cool:

So whats the Goal – Simple, be MORTGAGE FREE IN 10 YEARS.

Step 1 - The First Step
I have also created forum member financialbliss's mortgage overpayment excel and must say that it is great (BIG THANKS FB), if a little depressing (seeing how much interest this mortgage is costing us in interest on a daily basis).
This is something that i reccomend anyone that is looking to reduce the term of thier mortgage looks to do, as it does motivate both my wife and I to try and overpay as much as possible each year to reduce the overall term.

So for my calculation I have assumed the below:
Interest rate will remain constant throughout (3.34%). I know in reality this will not be the case, but it gives me a baseline to work against.

Step 2 - How much will i need to overpay to clear my mortgage Based on the above i would need to overpay my mortgage by circa £585 per month (£7020 per year). Thankfully i am able to overpay on my mortgage by upto 10% of the remaining mortage value and i can make overpayment when i like which is great.

Step 3 - Are there any other items that need money for..
For me there are a couple of other things that i want to do which are as follows:
1 - Change wife's car - Aim to build a fund of £3k asap (within 6 months)
2. - Build an Emergency Fund up - thinking of £5640 to put into an Instant Access ISA, at the moment we are not doing this, so this is important for those bigger unexpected items.


Step 4 - Produce a Statement of Affairs
Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 2
Number of children in household.........
Number of cars owned.................... 2
Monthly Income Details
Monthly income after tax................ 2000
Partners monthly income after tax....... 1000
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 3000
Monthly Expense Details
Mortgage................................ 588
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 120
Electricity............................. 25
Gas..................................... 50
Oil..................................... 0
Water rates............................. 25
Telephone (land line)................... 12.5
Mobile phone............................ 66
TV Licence.............................. 12.12
Satellite/Cable TV...................... 6
Internet Services....................... 5
Groceries etc. ......................... 200
Clothing................................ 50
Petrol/diesel........................... 250
Road tax................................ 15
Car Insurance........................... 50
Car maintenance (including MOT)......... 50
Car parking............................. 10
Other travel............................ 200
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 13
Pet insurance/vet bills................. 0
Buildings insurance..................... 12
Contents insurance...................... 18
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 40
Haircuts................................ 15
Entertainment........................... 30
Holiday................................. 100
Emergency fund.......................... 100
Total monthly expenses.................. 2062.62

Assets
Cash.................................... 0
House value (Gross)..................... 180000
Shares and bonds........................ 0
Car(s).................................. 1000
Other assets............................ 5000
Total Assets............................ 186000

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 119500...(588)......3.34
Total secured & HP debts...... 119500....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
Total unsecured debts..........0.........0.........-

Monthly Budget Summary
Total monthly income.................... 3,000
Expenses (including HP & secured debts). 2,062.62
Available for debt repayments........... 937.38
Monthly UNsecured debt repayments....... 0
Amount left after debt repayments....... 937.38
Personal Balance Sheet Summary
Total assets (things you own)........... 186,000
Total HP & Secured debt................. -119,500
Total Unsecured debt.................... -0
Net Assets.............................. 66,500
Created using the SOA calculator at www.makesenseofcards.com.
Reproduced on Moneysavingexpert with permission, using IE browser.

Any comments and Ideas for reductions would be appreciated.

curlygirl1971

Hi Gurj - Welcome to the MFW forum.

What's are the 'Other Travel' Costs of £200 per month? Could you get a better mobile deal?

Everything else seems fine to me but I can't really judge your SOA as I'm single person household - so I don't really know what's 'normal' for a family.

I think many of us MFW's have to ask ourselves how much do we want this? Some people are willing to sacrifice various things such as Holidays, Sky, 2nd Family Car in the short-term to get to the longer term goal quicker. Whilst others want to continue 'living' in the meantime and are happy for their goals to take a little longer.

The other thing to look at is increasing your income by doing things such as selling unwanted items on Ebay (I must admit that I don't bother doing this) and getting Cashback - Investigage Quidco & Topcashback if you haven't already. There is also ensuring that you get the best deals for your money (shopping around, comparing prices, not accepting renewals) and also making sure that the money you do have is in the very best place and earning it's keep. Apologies if you already do these things.

Anyway, there is a wealth of know-how on the forum - so have a little nosey around and see how other people are doing it. The diaries of similar sized mortgages for similar circumstanced families are perhaps a good place to start?

Gurj247

curlygirl1971 wrote: »

hi gurj - welcome to the mfw forum.

thanks for the welcome :cool:

What's are the 'other travel' costs of £200 per month? train travel between home and work
could you get a better mobile deal? sadly not, well i think not, but will investigate. The figure quoted is for both my wife's and my bill combined, however i might be able to cut my bill down as i don't really use many minutes.

everything else seems fine to me but i can't really judge your soa as i'm single person household - so i don't really know what's 'normal' for a family.

I think many of us mfw's have to ask ourselves how much do we want this? Some people are willing to sacrifice various things such as holidays, sky, 2nd family car in the short-term to get to the longer term goal quicker. Whilst others want to continue 'living' in the meantime and are happy for their goals to take a little longer. yes i think i am one of those that is somewhere in the middle, with regard to sky, i have just got it for virtually half price for the year, and its something that i really want (f1 nut i'm afraid), also the 2nd car, well thats on a classic car policy as i don't really use it during the week, only occasional weekend useage.

the other thing to look at is increasing your income by doing things such as selling unwanted items on ebay (i must admit that i don't bother doing this) - this is something that i need to learn how to do as i have various bits and bobs that could bring in some cash and getting cashback - investigage quidco & topcashback if you haven't already. - already signed up to quidco there is also ensuring that you get the best deals for your money (shopping around, comparing prices, not accepting renewals) and also making sure that the money you do have is in the very best place and earning it's keep. - now this is the tricky bit... apologies if you already do these things. - no need to apologise for trying to help :t:t:t

anyway, there is a wealth of know-how on the forum - so have a little nosey around and see how other people are doing it. The diaries of similar sized mortgages for similar circumstanced families are perhaps a good place to start?

:t:t:t:t:t:t:t:t:t

Gurj247

Also for those intersted i have stated a diary in the Debt-Free Diary section..
https://forums.moneysavingexpert.com/discussion/3901429

Gurj247

Talk about dragging a thread back from the dead


Well since I last logged in I have certainly been busy these last 4 years.


So heres the update...


I re-mortgaged 2.5 years ago to an Offset Mortgage at 3.14% interest.


Over that time we have been able to put away circa £80k into our offset pot. Partly saving in the last 2.5 years but also using savings as we were getting no interest anyway.


Have to say I really like the offset product - it does mean our current account lives near the £0 level, with only enough money left in it to cover our standard expenses + bit of contingency.


Its not been a straight forward trip, with sacrifices being made but as a result of this if we carry on we will have been able to reduce the total interest on our mortgage to circa £9k!!!


Now that's what I call a result, once its paid off (still a few years to go) that will be the biggest bill off our backs and will free up some more cash to start enjoying ourselves.

MissCreative

Welcome back Gurj247! :hello:
What made you think of posting on MSE today?
Congratulations on your huge achievement! That's a massive chunk off your mortgage and you should reach your goal in no time :T

Gurj247

MissCreative wrote: »

Welcome back Gurj247! :hello:
What made you think of posting on MSE today?
Congratulations on your huge achievement! That's a massive chunk off your mortgage and you should reach your goal in no time :T

Basically I'm now a father and so posting on here for information / advise, then realised I had not updated old posts so though why not, hopefully will inspire others too.

MissCreative

Congratulations on becoming a father! :beer:
DH and I will be having kid in a few years - would be great if you could post some tips on here for saving money and overpaying when having children too

Gurj247

MissCreative wrote: »

Congratulations on becoming a father! :beer:
DH and I will be having kid in a few years - would be great if you could post some tips on here for saving money and overpaying when having children too

Thanks MissCreative :-)


The biggest two tips I have are below:


a) Track you current expenditure -
Very important as when my wife an I did it, we noticed trends and then were able to change our behaviours to allow us to make additional savings, particularly things like going out. One change we made was we went out for meals during the week, rather than Friday/Saturday. We invited people around and cooked (guests brought the drinks) etc


b) Set up a Mortgage overpayment calculator
This was a bit of a shocker for us as I never realised just how much interest the mortgage was costing us per DAY :eek: :eek:
This focused our mind and we set the challenge to reduce ours so that we had the ability to save for a treat (like a holiday) at the end of it using the savings we would make on the interest



regarding savings when you have a kid.... I will let you know about that one as at the moment its just spend spend spend..

PennyJar

Hi Gurj,

Wow that's really good progress in 4 years, I've also just started a 10 year MFW goal...I noticed at the beginning of your thread you mentioned an excel spreadsheet which can allow you to calculate your daily. Any chance of bringing that back from the dead too :rotfl: Would be a great help to me and others

PennyJar

Gurj247

PennyJar wrote: »

Hi Gurj,

Wow that's really good progress in 4 years, I've also just started a 10 year MFW goal...I noticed at the beginning of your thread you mentioned an excel spreadsheet which can allow you to calculate your daily. Any chance of bringing that back from the dead too :rotfl: Would be a great help to me and others

PennyJar

Thanks, yes its certainly been some journey with a lot of hard work involved.


Until about April this year I was working the following hours:
Day Job - 40/week
Night job - 13/week
Weekend - 9/week
So approx 62 hours per week for circa 3 years (figure doesn't take account of holidays) and even now I work 50-50 hrs/week.


Thanksfully I was lucky, I had a supportive wife who would look after me and the house even though she was working full time too. so very much a team effort.


regarding the mortgage calculator below is a link to FinancialBliss's mortgage free journey, which tells you how to build it.
https://forums.moneysavingexpert.com/discussion/572849


I would send mine but I have edited mine considerably now to tell me specific things that interest me. If you want I can see if I can find an old version I created and email that onwards, just pm me you email address, no promises mind.