I've Done It!! I'm Finally Mortgage-free

molit

Interesting to read about the views on house prices dropping - I tend to agree with the drop, but expect it slightly later - 2015-17 - the reason being, without wanting to sound harsh - the baby boomers from 1945 will be approaching their 70s, and looking to downgrade/move abroad etc - generally these people have large family houses, with a glut of these on the market, there is oversupply, leading to dropping house prices ay the high end of the market, which should trickle down. The last drop happened early 90s, if you assume a slight baby boom casued by births in 1918-1919 - the 72-73 year argument follows.

Martinslovechild

barryheffron wrote: »

but what happens if they don't offer you a limit to cover the original balances?
this happened me when i had a 2250 balance on a card and tried to transfer and was only offered a 1500 limit on the 2nd card and had to apply for another which offered me only 1500.

i had a good credit record so couldnt think of a reason why i was offered so little and each was from a different company as far as i know
1st Halifax
2nd RBS
3rd Alliance & Leicester

OK - you have to view your mortgage overpayment fund as an extra money pot.

Here's an example:-

Let's assume you have £50,000 'borrowed' from 0% credit cards - this cash is safely sitting in your mortgage overpayment pot.

A month from now, the 0% offer on one of the cards (with a £10,000 limit) is going to expire, so you decide to apply for a new card.

Your application for the new card is successful, however they've only offered you a £7,000 credit limit.

• At this point, you wouldn't actually still owe £10,000 on the original card as you've paid 9 or 12 months' minimum payments (you'd have repaid £2,394 after 9 months assuming a 3% min payment).
• Secondly, even if you did still owe £10K, you'd simply drawdown £3K of your overpayments fund, pay this to the original card and BT the remainder (£7K) from your original card to the new card. Your overpayment fund will reduce slightly, but the bulk of it is still at the 0% rate.

Hopefully, because your mortgage balance is reducing pretty quickly, it won't matter too much if there's a small shortfall as you won't need access to quite so much credit 9 or 12 months on as you'll have paid off a fair chunk of capital.

Martinslovechild

aussielle wrote: »

This is one of the most inspirational threads I've read for a long time.

Huge applause to you and mrs mlc! :T

I'm really pleased for you both...in fact it doesn't seem that long ago since you were telling us in person about your plan (at the Salford Quays MSE meet) and now you've done it, well done!!!!!:j

Good to hear from you Aussielle.

Thank You for your kind words. Yes - I certainly stuck to my plan like glue and it's fantastic that the time has finally arrived when it's all paid off.

I've certainly been inundated with personal messages and requests since Martin publicised this thread in his weekly email, as well as messages of good will.

Thank You to everybody who's written to me - I'll get round to responding to the PMs that arrived over the weekend very soon (only got back from London late last night - Prince was excellent by the way).

barnishroader

Martinslovechild wrote: »

OK - you have to view your mortgage overpayment fund as an extra money pot.

Here's an example:-

Let's assume you have £50,000 'borrowed' from 0% credit cards - this cash is safely sitting in your mortgage overpayment pot.

A month from now, the 0% offer on one of the cards (with a £10,000 limit) is going to expire, so you decide to apply for a new card.

Your application for the new card is successful, however they've only offered you a £7,000 credit limit.

• At this point, you wouldn't actually still owe £10,000 on the original card as you've paid 9 or 12 months' minimum payments (you'd have repaid £2,394 after 9 months assuming a 3% min payment).
• Secondly, even if you did still owe £10K, you'd simply drawdown £3K of your overpayments fund, pay this to the original card and BT the remainder (£7K) from your original card to the new card. Your overpayment fund will reduce slightly, but the bulk of it is still at the 0% rate.

Hopefully, because your mortgage balance is reducing pretty quickly, it won't matter too much if there's a small shortfall as you won't need access to quite so much credit 9 or 12 months on as you'll have paid off a fair chunk of capital.

Thanks.

Just need to clear my exisiting card debts now as i assume it would be better to start this all off with a clean slate and that will hopefully set me on my way!

Martinslovechild

barryheffron wrote: »

Thanks.

Just need to clear my exisiting card debts now as i assume it would be better to start this all off with a clean slate and that will hopefully set me on my way!

Nope. Start right away. :cheesy:

If you have existing CC debts, transfer these onto 0% also.

For example:-

Let's assume you have the following:-

• Existing Capital Two Mastercard Balance £3,000 @ 9.9%
• Egg Money Balance £0
• Current Account Balance £0
• Mortgage Balance £50,000 @ 5.75%

You now apply for BigBucks Visa offering 0% for 9 months. They offer you a credit limit of £5,000.

You now balance transfer:-

• £3,000 from Capital Two to BigBucks, in effect reducing your existing debt from 9.9% to 0%.
• £2,000 from Egg Money to BigBucks. Your Egg Money card is now £2,000 in credit so you move this across to your mortgage (as explained in a previous post, via your Current Account).

There's no time like the present, so go for it...

:j :beer: :j

barnishroader

Martinslovechild wrote: »

Nope. Start right away. :cheesy:

If you have existing CC debts, transfer these onto 0% also.

For example:-

Let's assume you have the following:-

• Existing Capital Two Mastercard Balance £3,000 @ 9.9%
• Egg Money Balance £0
• Current Account Balance £0
• Mortgage Balance £50,000 @ 5.75%

You now apply for BigBucks Visa offering 0% for 9 months. They offer you a credit limit of £5,000.

You now balance transfer:-

• £3,000 from Capital Two to BigBucks, in effect reducing your existing debt from 9.9% to 0%.
• £2,000 from Egg Money to BigBucks. Your Egg Money card is now £2,000 in credit so you move this across to your mortgage (as explained in a previous post, via your Current Account).

There's no time like the present, so go for it...

:j :beer: :j

My 2 existing cards that i have balances on are both 0% until mid-next year but i have maxed the limits with transfers.
I suppose i could apply for an egg card and then another and hopefully get enough of a limit to consolidate the 2 i have balances on onto the new card.

My current mortgage deal expires on 30/11/07 and i am in the process of working with an advisor on a new deal.
If i get a new deal then i would imagine i would not be able to overpay for an initial period, eg 2 years and would then be able to save into my mortgage pot over this time.

Think my first step should be to apply for an egg card and see how it goes from there......thanks again mlc and sorry for being a bit slow on the uptake of all your advice!!!

barnishroader

Sorry another question:

When applying for my egg card, is there a general rule of thumb as to whether i should add my wife to the account or not?
She earns more then i do and has probably the same credit record as me so should i add her or is it detrimental to add another person no matter their earnings.

Martinslovechild

I would leave your two existing balances where they are - they're already at 0% so there's no point in consolidating these elsewhere.

At this point in time, you could either continue as you're already doing or apply for the Egg Money card and another 0% card elsewhere (let's call it BigBucks Visa). Max out BigBucks Visa, transfer to Egg Money then on to your mortgage. When you swap your mortgage deal in November, you could consider a fully flexible mortgage (i.e. allows overpayments and drawdowns - this is important for having the option of withdrawing cash from your overpayment fund to repay credit cards at the end of any 0% deals) - this will put you in the position whereby you can start converting chunks of your mortgage to 0%.

Regarding the Egg Card - ensure you apply for the Egg Money card, not the Egg Card (very similar names but totally different cards).


As for your question, I always apply in my own name only; this is so that your wife can apply for an Egg Money card separately in her own name, meaning that both of you can contribute to the mortgage overpayment fund. The beauty of this is that you're likely to get bigger credit limits across two different accounts than two names on just the one account. At some point or other, my wife has had cards from the same lenders as me - although not necessarily at the same time as me.

Best of Luck.

duron

Having read the article from the mortgage free martinslovechild, please could someone let m know how to transfer 0% money from a credit card to a current account.

~daisy~_2

everything you need to know is in the thread but i hope this helps

I initially decided on a maximum amount that I could afford each month to pay towards the mortgage (let's call it my monthly mortgage fund or MMF). I used Martin's Budget Planner spreadsheet to help me in determining how much money was available to spend once all the other bills were paid, allowing a buffer for CDs & meals out etc.

Secondly, all the monthly minimum payments on the 0% cards were met from the MMF. Since the mortgage became almost fully 0% (I usually kept it just above the zero-line as I didn't want the bank to believe that it was fully redeemed), I simply had to meet my normal monthly mortgage repayment - the rest of the MMF was used for 0% minimum credit card repayments.

Going back to your original question, let's assume that I borrowed £5000 on two 0% cards. Let's also assume that the monthly minimum payment is 3%. After 12 months, I would have paid £0 in interest and £1,526 in monthly payments on each card, therefore I would owe £3,474 on card #1 and £3,474 on card #2.

Shortly before the end of the 12 months 0% expiry, I would apply for another card with a different bank. Let's assume that they offered me a £7,000 limit with a 12 month 0% period (let's call this card #3). I would request the balance transfer of both lots of £3,474 to card #3 (giving me an opening balance of £6,948). Cards #1 and #2 at this point would now have zero-balances (however, that wouldn't stop me from phoning each of these banks to ask about additional 0% offers, sometimes it worked, sometimes it didn't!).

With card #3, the whole process would start over again and I would simply make the minimum monthly repayments until near the end of the 0% period etc etc.


With over £100,000 to repay on credit cards, the monthly minimum payments (assuming 3% each month) are of course £3,000. However, I didn't pay £3,000 per month on credit card repayments - some cards (e.g. MBNA) charged just a £5 monthly minimum payment - even on a balance of £20,000 - very handy! Therefore, plan around however much you could realistically afford to repay on a monthly basis - some card lenders charge 2%, some 2.5% and some 3%, in other words - it varies. You must be able to afford at least your normal monthly mortgage payment plus the credit card minimum payments each month if you're planning to replicate what I've done.

(bear in mind that since I did this, balance transfer fees have of course become the norm on 0% deals over 6 months, so there's now these additional costs to bear in mind).

Anyway, because I decided that I wanted rid of the mortgage in 6-7 years, I pretty much divided my outstanding mortgage balance into 7 at the start and decided that this was the amount I would need to repay each year to succeed.

In the end, it took exactly 6 years & 5 months meaning that I needed to repay £129,000 divided by approximately 6.5 (i.e. £19,800 per annum). As my monthly mortgage payments were somewhere around the £600 marker, I was effectively paying £7,200 to the bank and the remainder (£12,600) was paying the 0% minimum payments. If there was any money left over, this would go into the mortgage overpayment fund or a savings account.

and this

You apply for a 0% card (let's assume this is with NatWest who offer you a limit of £5,000). You ask NatWest to transfer a balance of £5,000 from your Egg Money card. Bear in mind that the Egg Money card doesn't actually need to have £5,000 worth of debt sat on it. Now you have £5,000 on your new shiny NatWest card (at 0%) and a credit of £5,000 on your Egg Money card.

Now, to move the money from your Egg Money card, on the Egg website you simply request to transfer a balance from your current account to the Egg Money card. At this point, your Egg balance returns to zero and there's now £5,000 sitting in your current account. Once the money's in your current account, you're free to move it to wherever you like including a savings account or cash ISA. At the end of the NatWest 0% period, you'll either have to repay the amount borrowed or move the balance onwards to yet another 0% card.

This whole process is called stoozing and you can find lots more info at www.stoozing.com. Note that you'll have to pay minimum payments to NatWest for the duration of the 0% offer - this will reduce your amount outstanding at the end of 12 months to less than £5,000 but you'll need to decide how to fund those minimum payments, either withdrawing the cash from the original £5,000 borrowed or out of your own salary/savings.