Mortgage Free in Three Yrs

Desperate_Housewife_2-2

Hi Guys,

Just been reading your posts on ISAs and I am thinking of opening a Barclays one as the AER is 6.5% and my interest payments at the mo are 6.35% on the mortgage but I was in credit a bit last month so I think it might be worth it to start an ISA. Am I on the right track? cheers.

Moneygoes2money

benbenandme wrote: »

Thank you Kaz, my mortgage is currently just under £56k, I bought it for £162k last summer so I guess my ltv is good, but it depends on whether they're happy about my income, although surely if I can show I've been making regular overpayments then thats got to be a good thing??

As long as your ISA rate is higher than your mortgage rate, leave the money in the ISA. Then about three months before your mortgage deal is due to expire, start shopping around for the next deal. If you are unable to get a mortgage at this time, you then have the option to use the ISA money to reduce the amount you need to borrow at the time of the remortgage.

Moneygoes2money

Desperate_Housewife wrote: »

Hi Guys,

Just been reading your posts on ISAs and I am thinking of opening a Barclays one as the AER is 6.5% and my interest payments at the mo are 6.35% on the mortgage but I was in credit a bit last month so I think it might be worth it to start an ISA. Am I on the right track? cheers.

If your ISA rate is 6.50% and your mortgage rate is 6.35% then it makes sense to get as much money in the ISA as possible.

As soon as your mortgage rate is higher than your ISA rate it would make sense to use the ISA money to reduce your mortgage balance providing you can pay off a lump sum without incurring a charge.

Desperate_Housewife_2-2

Thanks MG2M,

I have just rang Barclays to discuss and the AER is 6.5% but APR is 6.31% and is variable. I don't think I would be any further forward by getting one so will leave things as they are for a bit. I've got £3,300 stoozepot money coming soon and will just keep stoozing and try and get this mortgage paid off.

I can't blooming wait as I can then open up an ISA and start saving. I reckon if I had money I'd be dangerous! I'm gagging to be mortgage free!!!

Moneygoes2money

Desperate_Housewife wrote: »

Thanks MG2M,

I have just rang Barclays to discuss and the AER is 6.5% but APR is 6.31% and is variable. I don't think I would be any further forward by getting one so will leave things as they are for a bit. I've got £3,300 stoozepot money coming soon and will just keep stoozing and try and get this mortgage paid off.

I can't blooming wait as I can then open up an ISA and start saving. I reckon if I had money I'd be dangerous! I'm gagging to be mortgage free!!!

I too can't wait to be mortgage free but unfortunately for me it's gonna take about 10 years (I wish I had a mortgage of £27k). It just takes too long to clear mortgage.

Desperate_Housewife_2-2

I know, its been a long haul for us too. It looks great that we only owe £27k but the real story is that we bought this house back in 1991, it was cheaper then but we struggled for ages as interest rates were around 15% and people thought we were mad for spending £65k on a house (!) We had an endowment back than so only paid interest but couldn't afford a repayment.

Child care costs were astronomical too for 2 babies and I used to work weekends to make ends meet. Onto easier times and the kids started school and I changed my hours to suit my family life and lightbulb moment arrived! I swapped mortgages year 2000 for a virginone account (lots of people don't like this account but we do) cashed in endowment and organised cheaper life cover. Paid off debts incurred while off work having babies (ill and couldn't work)

Its been a long haul but part of the rich tapestry of life and wouldn't swap a minute of it. I feel like we are towards the end of this long road and looking forward to the day when we can start saving!

Must confess, all this thinking about money matters and budgetting etc has been balanced with holidays and quality family time (which doesn't have to cost the earth) There are more important things than moneysaving but life with money is usually so much more pleasant and easier than life without money.

I have learnt a lot of lessons along the way and realise that I don't have to or need to spend loads of money to have a good life. I do have my Achilles' heel when it comes to spending (don't we all) but curb it by being sensible and avoiding temptation.

Good luck everyone, we'll get there eventually!

Trying_to_be_good

benbenandme wrote: »

Thank you Kaz, my mortgage is currently just under £56k, I bought it for £162k last summer so I guess my ltv is good, but it depends on whether they're happy about my income, although surely if I can show I've been making regular overpayments then thats got to be a good thing??

If you pay into ISAs now, but don't tie yourself into a long deal, you could always access the money if you needed topay down the mortgage when it comes to looking for a new deal and you find they won't give you enough. This way you keep your options open - not often that happens!

Kaz2904

Mg2m do you realise that you have knocked 6 months off your mortgage in 9 months? If you keep going like this you will have shortened your term by around 2 years after 3 years. So you'll be 5 years closer to having no mortgage than you were to begin with.
The thing with the ISA discussion is that so many of us are not in a position to be able to overpay and fill ISAs. We have realised that they do provide an excellent long term investment. It is worth filling the ISA year on year if able as it will generally provide a better return than overpaying the mortgage.
If you want to keep the ISA money forever then it comes to a point where your ISA contains more than you owe. It is at this point when it becomes really viable to change your mortgage to an offset provider who will allow you to offset your ISA. You then transfer in your ISA and stop paying interest on your mortgage. Each monthly payment you make to the mortgage becomes capital only and puts you in a positive balance. Your ISA starts becoming freed up and you start transferring it out to a better paying provider.
You then get the best of both worlds as you have technically paid off your mortgage when you have enough in your ISA. It then becomes a bit like a stooze pot!

Moneygoes2money

Hi Kaz

I totally agree with paying money into ISAs but only if the interest rate is higher than the mortgage rate. We're currently overpaying by £500 per month on our Nationwide mortgage, which is a lifetime tracker 0.18% above Bank of England base rate (i.e. currently 5.43%). Every month Nationwide sends us a letter advising the remaining term on our mortgage and this monthly letter confirms our mortgage term is reducing by 3 or 4 months for every £500 overpayment.

Also, following last month's Bank of England rate reduction, we have asked Nationwide to reduce our mortgage term by one year, which will increase our monthly payment to what is was prior to the BoE rate reduction. In other words, same monthly payment but mortgage reduced by one year.

I'm considering we each borrow £3.6k at 0% to stooze in cash ISAs to get the best of both worlds (i.e. maximise ISAs and maximum overpayments on mortgage).

Thanks for your words of encouragement and your thoughts are always welcome.

setmefree2

Moneygoes2money wrote: »

I accept it is each to their own but I thought this was the MFi3 forum not the "pay the maxmium into ISAs every year" forum.

OMG:eek: I'm realllllly sorry I didn't mean it to sound as if I was suggesting you shouldn't over pay your mortgage.....I think it's what ever motivates you that counts the most. If we all had endless amounts of money, we could do it all:rolleyes: but we don't (or at least I havn't )...I was just making an observation really....:o