2.5 years MF Plan

Hi Everyone,

I thought maybe the idea of writing this down may actually help this plan happen ! I have a small fear of losing my job ... Then house.... Hence to eagerness to clear mortgage and relax.

I live on my own and I plan to MF in 2.5 / 3 years ( starting from jan 2014) . After having a fixed rate mortgage for 5 years, in sept 2013 I remortgaged to an offset mortgage ( 80k) over a 10 year term, payments are 800 a month . I decided to do this because I am a good saver and I liked the idea of having savings available once my mortgage is paid off.

I have 16k in the offset account to date and I aim to save between 1000 - 1200 a month. If I do this, then in 2.5/3 years ( depending on how much I can save ) my mortgage balance will match my savings in the offset account ( roughly 50k) which technically means I could pay my mortgage off, but for me it means that I will not be paying any interest on my monthly mortgage payments .

So far I have done these changes to help reduce my outgoings

1 went to an £8.50 sim only deal. Original plan was £30
2 signed up at a cheaper gym, from £70 - £15
3 cut sky off and have a recordable freeview box
4 created a monthly budget spreadsheet. Eg I have worked out what all my bills are like water, gas, tv license.... I added the total bill together and divided by 12. So each month in 2013 I was putting money away for my 2014 bills, so when they arrive I can just pay them straight off and by doing this it doesn't impact on my monthly savings into the offset
5 started to make lunch and food at home more because its cheaper than takeouts !
6 Collected tesco point all year. Accumulated £75 worth of vouchers which I used on food.

If anyone has any input, tips , advice please go ahead . Or if you have any questions ask away. Currently age 30. Bought a house when I was younger ( only 25k ) mortgage cleared on that. I'm very impatient and want things yesterday !
Starting mortgage 08 was 118K. Paid 18k deposit
Saved 10k and paid off mrg in July 2013 ( 1st OP)
Remortgaged Aug 13 to an offset. Balance 75K
20K saved in offset account :j
Save 12k challenge 2014. Member 146. £4808/12k
Aim to be MF 2016 at age 33 :j
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Replies

  • mortgage_girlmortgage_girl Forumite
    880 Posts
    Part of the Furniture 500 Posts Combo Breaker Mortgage-free Glee!
    Forumite
    Just stopping by to say hi. It seems that we're aiming to be MF on similar timescales. You've done amazingly well so far and the only thing that stands out so far from your list is possibly using your Tesco vouchers to buy things via Tesco rewards as you get 3 times their value.

    I've subscribed to your thread and will be cheering you along on your journey. :)

    MGx
    :jMortgage free 08.08.19 :j
    2018: £19410.25 / £9,300 2017: £7646.64 / £11,000 2016: 4557.98 / £11,000 2015: £10,230.37 / £11,000 2014 =£6703.26 / £11,000 2013 = £4288.51 / £8000 2012 = £1600/£5000 2011 = £2579/£3000
    MF date was Nov 2041 - mortgage neutral 23.07.18

  • Thanks mortgage girl. Didn't know it was possible to subscribe on here - I need to be "on it"! I didn't realise tesco done the rewards offer, looks like this time next year I'll be maximising those vouchers !
    Starting mortgage 08 was 118K. Paid 18k deposit
    Saved 10k and paid off mrg in July 2013 ( 1st OP)
    Remortgaged Aug 13 to an offset. Balance 75K
    20K saved in offset account :j
    Save 12k challenge 2014. Member 146. £4808/12k
    Aim to be MF 2016 at age 33 :j
  • Hi Guys

    Even though ive had my house since 2008, I forgot to mention that in July 2013 I made my FIRST overpayment of £10,000 off my mortgage balance which I'd starting saving from 2011. I had this money saved just incase I ever lost my job.( This left me with 16k savings to date )When my job was made permanent I decided that paying a lump sum off was a good idea because it was time for me to re mortgage and it helped my LTV ratio, so I got a good deal. ( between 2008 and 11, it was not possible for me to save because my whole house needed renovating when I bought it and as its just me living here, it took a while! )

    God only knows how I manage to save so much ( for me this is a lot) because after tax I get £2,333 a month.

    - knowing exactly how I spend my money helps
    - writing dwn what bills are expected helps
    - when it comes to food - I roughly know how much fish, chicken etc i need for the month because I have a food plan!

    I've decided that in 2014 I'm going to work smarter at work and not harder ! hopefully I will get more bonus !
    Starting mortgage 08 was 118K. Paid 18k deposit
    Saved 10k and paid off mrg in July 2013 ( 1st OP)
    Remortgaged Aug 13 to an offset. Balance 75K
    20K saved in offset account :j
    Save 12k challenge 2014. Member 146. £4808/12k
    Aim to be MF 2016 at age 33 :j
  • getmore4lessgetmore4less Forumite
    46.8K Posts
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    Forumite
    total spends of £333pm seems very low longer term with a house to maintain.

    2.5 years is very optimistic.

    £78k £16k offset @ 3.49%

    £800pm mortgage £1000pm offset
    2y 6m £57300 offset £46k
    3y 0m £52623 offset £52k

    £800pm mortgage £1200 offset

    2y 6m £57000 offset £52k
    2y 8m £55500 offset £54400


    to hit a target of 2.5 years you need to offset £1361pm


    I think that if you can hit £1k+ pm then having a target of 3 years is realistic with any extra as cash flow savings.

  • I think that if you can hit £1k+ pm then having a target of 3 years is realistic with any extra as cash flow savings.

    Thanks for your input. You are right 3 years is more realistic. 2.5 years is pushing it ! I worked out roughly that the difference between 2.5 years and 3 years is £6000 ( bear in mind my maths isnt perfect!)

    An idea for other people and something i forgot to mention is that With my job you can sell back unused holidays so I've sold back 5 this year, the maximum. I will get that money in apr I think ( I plan on doing this 2014 and 2015) that should accumulate an extra £2k plus.

    I should be getting a promotion in the new year if all goes well. Also with bonus' throughout the year Im hoping I can make up the extra money to get me to 2.5 years ! Positive thinking or madness. I don't know.... But let's see!!
    Starting mortgage 08 was 118K. Paid 18k deposit
    Saved 10k and paid off mrg in July 2013 ( 1st OP)
    Remortgaged Aug 13 to an offset. Balance 75K
    20K saved in offset account :j
    Save 12k challenge 2014. Member 146. £4808/12k
    Aim to be MF 2016 at age 33 :j
  • getmore4lessgetmore4less Forumite
    46.8K Posts
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    Forumite
    Thanks for your input. You are right 3 years is more realistic. 2.5 years is pushing it ! I worked out roughly that the difference between 2.5 years and 3 years is £6000 ( bear in mind my maths isnt perfect!)

    the actual offset (on top of a £800pm payment)needs to be

    £1017pm for 3y 0m total interest £3391
    £1361pm for 2y 6m total interest £2834

    that's an extra £10320 over the 30months to save £560 in interest

    An idea for other people and something i forgot to mention is that With my job you can sell back unused holidays so I've sold back 5 this year, the maximum. I will get that money in apr I think ( I plan on doing this 2014 and 2015) that should accumulate an extra £2k plus.

    Only works for people that get over the statutory minimum of 5.6 weeks(28 days) and work for companies that allow it.

    I should be getting a promotion in the new year if all goes well. Also with bonus' throughout the year Im hoping I can make up the extra money to get me to 2.5 years ! Positive thinking or madness. I don't know.... But let's see!!

    The trick is to have a realistic target that is achievable and budget that covers everything.

    3 years is looking like a good target with plenty of potential head room, if the budget is solid and nothing unexpected comes up 2.5 years could be hit.

    To knock more months off here are the savings targets,
    2y 6m £1361
    2y 5m £1432
    2y 4m £1509
    2y 3m £1591
  • Watty1Watty1 Forumite
    3.8K Posts
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
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    What a postive outlook and plans. Lovely to read. Will be cheering you on.
    Made it to mortgage free but what a muddle that became

    In the event the proverbial hits the fan then co-habitees are better stashing their cash than being mortgage free !!
  • SuperSecretSquirrelSuperSecretSquirrel Forumite
    944 Posts
    Tenth Anniversary 500 Posts Name Dropper Photogenic
    Forumite
    Very ambitious plans, looks doable too!

    Wish we had an offset... Redemption charges on a long term fix mean it wouldn't be worthwhile us switching, ho hum the benefit of hindsight! Still, we're aiming for something similar to you ourselves, mortgage neutral in about three years time.

    Good luck, I'm sure you'll do great. I'll be reading along :)
  • Great to seem some ambitious planning going on - it sounds like you have the determination to succeed.

    I especially like the 'work smarter not longer' approach :)

    re the house - if you have a spare room you could rent it out and it would be tax free money https://www.gov.uk/rent-room-in-your-home/the-rent-a-room-scheme. Of course you may not fancy this, but it's an idea?
  • Actually writing things down is helping me to remember what I've actually done and has happened.

    Firstly as you've guessed there is no room for lavish spending in my life. However my friend works for a top airline company so I will be getting very cheap flights come 2014 - massive help. At least I won't miss out on a holiday! So grab an air hostess friend where possible!

    Renting a room is something I've thought about but I am actually going to consider this. Thanks longtermplanner.

    Hopefully in Jan 2014 I should have 21k in total in my offset saving IF I get this bonus I was on track for in 2013. 21k is this figure I have been using on paper to get me to the 2.5 / 3 milestone. ( being optimistic with my figures!) I will keep you posted.

    It does not help that it takes me a while to get my head around the figures. But i quite enjoy it! Getmoreforless - your speed on the numbers is impressive !

    A few more very basic things I'm going to try and stick with in the new year
    - stick to one take out meal a week - it saves plus good for health !
    - wherever I can buy something cheaper - get it because I have a food plan and things I need for the house monthly, I'm going to make the effort to get It from the cheaper places eg home bargains , aldi ....thanks mum!
    - use what I have I'm definitely going to use what I have in my cupboards , freezer before buying more stuff.

    Have a good day everyone
    Starting mortgage 08 was 118K. Paid 18k deposit
    Saved 10k and paid off mrg in July 2013 ( 1st OP)
    Remortgaged Aug 13 to an offset. Balance 75K
    20K saved in offset account :j
    Save 12k challenge 2014. Member 146. £4808/12k
    Aim to be MF 2016 at age 33 :j
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