MFW by 2019 21 December 2012 at 1:59PM edited 16 September 2013 at 6:42AM in Mortgage-free wannabe 28 replies 3.9K views

Gadfium

I originally had a £70K mortgage, but a divorce in May 2010 meant that I had to borrow to pay my ex off. I retained the house, which I think has been one of my better investments ...3 bed detached, bought for £59K in 2001. Extended and renovated throughout with an extra bedroom, extended kitchen and a decent garden.

My new mortgage in May 2010 stood me £132K. That was made up of two mortgages...£58.8K on 3.19% and £74K tracking 0.99% above base rates.

I made a commitment to myself to pay this off as soon as I can, within reason. I'm currently attacking the smaller mortgage and it now stands at £43.3K. The larger mortgage is at £60.3K which means that I have reduced the total debt by £30K.
The aim is to continue to overpay the smaller mortgage by £500 per month. Doing this will have it paid off (assuming interest rates stay low....optimistic I know!) in under 4 years. The larger mortgage should then be about £40K and that will then be attacked.

So, two goals. Pay off the smaller mortgage by end 2016. And then be totally mortgage free by 2019.

Wish me luck!

lvm

Good luck!

I'm very jealous of your 0.99% mortgage!

Maybe you should look at some higher interest regular saving accounts to make the most of your overpayments.

I wonder if you'd also be able to go interest only on the bigger mortgage and pay more off the smaller one!

Anyway, god luck and I'm sure you'll be MF in no time!

Gadfium

lvm wrote: »

Good luck!

I'm very jealous of your 0.99% mortgage!
I wonder if you'd also be able to go interest only on the bigger mortgage and pay more off the smaller one!

Thank you. :wave:

It's not quite 0.99% as the base rate has to be added. Still, at 1.49% it means that anything that I pay against it pretty much goes straight into reducing the capital. The interest is about £74 per month, but if I changed to an interest only I would probably have to re-mortgage? Which would mean losing the 0.99 above base-rate?
I'm paying about £485 off the capital each month, so it's nice to see the amount reducing.

lvm wrote: »

Maybe you should look at some higher interest regular saving accounts to make the most of your overpayments.

How would that work? Pay the money into an account, earn some interest and then pay it down once per year?:think:

lvm

Yup!

Don't know exactly what's out there but I've heard First direct at 8% and HSBC at 6% I think.

Even waiting til you had saved in one of these accounts for a year then sticking it in a fixed rate account for another year or 2 would be worthwhile...depending on if your rate changes or if you think the rate will change in the near future.

Gadfium

lvm wrote: »

Yup!

Don't know exactly what's out there but I've heard First direct at 8% and HSBC at 6% I think.

Even waiting til you had saved in one of these accounts for a year then sticking it in a fixed rate account for another year or 2 would be worthwhile...depending on if your rate changes or if you think the rate will change in the near future.

I think I'd need convincing if that'd be worthwhile. Looking at the First Direct site it says "if you saved £300 per month for 12 months, you'd receive returns of approximately £156 gross (£124 net) in interest after 12 months.", I'd then have to calculate how much extra the interest would be on the mortgage because I would be overpaying by a smaller amount.
It seems a lot of hassle for £124, to be honest

Gadfium

Crossed a psychological threshold this month...my total mortgage owings broke through the 6-figure "barrier" (only just, mind).
My next step is to get my total savings and investments greater than my mortgage debt (I'm excluding the equity in the house, which is something like £80K). Assuming that interest rates stay low, and that my job stays as-is, then I should cross this mark in late 2014.

Gadfium

Overpaid by £1K this month. This is £500 extra due to an error when moving bank accounts. Ahh well, it's all to the good. And according to a quick calculation that extra payment should end this mortgage 2 months earlier than planned.

sharpe106

Sounds like you have made a very good start to this, hopefully you can keep it up

Gadfium

Thank you. Down to £98.3K which is another psychological point for me...25% paid off in just under 3 years :j

Gadfium

Another £500 OP this month.
£97.1K to go.....

Gadfium

A little update. I have some BT shares that I acquired through a works Sharesave which are doing really well (bought at £0.68). I've sold some today at £3.11 which has released £10K (the shares are riding high and I took the decision to crystallise some of the profit).

This £10k will go against the smaller mortgage in June which will bring the total debt down to £85K. it will also knock a full year off the payment term of the smaller of the two mortgages.
:dance::dance::dance: