Ramjet's Mortgage Free Mission

roger_ramjet

So it starts...

Current mortgage is £76400.96 - with monthly repayments currently at £798. The mortgage is 2 years into a 5-year fix at a rate of 2.65%. Included in the repayment is approx. £40 worth of overpayments. I would be allowed under the terms of the mortgage to pay an additional £120 per month whilst the fix is in place.

Based upon the above, the mortgage will be paid off in Jan 2024. However, I have a loan with a small outstanding balance of £1300ish which I should clear in the next month or so - leaving me at least £300 extra available. This will allow the extra £120 to be paid off, bringing forward the repayment date to Jan 2023.

However, I would like to bring this date forward to around mid- 2019, just over 5 years. Whilst my overpayments are currently limited, I can build up a pot and make a substantial payment when the fixed period ends, and then up the monthly repayments to the required level.

5 years = 60 repayments = £1273 per month. With the £120 increase, would take my repayments to £920 - meaning I need to save £353 per month over and above to make this plan work.

Does that seem right?

My income is approx. £55k of which net income is approx. £3700 per month and the monthly bills excluding food, fuel etc is approx. £1500. Add in the monthly spend, leaves about £1500 to play with - but I have had a few big spends in the last couple of months, and have paid off £7k from the loan since Oct 14.

roger_ramjet

Whoops - still living in 2014! So only 50 payments left. I thought my maths was suspect!!

Luckyinlife

Great job i have a similar amount mortgage 68k i recently got im at the start of my journey and am paying much higher interest due to my situation currently.

With your wage your on you could OP and save extra on the side and pay it off in a few years time if you can save most of that 1500 extra you have

Good luck ill look forward to following your journey :]

roger_ramjet

£1528 per month then, so need to put aside £600 per month.

roger_ramjet

Day 2.

Another £200 paid off the loan - taking the balance down to £1161.36. It will be a nice little psychological boost to get it below the £1000 mark. And with the regular payments of £300 per month - it should be gone in 4 months even if I make no further repayments. However, I want it gone by April, then I can turn my attention to the mortgage.

However, I do have 3 mortgages in total. Two in connection with my family residence - with a total £76400 outstanding (in post 1). I have a further mortgage on a rental property I own. Outstanding balance of £77600 against a current value of approx £145k. This is currently generating a net income of £546 against a repayment mortgage of £378. Since this is an investment, I am parking this until the mortgage on my family home is paid for.

roger_ramjet

Calculations would suggest if I can save £1000 per month, then I should build enough savings to pay off the mortgage by Mar 2019. This, does not take into account any interest generated on the savings or interest saved on the mortgage through overpayments. Rather than recalculate based upon these changes, I'll think I'll keep it simple. Up the overpayments to the max allowed during the fixed rate period, and still try and save £1000 per month, once the loan is paid off. The loan should given me £400 towards that, need to budget to sort out the rest.

roger_ramjet

Another £12.34 paid off the loan. Small amount but all helps. I feel I obsessing about paying off this loan at the moment, I like adjusting the numbers on my spreadsheet!

However, I want to get to the stage where the monthly loan repayment disappears altogether, since this will boost significantly my disposable income.

Luckyinlife

I think taking into account the saving without any interest is a good idea any extra for nothing is a bonus :]

Defiantly doing the right thing paying off the loan first then you can do the mortgage :]

roger_ramjet

The loan, now being relatively small means it is a quick win, and a good psychological boost. Likewise, having 2 mortgages on my family house is useful, since one is about £16k the other is £60k. The smaller seems achieveable to pay off. If I can some muster the effort to save £1k per month, it's covered in just over a year, and keeps me on target. So that is what I am going to do. I would also like to target getting my mortgage balance equal to my annual salary. Current multiple is around 1.5. You should see my spreadsheet - it's like a brain dump!

roger_ramjet

Good news!

Just phoned in for a resettlement figure on my loan was surprised it was approx £880, reducing to £446 with an interest rebate. So the upshot is that the loan is repaid. Gone. Done!
It's like christmas.

Onto the mortgage!

roger_ramjet

Total overpayments in place £150 per month or £1800 per annum.