Quest To Pay Off My 150K Mortgage in 3 Yrs!

setmefree2

well done DD :T:T:T

DD4

Latest update from me (DD):

I have been in touch with my mortgage provider (Standard Life) and have reduced my mortgage term down from 19 years to 12 years. This will increase my monthly payments from their current level of £640 to £910, which is still less than I used to pay prior to starting my Mortgage Free quest. I also asked Standard Life to take £1000 per month in mortgage payments as an extra bit of overpayment and to provide a buffer for when mortgage rates finally start increasing.

When this current challenge ends in April 2010 (and my mortgage deal ends and I go onto SVR), I intend arranging a 5 year fix and will also try to further reduce my mortgage term down to just 10 years.

I've also arranged a S&S ISA with Hargreaves Landsdown (who I have my SIPP with) and transferred the full allowance to this. My aim now is to pay down my mortgage at an accerated rate, but to also start making major plans for a comfortable retirement, but making sure that I have enough money to enjoy the years between now and 65!!!

Spending a 2.5 years blitzing my mortgage has really paid off financially, but I feel it's now time to look at a more balanced financial strategy where I overpay a bit, invest a bit for my old age and spend a bit enjoying myself.

twinklie

I think we forget the enjoying ourselves bit....I know I do! So a good plan I think! Well done!

black_taxi_2

yeah--a plan and enjoying present time is good.

good-luck

angelavdavis

Sounds like a good plan DD.

Boy, am I glad we paid off mortgage when we did. I have been looking for a bit of local work to bring in some pennies for holidays/luxuries and there is NOTHING out there. I am setting up a small business designing and making handbags from recycled materials but its in its infancy so some money would be good!

I think you jumped contractor ship in time tbh.

DD4

Thanks guys, and Angela I agree that I bailed out of contracting at the right time! I have pals who are contractors and haven't had work for months now and I also have colleagues at Consultancies who have been made redundant. Hard times.

I was always a bit worried about getting my next contract but when I saw the credit crunch start I really started to worry - it doesn't take a genious to realise that if companies can't get credit they will shelve IT project work until they can. I was really fortunate to find a job so close to home, but I do think that to a certain extent you make your own luck.

DD4

Mini update...

I set up my S&S ISA as stated, placing the annual maximum of £7200 into the ISA account. Standard Life sent through details of my term change from 19 years to 12 years but I decided not to sign it as it would incur a £30 fee and would not have anything other than a psychological impact on our mortgage overpayments. We have already increased our mortgage payments to £1000, so changing the term would not have any effect on overpayments other than the fact I'd have £30 less in my pocket to overpay with .

I have finally received my corporation tax details from my accountant and I owe £9900 for this. I had expected it to be a bit more, so was obviously pleased to be paying less. I also received my self assessment details from the same accountant and was given wonderful news that I would be receiving a £6200 rebate. Yay!!

Due to the twin tax surprises, I decided to pay the extra 'just in case' money that I had put away for my income & corporation tax straight onto the mortgage. I phoned the bank and did a £4500 overpayment onto my Home Extension loan bit. This means I have today hit three important milestones...

My mortgage is now below £100K (standing at £99,709.77), my home extension loan is now below £40k (standing at £39,932.97) and the overpayments I have made since the start of the challenge is now over £50k (standing at £50,031.53).

My mortgage balance has been under £100k for a long time now due to the effect of my offset account, but this is the first time it has been physically under £100k since we bought the house back in 2002.

I keep thinking that I should leave the mortgage alone and concentrate on other areas, and to a certain extent this is what I have done (increasing my pension, putting savings into ISAs and renovating the house), but I simply cannot get away from the pleasure I feel at reducing my mortgage balance.

I keep reading newbie diaries on MFW where some posters recommend putting money into offset accounts, ISAs or other investment plans other than directly onto the mortgage, soley due to financial reasons such as receiving more interest on the saving than you gain from overpaying on the mortgage. I know they're right and I toy with this sometimes myself, but what they (and I) forget is the psychological effect of actually seeing that mortgage balance reduce. Becoming MF is usually achieved over the long haul, so motivation is the key. I know that I'm motivated more from seeing my mortgage reduce than I am from seeing my savings increase.

setmefree2

well done on the OPs and well done on getting sub £100k We should achieve this too before the year is out; can't wait:D

I know what you mean about all the different things competing for money. Next year I want to fully pump our cash ISAs (up to the new limit). If neither myself or Mr SMF2 get a bonus (totally expected) this would mean reducing our current mortgage OPs. I'm happy to do this, Mr SMF2 would rather OP the mortgage - even though he knows it makes more sense to fill-up the ISAs and that the effect on our net debt position is neutral....I think I have persuaded him - but we'll see:p

Catanddogs

That is just fantastic!!

gallygirl

DD4 wrote: »

I keep reading newbie diaries on MFW where some posters recommend putting money into offset accounts, ISAs or other investment plans other than directly onto the mortgage, soley due to financial reasons such as receiving more interest on the saving than you gain from overpaying on the mortgage. I know they're right and I toy with this sometimes myself, but what they (and I) forget is the psychological effect of actually seeing that mortgage balance reduce. Becoming MF is usually achieved over the long haul, so motivation is the key. I know that I'm motivated more from seeing my mortgage reduce than I am from seeing my savings increase.

Go on DD, that's what spreadsheets are for...... go on go on go on go on, you know you want to .

Congrats on OP's and progress :T