Mortgage Free in Three Yrs

Kaz2904

I thought that I was the only crazy person who counted up pennies and took them into the bank! I'm off upstairs now to empty out any penny jars hiding quietly! I really need to do some hoovering but I've been on the computer all day!
I've done my insurance and got separate buildings and contents with direct line. I will get 2 lots of £100 cash back now! Only problem is that it's £360.15 out until I get the money back whenever that might be- probably August.
I now need to get out into the sunshine and do some shopping as we have little food and no fruit/veg in the house!

amazamum

Hi everyone.

Dithering Dad please could you change my 3 year aim to show that I want my mortgage to be less than 30,000 pounds after the 3 year challenge,this will be near enough the same as my original aim but will spur me on a little better as I will be able to see my mortgage coming down (means knocking 13,508 off the mortgage).
Thank ps Tallgirl I will be able to let you know my new mortgage total the beginning of next year as my payment will have come out.:T

sparklymessygirl

Morning,

Have become a little obsessed!

Just used an online calculator and worked out that as I am being charged 7.5% interest on my mortgage I would have to earn 9.38% Gross on savings (am basic rate tax payer) just to keep still so I am very seriously considering cashing in my savings to pay a lump sum off my mortgage. (May have got these figures round my neck though!) I could always borrow at a lower rate in an emergency.

Sparkly

FrugalNotTight_2

sparklymessygirl wrote: »

Morning,

Have become a little obsessed!

Just used an online calculator and worked out that as I am being charged 7.5% interest on my mortgage I would have to earn 9.38% Gross on savings (am basic rate tax payer) just to keep still so I am very seriously considering cashing in my savings to pay a lump sum off my mortgage. (May have got these figures round my neck though!) I could always borrow at a lower rate in an emergency.

Sparkly

This all sounds very dangerous!!! I assume you've got a massive penalty if you change to a fixed lower rate? There are rates below six still around at the moment.

I wanted to change to a lower rate but it's just not worth it for me. I'm paying 6.09% and my penalty will be £2,014. I've got two years of the term left so I'm going to have to leave it in the lap of the gods. VERY SCARY!!!!

My mum and dad got hit with an over 10% interest rate in the eighties. Not sure I could hack that. :mad:

Dithering_Dad

sparklymessygirl wrote: »

Morning,

Have become a little obsessed!

Just used an online calculator and worked out that as I am being charged 7.5% interest on my mortgage I would have to earn 9.38% Gross on savings (am basic rate tax payer) just to keep still so I am very seriously considering cashing in my savings to pay a lump sum off my mortgage. (May have got these figures round my neck though!) I could always borrow at a lower rate in an emergency.

Sparkly

That's a pretty high interest rate, are you locked into your current mortgage? I have my emergency savings in an offset account, so don't gain any interest on the money, but do gain by paying no interest on the mortgage amoutn that is offset. The money is available to withdraw ASAP if needed but is also sufficiently hard to get at that I can't "accidently" spend it on an emergency LCD TV purchase

If you can't change to a lower rate or to an offset mortgage, why not ask your current provider about how easy it would be to get back any overpayments you make? I remember that Northen Rock allow overpayments to be withdrawn without too much rigmarole (sp?)

Gray0103

This looks like a great idea, however baby number 1 is on its way and looks like my mortgage free date will be some way off now.

sparklymessygirl

FNT and DD - thanks for your comments. Believe me I have looked at remortgaging but without exception everyone I consulted said that they could not make it cost effective for me as my balance outstanding is so tiny
(£10,554). Any interest savings are wiped out by redemption fees and arrangement fees. Same point re offset accounts last time I checked.
I plan on keeping £3000 savings for emergencies and perhaps cashing in my premium bonds of £2,000 to pay off a lump sum (no penalties I believe but will check) so I don't think I am going to be reckless
Sparkly

Dithering_Dad

sparklymessygirl wrote: »

FNT and DD - thanks for your comments. Believe me I have looked at remortgaging but without exception everyone I consulted said that they could not make it cost effective for me as my balance outstanding is so tiny (£10,554).

Oops, sorry sparkly, I didn't think to look at the OP to see how much your mortgage was. Cashing in the premium bods would be a good idea as you'd definitely geta better return on your mortgage, unless you win the jackpot of course

As far as the other cash is concerned, the usual "rule of thumb" for emergency money is 3 month's net pay, so if you have more than that put away and are in a stable job (steady, rather than horsey) then maybe you could afford to reduce your emergency pot and pay the difference onto your mortage.

sparklymessygirl

DD - no problem - you cannot possibly keep up with everyone's details Just remember that I'm the one who lives in a hovel!
I agree that using up the full £3000 on the mortgage might be wise and my job is fairly stable and I would get 12 months notice unless I were sacked for misconduct :eek: At the back of my mind though is that I might need the money for something that I feel strongly about and may need to do very fast and I don't want my decision to be influenced by borrowing/arranging finance - a bit like not wanting to have to think about money in deciding whether your dog should be put down - I'm sure none of that made sense to anyone but me

Sparkly

FrugalNotTight_2

I was thinking exactly the same as DD really.

Why do you need to keep your savings for an emergency when you could just as easily get another loan out if you need it? In an emergency, as you say, you would be able to get a loan into your account within days in this present age. I'm sure the interest rate would be less than 7.9% too.

You could also withdraw cash on a credit card and have a no interest balance for six months or maybe even more. This is a bit dangerous though. If it were me I would probably, as I've got £3000 in savings, look into taking out £3,000 from a credit card, then transferring the balance to a no interest credit card. If it failed for whatever reason, I would then pay the £3,000 back in and I've only lost out a little bit from trying. There would obviously be a charge for withdrawing money which might be why you could lose out should you not qualify for a balance transfer.

There are also loans available out there which are less than 6%. Obviously repayments need to be kept up etc, etc, but maybe use a loan to pay off your mortgage which would be at a lower rate. No one needs to know what it is for.

These are all ideas and need to be used with caution. But from what I've seen from other posts I think you could quite cleverly get your mortgage to nil by using savings, loans, credit card transfers and premium bonds which you could buy back when your flush!!

I assume you don't have an early redemption charge????