Mortgage Free For A Happier Me

Happier_Me

Sometimes it feels like we are on a strict diet when it comes to our finances - we haven't opted for a more sustainable 'lifestyle change' route to mortgage freedom.

But as we have such a relatively short time left before the mortgage is paid off we are committing to our original plan for the time being of hitting this as hard as we can. We will review a couple of times this year and next.

It dawned on me earlier this week that I am now earning £20k a year MORE than I was earning this time last year. This is partially down to an increase in my days from 4 to 5 plus promotion. This will likely drop back in October 2014 - but I need to make these secondments pay both in terms of helping to reduce the mortgage and giving us a little more spending money so it all feels doable. I will kick myself if we fritter this extra money away.

Happier_Me

Another £190 paid off the mortgage this morning courtesy of the last quarters solar panel income. My usual mortgage plus OP is due this weekend and I will update my signature then but my balance should fall below the £68k mark.

Muser1

Great diary HM,

How's the no booze going?

I'm sure mine would be paid up if I stopped drinking wine

Happier_Me

Hi Muser

We are still doing well cutting back on the lager and wine. I have a very occasional drink:A. DH isn't being as good but then he doesn't get struck down with instant 'hangover' (migraine) after half a glass of anything alcoholic.

But lets be realistic here! Would I be doing so well if wine wasn't triggering migraines? Honestly, the answer is: No, I would probably be having a glass of the lovely red stuff right now (8.15 am on a Sunday morning):rotfl:

Only joking, I'm sure I could wait until lunchtime! Oh dear, it's starting to sound like I joined the wrong forum...

Happier_Me

Things are good in the HM household.

Another £2,350 mortgage payment made today and our balance is now below £68k.

I batch cooked four lasagnes yesterday with plans to make 4 x cottage pies today.

We continue to shop at Aldi with specifics usually from Sainsburys (its next door). Our food bill this week was £150, high but we have been spending between £50 and £75 per week for a number of weeks now and we were short on everything, including batch cooked meals. The weekly shop should be a cheap one next week. Cutting back on alcohol has made a big difference to our food budget.

Just arranged travel insurance for our France holiday via quidco - 40p cashback.

C&ntre P@arcs hol paid in full - thinking about ebaying some clothes/toys/stuff for spends. Hopefully this will progress beyond 'thinking' and into 'doing' at some point.

We have to be really sensible with our budget this month as we have paid for DS's birthday party and bought DD a new mattress. If we don't succumb to silly spends we should be able to meet these costs from our entertainment budget. DH's family invited us out for tea last night, but we declined and went home for a sausage dinner. I think DH was longing for a mixed grill but he needs to stay strong this month. We are spending more this year on holidays than we have for a while so we have to be good elsewhere. And I'm in the frame of mind that if I'm going to spend £80 I would rather it be on a day trip with the kids than a meal out.

That's it for now.

Happier_Me

It's been a little while since I posted. April over payment made to the mortgage as planned although now our interest rate has reduced to 2.5% I am starting to rethink our mortgage freedom plans...

We want to be in a position to retire in our late 50's. We both pay into pensions, DH makes a small contribution to a company pension (20 years contributions) and I am very fortunate to be in the Local Government Pension Scheme (15 years contributions).

But this won't be enough to retire on comfortably 10 years early. So we are considering stopping the mortgage over payments and pumping our money into something else. We have always wanted to have a buy to let property. This would be a long term investment. We're not interested in achieving a monthly income. If it's not for us we can bail out and rethink things, if it works out we could consider a second or more BTL's in the future.

Does anyone have any experience with BTL's? Good or bad, any info would be much appreciated.

Beckyy

We own a BTL, we kept the property when we moved, remortgaged with a BTL mortgage and let it out. Although it's a great investment to have, it is a lot of work and responsibility. We found the tenant ourselves and also manage it ourselves (agent fees are v.high and I can't say I trusted any with it). A good tenant is key, if you get a nightmare tenant then it's going to cost you an absolute fortune and could potentially leave you with money troubles, rather that money joys. There are also a lot of hoops to jump through, gas safety certificates (if mains gas in house), electrical safety certificates, insurance, energy performance certificates (EPC) etc. A good tenancy agreement and inventory are vital.

The interest on a BTL mortgage (usually interest only) counts as a tax deductible expense, so don't OP it and don't get a repayment one whilst you still have a mortgage on your own house. You need to have a decent monthly rent coming in, as most mortgage lenders stipulate that the rental income must be 125% of the mortgage interest at least. It's usually easily done, but you're still better off with the highest yielding property you can find for your money, even if it's more for the long term investment you wouldn't put savings in a 1% account when you can put it in a 5% one.

Personally, I'm am very glad we have our BTL. If you have a good tenant and look after your property then you should have no bother getting a good return for your money. Once you get your head around everything it seems much simpler and has been very worthwhile for us.

Hope that helps

gallygirl

HM I've a few BTL's and they'll be providing my retirement income (in the next few years ). Obviously I'd highly recommend them :rotfl: but they're not for everyone. If you're the type to stress out if you have to round and sort out an emergency plumber on Xmas Day then probably best avoided .

The best advice I can give is to speak to anyone locally who does it and ask their advice (you're hardly going to be stealing their business ). Maybe even speak to letting agents. Look at what is available to rent/buy and work out your yield (gross yield is the rental income as a % of the value of the property). The best yield in many cases is modern flats but you need to factor in leasehold costs etc, we've always steered clear (but tbh we don't come from a town that's had a 'flat culture' till recently).

Go for a newer property if possible as less maintenance. We're currently selling a Victorian property that after all mortgage and repair costs has never made a surplus .

Do you want to rent to a family, with more wear and tear but possibly longer tenancy, or professional couples who may stay there a few years if you're lucky?

Ex-council properties, let out to traditional 'council tenants', on some kind of benefits will give a good yield but in my opinion (and sorry if it offends anyone but this is my experience apart from one long term tenant) you'll end up chasing them for the rent as when they hit difficulties that gets stopped before they'll cancel their mobiles or Sky.

Basically - modern, 2 bed house near good school, shops, hospital and good transport links. Simples :rotfl:.

When you view, view through the eyes of your target market, not whether YOU would live there. But also have an eye to resell - ask yourself if you had that amount of money to spend on somewhere to live whether that house would be a serious contender. We saw a perfect house for rental recently but I turned it down as the garden was seriously overlooked which is something I wouldn't compromise on. I also wouldn't buy anything with decking as it needs maintenance.

When it comes to mortgages, the perceived wisdom is an IO mortgage. However we've always gone for repayment as like you we're not reliant on the income at present. Ideally though you would go IO then invest the 'repayment' element to pay off in the future.

PM me if you want to chat about it.

GG

Arkers

I would endorse everything GG has to say, especially re your target market. We have gone down the student let route, which is not for the feint hearted! I have always found that they pay their rent (sometimes with a little chasing). Yes some students are better than others, but that is the same with all demographic. I have made my houses a shrine to ike? and quite girly; as they come furnished and this attracts groups of nice young ladies.:rotfl::rotfl:


TBH I get on with young people and I remember how I was at that age!


The area you live may not be the best re yield which is also something to consider.


Good luck

Happier_Me

Hi, thanks Beckyy, Arkers and Gally Girl for posting about your BTL experience. It is really helpful to have an insight from those that have done this. We are fortunate to have family and friends that have ventured into the BTL market in our area but they all purchased many years ago when house prices were lower and their end game is different to ours - its more about the return they can get now as opposed to longer term pension planning.

We aren't going to commit yet but watch the market and our plan as you suggested GG is to buy newer if we can. It is hard not to go for something I could see myself living in though! Our aim after retirement will be to sell the house we're in now and downsize to release a chunk of equity as we will be hoping to travel for several months each year. We will not need a 4 bed house with a band F council tax rating after retirement as it will either be empty or being destroyed by our adult children whilst we're away.

I am aiming for families and intend to buy probably this Winter.
Our mortgage over payments have stopped and are now being redirected into savings to ensure we have a deposit and fees ready. DH will deal with the maintenance issues on our BTL which won't phase, him but owing more money even though its attached to an investment may not sit well with me. My biggest concern is problem tenants - I have heard some horror stories! My plan is to use a recommended agent to find the tenant and sort out the tenancy agreement and for us to do the viewings so we can get a feel for the people that will be renting the property.