The Mortgage Free in Three - Take 3 challenge (MFiT-T3)

Mrs_Money_Penny

Managed to save £770 in an offset savings account. Good luck in February everyone.

OS_QS

Totalled £793.55!! That's over £50 than our regular standing order OP :j achieved by odds and ends and spurred on by mfw 2013

Glad it's February now though, jan was a very long month - 6 weeks since the Last paycheque!

tattycath

Gosh OS QS and Mrs Money Penny make my overpayments look like smallfry. I'll have to try and up my game somewhat. ... open to all suggestions...

JoeyGrey

Done some shuffling round of funds on my spreadsheet and some real thinking about how I should handle paying the rest of my mortgage off. Just using this post to lay my thoughts out really and see if it clears my head at all, so sorry if it is a bit tangled, but that's how my head is

Situation at the moment is that I'm paying £550 to my mortgage company each month which is a £400 overpayment. Of that about £30 is interest, so it's making a decent indent each month of about £522.

I mentioned in a previous post that I've got a bit of a chunky payrise a few months ago, so I opened up a fixed rate ISA account to put any extra money I have at the end of each month away as an offset fund. I didn't realise, mainly because I didn't read it properly, that you aren't supposed to keep adding funds to the type of ISA I opened, but fortunately they didn't stop me until I had £3560 in there (proceeds from selling my car plus savings), so I didn't waste my ISA allowance totally for this year. I've now had to start putting my excess into an ordinary savings account which I use for emergency money. So I have the grand sum of £4906 so far and this is growing by about £500 or so per month.

If I take that sum away from the total of my mortgage, I actually owe £14,152 which is pretty mind blowing. In real terms if I keep on overpaying and saving at this level I should be able to pay my mortgage off in 14 months!

So, I need to make a decision. Do I (1) wait till March next year, pay my mortgage off completely and enjoy being mortgage free for a while until I decide if I am actually going to start again on a bigger house, (2) wait till next March, knock my payments down to the minimum, let the mortgage run its course via my current savings as an offset while new savings keep building elsewhere that could possibly be used as a deposit for a new house at a future date, or (3) should I knock my payments down to a minimum now and use the £1000 per month I am saving as a deposit for a new house? (I doubt I'd sell this house by the way, I'd probably look into renting it out as a bit of a retirement security).

It's a lovely decision to have to make as whatever I do, I'll be in a great position next year. I just can't decide if I'm goiing to want to have another mortgage once I've got rid of this one.

My current house is an ex council house on the edge of the estate. I have a massive garden and amazing views, squirrels, foxes, hedgehogs etc in my garden. It's not exactly a classy area, but I feel quite safe here and have lovely neighbours, so I'm not forced in any way to move. But it only has 2 small bedrooms which sometimes frustrates me as I am tight for space and eventually I'd like to foster kids, so it will feel very small very quickly if I did that.

It's really a question of do I want a bigger house in a nicer area more than I want the freedom being mortgage free would give me and I just can't decide. So think I'll rule the third option out for now and make the decision next year.

Anyone who has been in the position of paying a mortgage off and deciding whether to start again, did you go through this thought process and what pushed you to make the decision you did?

gallygirl

Well, let's start by saying - what is your mortgage rate?

JoeyGrey

Hi GallyGirl - it's 1.49%. This is what the bank put me on when I came out of my fixed tracker 18 months ago. There's a £295 charge should I decide to pay it off early and no limit to overpayments.

gallygirl

Well, that is very low :T. In that case, you only need to get a savings rate of just under 2% net (assuming you are a lower rate tax payer) to beat it. Fill a cash ISA if you haven't already got one and look for other savings accounts paying over 2% - there are a few about..... That way you will have total flexibility.

Shineyhappy

Hi everyone, we are making our £700 a month op as have decreased the term by years so progressing nicely, but we off the topic slightly, what are you all doing about holidays?

DH and I can sacrifice just about everything, but the more I look at holidays the more I want to spend.

We have so far raised £400 through Ebay towards it but I think in all honesty I want to go on the kind of holiday that will cost about £4k for us both including spending money. Is this too much or should I get a cottage in the UK?

It's so hard to know whether to spend the cash and have a lovely time or do without and be better off but if something bad were to happen then I would wish we had of had the holiday. We aren't expecting bad news but loads of people I know seem to be getting some very nasty illnesses and sometimes it makes you think life is too short.

Any ideas?

Mortgagefreeby50

How about you alternate years, so have a big blow out one year, but have a budget holiday the next?

The crux of the matter is will you enjoy your expensive holiday, or will you feel guilty about how much it cost? It will definitely be a waste if you don't enjoy it, but money well spent if you do!

I agree that funding it with 'extra' money is a good idea. How about a second job dedicated to the holiday fund?

Just thinking out loud of ways you can justify it to yourself.

tattycath

tattycath wrote: »

Managed to over pay an extra £92 in January. over and above the normal overpayment.

tattycath wrote: »

Gosh OS QS and Mrs Money Penny make my overpayments look like smallfry. I'll have to try and up my game somewhat. ... open to all suggestions...

Right. Seriously need to sort out overpayments if I am to achieve my MFI3 goal. So Last month I managed to overpay £92 (on top of regular op) and this month already I have OPed £53 and it's only 4th Feb.
I intend to chuck the CT payment amount at it as we have 2 free months-but that won't be 'til the 2nd half of the month and hoping to claw back money owed to throw that into the pot... (wonder if i should just start a diary...)