When I grow up - my mortgage free journey

Yorkielass

After several years of following the diaries on this board and thinking that'll be me one day I finally made our first mortgage overpayment this morning and so here's my diary to go with it :j

My husband and I are both 30, we bought our first home in late 2006, decided in late 2010 we needed to move and 102 weeks (yes 2 weeks short of 2 years) later last August we moved. It was a very stressful two years and costly (we sold for less than we paid) and we have a house that's the same size but with less bathrooms and rather than being a new build has 50 years of DIY and decorating to undo but our quality of life has improved hugely moving back into York from a town about 15 miles out of it and I'm so glad we did it. The difference in mortgage payments is offset by the cheaper council tax costs (same band different councils) and the fact we're using about 1/3 of the petrol we used to!

When we decided to move we'd just got to the point where we could afford to overpay (I'd got a new job and had doubled my salary since we took out that mortgage in 2006 (I earned very little then, we had a good deposit and my mum was guarantor!)) but instead we saved the money for moving fees etc, during the two years my OH lost his job and found a new one very quickly too and so we wanted to build our savings up should this happen to either of us again.

So overpayment ambitions were put on hold and we've spent this last year paying the minimum amount on our mortgage, thinking we should overpay but not doing anything about it and having money left each month. Then the other week 2 things happened - one we got the annual statement for our mortgage. The Co-op one is much better than the Halifax one and it really bought home how little we'd paid off in the last year. Then my dad had a little lottery win and said he'd give me £100 of it and I thought I'll be grown up and use that as our first mortgage overpayment, it's money I wasn't expecting after all.

Then last night my OH was randomly started talking about mortgages and money (I'm the more money savy one of the pair) and about overpayments and I got him on here looking at the overpayment calculators and we did some number crunching and once he saw the difference even a small overpayment makes he was convinced.

So this morning I phoned up the Co op, I made that £100 one off overpayment and I also increased our direct debit - we're now officially mortgage free wanabees :T

So some numbers:

Mortgage when started (August 2012): £165099
Current mortgage (31st July 2013): £161928.25
Mortgage free date: August 2042

Current monthly payment: £857.46

Mortgage 10 year fixed rate at 4.79%

As of October our mortgage payment will be £1000 a month

Making this overpayment will save £40000 of interest and mean our mortgage free date would be:

February 2035

I knew overpaying would make a big difference but seeing it like that really brings it home.

We think we can increase the monthly overpayment further but need to do some sums first.

Phew so that's a bit about our property history and some figures - I'll post again soon with my motivations and my plan.

Oh and the title of this - it's inspired by a song from Matilda the Musical!

Thanks for reading.

Yorkielass

So my motivations and plan.

My parents haven't moved house in over 30 years and paid off their mortgage in their late 40s, about the time I went to University. They've had over 10 years of being mortgage free, in which time they've supported my brother and I during University, contributed to our weddings and gave us a chunk of our house deposit last year (which was a wonderful surprise) last year my dad took redundancy and effectively retired, technically he's a house husband. My mum is a couple of years younger, has a good job and wants to work a couple more years and then they'll properly retire together.

My inlaws still have a mortgage and when my FIL was made redundant earlier this year in his late 50s he had to find a good job and now has to commute into central London each day for the first time in his working life.

Our house is hopefully our forever home, but if we have children will probably need an extension. I certainly have no desire to keep moving, one lot of selling and buying was stressful enough.

We've got a 30 year term and so should be mortgage free at 59 if we don't add to it, however I'd love to do this by the age of 50 - which is late 2032 for both of us and the different experiences of our parents above when faced with redundancy in their late 50s/early 60s is all the motivation I need.

I lot will happen in the next 30 years, but I think if I keep this plan in my head it'll motivate me.

So what we intend to do:

Round our monthly payment up to £1000 a month

If we get small bits of unexpected extra money we'll add that too.

Then the two 'free' months of council tax, and any other bonuses like that when direct debits aren't taken etc.

I'm also going to start doing Tilly Tidies, into an empty savings account I have linked to my current account for now, will see how much I get and then transfer each month I think.

I have to ring up to overpay with Co-op, so probably better not ring up each day with 27p!

So anyway that's my motivation and my four initial intentions.

I do already do bits like using quidco, P*nec*ne, few other surveys, selling on F*cebook, G*mtree, E*y etc but I'm trying to keep this money to one side to pay for new furniture etc, it's been working for us for the last 8 years doing that with money I've made so going to keep that up for now.

So that's me. I love reading lots of the diaries on here and I'm looking forward to sharing our MFW journey with you all.

Tahlullah

Hello and welcome. You and your other half appear to have your heads screwed on and more importantly, have a plan of action.

I wish you all the best in your quest. The stark difference between your parents really is an eye opener and if you are in a position to head it off at the pass with a bit of judicious planning, then you do right.

Pleased you are happy with your new home, especially the bit with fewer toilets to clean!

I will watch and look forward to seeing you progress.

HelenDaveKids

Welcome and good luck with your MF journey. When does your fixed rate finish? as that's a really rubbish rate.

Daisychain1

Good morning Yorkielass. I too have been a lurker on these forums for a few years now. I will watch your journey with interest as we are a similar age, with similar mortgage end dates. I also do not want to be paying my mortgage forever!

Good luck on your journey.

DC1

originalmiscellany

Hi there HelenDavies, I guess if the mortgage is 10 years fixed, and taken out at the earliest of Aug 2012, there's a very long time to go, (Aug 2022 at earliest) and the costs of changing mortgage providers will be horrifically prohibitive!

icontinuetodream

just popping in to wish you good luck and say hello and welcome! :hello:

Yorkielass

Thanks for the messages.

With regards to the mortgage yes we're on 4.79% until August 2022, but we did lots of research before applying for the mortgage and decided that for us having a 10 year fixed rate worked well for us, having the security of knowing what we were paying each month over that period of time. I know rates have come down since then, that was the risk we took when we took the product. But we're happy with what we've got.


Right our direct debit overpayment won't happen until 1st October so I've made this month's overpayment manually and our balance is now 160689.42

I think September's focus needs to be getting our statement of affairs in order and working out where the money we earn is going, I'm sure we can increase our monthly overpayment further right now and reading other diaries I think if we can do this then this is where we can dramatically reduce our mortgage free date.

Lots of number crunching to do then!

Yorkielass

So I did the number crunching, OH and I discussed everything and we've made a big decision.

We already have about 8 months worth of our combined take home salaries in ISAs.

We did really well at adding to these and other savings accounts in the couple of years we were trying to move, adding the increases we both had salary wise and that really helped when we moved.

Then this year we haven't been so good, we've both spent money a bit frivolously really, I made the mistake of not setting up direct debits for savings/not starting over payments as we wanted to see how the costs of our new house so whilst we have some savings from this year they aren't that brilliant, but we have spent money having work done to the house.

Anyway we've drawn a line under all that. Looked at our income and our regular outgoings, what we have in savings and decided we can increase our direct debit further.

So from October we'll be paying an extra nearly £650 a month off the mortgage, total payment will be £1500.

It's money we can access at any point if we need to and as has already been pointed out our 4.79% rate is high (fixed for 9 more years) and it's going to make a huge difference.

Circumstances will probably change a lot over the next 11 years so I doubt we'll be able to keep it up but if we did:

"Overpaying would save you
£88,332 in interest alone,
and mean you pay it off in full
17 years and 5 months earlier."

That's food for thought.

So the plan is to let this run until the new year (I've manually overpaid £500 for September today too) and see how we go, during this time our home and car insurance both need renewing and we need to look at our gas and electric costs, rest of our SOA I'm pretty happy with.

I'm going to keep up with the tilly tidies and if we can add anything extra look at doing that too.

Part of me thinks £1500 a month on our house seems like a crazy amount of money, but then I think how much rents are in London and it makes me feel a bit better. We can certainly afford that and if we really could be mortgage free in our early 40s wouldn't that be wonderful.

Yorkielass

Gas and Electricity sorted, had issues with dds being changed, pay the balance off then ended up getting all that back and some more five months later.

Now changed supplier will save about £140 pounds this coming year on our total spend this year and I'm hoping we can reduce our usage a bit too.

Will start looking at home insurance in November, that's the next thing coming up to try and cut.

Keeping up with my Tilly Tidies and waiting for next Tuesday when I make my first DD overpayment.

tootoo

sounds as though you've gotten off to a great start