2014 mfw

Stroppypops

I need to reduce my taget to £2,800. As mentioned the job isn't looking as secure as it once was. Therefore the next few months will be increasing my savings pot just in case the worse happens. As soon as I get to over 8k in savings I will start tackling the mortgage again, so around June 2014. I will keep both my current martgage OP SOs running and therefore £60 pcm OP will be made.

ajmoney

Sorry for taking a while to put down my target for the following year, I would like it to be £2200. I hope eventually for it to be more but I have a lot of different things going on next year and even this may be a struggle.

BlueMoo

Hello,

Can I please join?

I would like to have a traget of £3000 (this will include 2652 regular OP, plus 348 to find through various MSE :mse: ways!)

Any number fine, but would like to be the lowest possible I can be. 85 or 29 would be fab if available.

gallygirl

Am not proud, any number will do .

OP's of £23,237 please :eek:. (Actually calculated as £23,237.81 but allowing for a bit of slippage ).

This is the total if circs remain the same but may be some big changes in which case I'll either meet it easily or end up with serious egg on my face .

jamesd

My current pension lump sum value is 72% of my mortgage and during 2014 I expect to pay into my pension enough to add 8% worth or more. 0.66% a month is the current target. I expect to add enough so that I'll be able to get a big enough lump sum to clear the mortgage within 10 years of starting the pension and 8 years of starting the mortgage. In year 3 of the mortgage at the moment.

I've no plan to overpay because that's usually not very efficient. I prefer to do it the efficient way, letting the pension tax relief clear it for me at no net cost at all. This year I'll be getting 58.9% combined income tax and NI relief on some of my pension contributions and 48.9% on the rest. It's really hard to beat that sort of thing for efficiency. The 58.9% is half of 13.8% employer NI, 12% basic rate employee NI plus 40% higher rate income tax. I have non-work higher rate taxed income and the salary sacrifice to eliminate the higher rate tax is at basic rate for some of it.

I probably won't actually clear the mortgage as soon as I could do it with the pension. Having the money available to do it whenever I want to is enough for me. I already have enough in savings and investments outside a pension to pay it off roughly twice if I wanted to. I don't because that money and the pension means I can live decently for the rest of my life if I lose my job or can't work. That's worth much more to me than clearing the mortgage as early as I could - I could have done that on the day I took out the mortgage.

BlueMoo

jamesd - I hope I don't sound rude, but the way you've phrased your post is *I think* slightly offensive to MFW people

I've no plan to overpay because that's the least efficient way of becoming
mortgage free. I prefer to do it the efficient way, letting the pension tax
relief clear it for me at no net cost at all.

I think a kinder way of saying it would be "that's the least efficient way of becoming mortgage free FOR ME"

I know for me personally, I work very hard and sacrifice in order to make the overpayments towards my mortgage, and what may be right for you might not be the most efficient ways for others, or alternatively not meet the requirements/reasons of why or how they want to become Mortgage Free.

Anyway, glad that you are working towards your goal.

jamesd

If you wonder why I posted more about how I'm doing it, consider this from the first post: "This is the thread for you to join fellow MSE forum members in setting a target for overpaying your mortgage in 2014 and sharing your progress over the year", but in a thread titled "2014 mfw", not "2014 mfw overpayers only".

There are more ways to becoming mortgage free than just overpaying. Maybe this thread is really only for those who are doing it by overpaying, but this section is for all ways. I prefer more inclusive, but maybe JCL wants to restrict what JCL does to only overpayers.

I also work hard and sacrifice. I've been saving and investing more than 60% of my (net pay plus gross pension contributions) for years. At the moment I have 87% of all of that accumulated. It takes commitment however it's done.

I did edit my post a bit but can you think of any more efficient way than no net cost at all, for anyone eligible to use it? It's not possible or even sensible for everyone, though:

1. It's only available up to £312,500 of mortgage value. After that the pension lifetime allowance kicks in.
2. The earliest the lump sum can be taken is 55, so if the mortgage is done by then the free clearing with pension tax relief can't be done.
3. Some people just might not be comfortable with pension investing.
4. Overpaying might be more efficient sometimes if it gets over a LTV threshold.

There are more than enough reasons why someone might not be able to or might not want to do it in the way I'm using. I tell people that they should overpay sometimes when that's clearly their best choice. Sometimes it really is the best possible way. But for me, it isn't. I also want to be able to maintain my lifestyle if I can't work and want to be able to retire early, so I pay a lot of attention to efficiency and meeting all of those goals. If I was just to overpay the mortgage directly I'd be compromising the rest of my goals.

I agree that it might be kinder not to discuss efficiency here but MSE is about education and sharing tips as well as being kind. So I'll share but if you don't like that way please do ignore it.

We're all different and lots of people prefer the certainty of overpaying. Whatever way people choose to do it is fine. However that is, good luck with it.

BlueMoo

Hi,

Think we are in agreement really. Just trying to point out that your way is not the best way for everyone (for all the reasons you have listed and more), and the way you phrased your post was a touch abrasive.

Feel free though to post all the things that have helped you though in your quest. Like you said, this is a forum and we're all here to help each other.

black_taxi_2

many on here,are self employed,work p/t,single mothers,fathers or married with financial debt

over paying mortgage is more about having more disposable income once paid off.


we're probably not tax efficient,but it's more about budgeting

Like bluemoo said everyone has there reasons

jamesd

BlueMoo, yes it was a bit more abrasive than I really liked, thanks for telling me and giving me the chance to edit it. Probably still is irritating to some but hopefully it's less so.

Black taxi, yes, those who overpay seem to have a really tight focus on budgeting. And for those who just don't like the risk of investing it really is the best way and one of the better things to do with money.