Starting the complicated journey to Mortgage-Free

I've been deliberating over starting a diary here and the more I've thought about it, the more I think it can only be a good thing to get thoughts down in writing to help keep me motivated. Ultimately my DH and I would really like to be mortgage-free, but we are hoping to actually take out another mortgage before we even get close to it! I think the theory behind it is sound, but I've never really asked anyone else for advice about the way we do our finances. One of those things you just don't really talk about with friends I guess, and we don't have a financial advisor.

Brief outline...

We own a flat that has about $52000 left on the mortgage that I think it due to be paid off in 2030. This flat is actually only in my name but since we have been together we have both contributed to the mortgage.

At the moment we live in the United States and we have been renting out the flat. It doesn't generate any extra income but the mortgage is paid every month. Two months ago I added a very basic overpayment of 20GBP to the regular payment of 329GBP with the goal of eventually making that a larger amount (125GBP ideally) but in the mean time at least it is contributing to shaving about a year off the mortgage.

We are in the early stages of moving back to the UK and I've been trying to put some cash aside for a deposit on an entirely new house wherever we end up. I may be under some sort of misconception that DH could still be eligible for a first time buyer mortgage that might be of some benefit to us when we buy our next house. I won't have an income immediately so the mortgage would be based only on his salary anyway. I'm desperately trying to get to 20000GBP which would have been achievable

BUUUUUUT

I have to give up my job at the end of September - VISA restriction - and we will no longer have my income coming in.

So my plans for overpayment and saving for new mortgage have been challenged somewhat AND we are going to have a new baby joining us in the fall...

We already have a budget every month but we haven't stuck to it as strictly as we could have, and I'm seriously beginning to panic about how we will cope on one salary. Plus it is infuriating for our savings rate to go from over 30% to only 12% but I just can't figure out how we can save anymore.

Anyway, this is probably enough to start. I've joined the August grocery challenge as that is one area I'm really keen to make work for us. Really motivated by all the encouraging posts so I'm hoping this will really help me out.
Deposit Fund = 9754/20,000
OP Fund (2016) = 250/700
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Replies

  • Hi just wanted to say Hi. I'm due a baby in Sept. Also paying off a mortgage on my original flat that I bought on my own in 2003. It's rented out and while it makes no profit it's just about washing it's own face if you know what I mean.

    Good luck on your journey:j
    MFW Target Jan 2016 Sub €100k
    Mortgage June 2015 [STRIKE]€130,655[/STRIKE] July 15 €110,969
  • Nancy - we must have been reading each other's threads at the same time because I just left a comment on yours! :)
    Deposit Fund = 9754/20,000
    OP Fund (2016) = 250/700
  • getmore4lessgetmore4less Forumite
    45K Posts
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    Sounds like savings will be taking a hit so if you want to plan for a return to the UK you might need a rethink.

    Sort out your budget for single income, start that now before it stops.

    Starting with the flat that needs to be keystone to the plan
    Amount outstanding
    value.
    interest rate.
    Term
    rent(gross and net if using an agent)

    What sort of areas might you come back to house prices vary a lot and this will make a big difference to the mortgage/deposit numbers.
  • edited 3 August 2015 at 4:43PM
    MumofIowansMumofIowans Forumite
    51 Posts
    edited 3 August 2015 at 4:43PM
    Thanks for your thoughts getmore4less! I already have a budget in place for when we are down to single income, I'm just worried about making sure I can stick to it. Ultimately we won't have a choice so we will just have to knuckle down where necessary. Savings will definitely be taking a huge hit, much to my distress!

    The flat that we have a mortgage on... I'm frustrated that I don't have any paperwork handy here to update precise figures BUT I did receive the annual statement in the mail and I know it is at home somewhere - I'm at work just now.

     

    Amount outstanding: I’m pretty sure this is around £51022 – started at £70,000

    Value: based on other properties in the area I would say ~£76,000

    Interest rate: 2.5%

    Term: 25 years, so due to be paid off 2030

    Rent: £359 per month

    Mortgage payment: £349.72

     

    There are a couple more things to consider… The roof needs replaced at some point and the only reason we haven’t done this already is because it has to be split with the downstairs neighbor and they have been dragging their heels on it ever since we moved in 10 years ago! I anticipate this will cost £3000-4000. The driveway has also recently suffered from some sort of disrepair but that hasn’t been fixed yet because it is supposed to be split with the neighbor on the other side of the driveway and he hasn’t responded to any requests to discuss it. The initial quote we got was way more than we would like to pay on our own but wouldn’t be so bad if it was split. *sigh* It is a pain to be so far away, and we don’t really like our rental agents but we always thought the most important thing was to get the mortgage covered whilst we were out of the country. Then when we realized we probably wouldn’t be moving back to the same area we thought it might be worth trying to pay off that mortgage a little sooner whilst saving for a deposit on a completely new mortgage.


    In terms of where we might move to… it’s really hard to say. At the moment, and it is very early days, DH is speaking to people in Liverpool, Sheffield and York. We think we would probably rent for at least a year to try and build up some more savings and get used to the area before buying something. I would think we could afford something around £140,000 so I’ve been thinking we would need at least £20,000 for deposit. I could be completely wrong on every level!!

    Phew. It seems like a lot to think about, but I think it is best that we are thinking about these things just now and not later.
    Deposit Fund = 9754/20,000
    OP Fund (2016) = 250/700
  • Hi.
    Thanks for popping into my diary. That's rough that you'll lose out on the miserable bit of maternity pay you would have gotten. Makes it very hard.
    Have you bought much for the new baby? I've bought from a few second hand shops and a friend has given me a loan of a few things. So not much spent really.

    I'm in my stride now of mortgage OP's so it will hurt to have to stop them. So that's why I use the 1000 bricks to mortgage freedom system. I figure I won't be able to make large OP's but perhaps I can sock together the value of one brick (€130 = 1/1000 value of my mortgage) over a few weeks and OP that. It's not much but it will keep me in the game.

    You sound like your churning a lot of things around in your head. I can empathise it really is hard to know what's for the best. Is your hubbie good with budgeting etc. Mine is a disaster even though he earns substantially more than me. I have to do it all without making too much of a fuss about it but I've always been the sneaky type :rotfl:

    Hope you're having a good weekend and getting some rest for you and baba too:A
    MFW Target Jan 2016 Sub €100k
    Mortgage June 2015 [STRIKE]€130,655[/STRIKE] July 15 €110,969
  • We've been really careful about new things for the baby. I feel a little guilty for her but most of the things we have gotten second hand. I got nearly all the clothes she will need for the first 3 months for $40! And there were a few blankets in there too. I did look through all my son's clothes too and there were quite a few pieces we can use for a girl too so that has helped. We do need a new baby monitor because ours broke, but I'm just going to get a used one on ebay. We are going to get the same one that we had before and it is much cheaper to buy used. I might need to buy some new bottles too, but I'm planning to breastfeed the first year so I might be able to make do with the ones we already have. I'd like a new breastpump as well but that should mainly be covered by my health insurance.

    I've been looking at our accounts and I guess my decision is to keep putting as much aside as possible for our new house, but I'll also put a little aside every month to OP on the flat. My husband doesn't take much to do with the financial plan - I do show him, but he seems happy as long as he has a beer budget and doesn't have to buy second hand clothes. :) He has a real problem with used clothes, but our credit card earns rewards that we usually use for topping up the wardrobe, and to be honest, it doesn't happen very often. I do find it stressful some months when I'm trying to spend as little as possible so I have to be the one saying 'no', but we are getting better at discussing the budget on a more regular basis.

    The month's grocery budget is looking pretty bad already - but I've made a ton of meals for the freezer for once the baby is born and that has come from August's budget even though we won't use it this month. I'll still try and meet our target but I probably won't beat myself up if we go a little over. One piece of good news - DH got paid an extra $119 this month. We aren't exactly sure why so I've just moved it straight into savings just now, but it would be nice if that was a permanent change! We also decided against travelling for a family wedding this past weekend so I moved that cash into the 'flat account' for making an extra payment at the end of the year. I also spent some time putting items on craigslist - the US equivalent of gumtree - and one thing has sold already. Woop woop. I need to have a hunt for other items we want rid of now too. :)

    My other thought from reading diaries is that we don't really have a monthly 'family fund' and that might be something we have to address. Not sure where I would take the money from right enough, but as DS gets bigger we are probably going to have to spend a little extra cash on outings etc. Food for thought.
    Deposit Fund = 9754/20,000
    OP Fund (2016) = 250/700
  • Feeling really motivated this morning. Had discussion with DH re: getting rid of the flat mortgage in 10 years instead of 15 and I was surprised how on board he was with it all. We've made so many changes to the way we live in the last 2 years I guess I shouldn't have been surprised but it made me feel really good about our plans. :) They are all in various stages of infancy and we don't really know what our immediate future is going to hold, but we seem to be on the same financial page and that's a huge plus.

    We have a couple of savings accounts that are for the kids. We have always intended to have 20,000 saved for each of them by the time they are 21. Not for just giving to them necessarily but to help cover uni, marriage, cars etc in some way. We no way intend to just provide these things but we would like to have the money there so that we have the option if we want it. Discussing it with DH this morning, we were thinking it would make more sense to pay off the 51,000 outstanding on the flat mortgage sooner, and then we will have the option of selling it for closer to 70,000 (conservatively) at some point in the future that would still allow us to have savings for the kids by the time they reach 21. I mean, DS is 2 and DD is still cooking, so technically we have plenty time. :) I told DH I'd look at some calculators to send him some figures so at least we would have some sort of mid-term goal that we were both on board with.

    *sigh* I do realize we are about to lose a wage and that will make meeting any big targets a long way off, but even being able to see some money building up in the meantime would be motivational I think. And we don't have much of an emergency fund, only 1000 just now. So that is something to consider too.

    I keep forgetting we have to pay for the baby arriving too, but I'm hoping that all being well, this will only set us back about 1000 bucks. I'm pretty sure DS only cost around that much, so unless I have a section, it should be pretty similar. I have purposefully not included my final wage in our budget so that can be set aside for the medical bills. I definitely picked the wrong country to have my children in! :)
    Deposit Fund = 9754/20,000
    OP Fund (2016) = 250/700
  • Oh, and the lady came to collect the diaper pail last night (I know, I'm going to have to get used to using British lingo again soon!) so that's an extra 10 bucks in the OP fund. And time to find more things to try and sell. I'm sure DS has some decent clothes that are too small and are for the winter so I'll have to start looking those out.
    Deposit Fund = 9754/20,000
    OP Fund (2016) = 250/700
  • The last few days have been NSD - woop - but I'm going to have to spend a little today. DH and I have our birthday today so I'm going to pick up something nice to make for tea. We already cancelled gifts and cards because we really don't *need* anything and we would feel guilty spending money on something unnecessary and frivolous when we are trying so hard to save. We were going to go out for a meal but we have some friends coming to visit this weekend now and it is likely we will eat out as part of that so we really don't need to go out tonight too. Fortunately our friends who were going to babysit who are super flexible and will come another night instead.

    So I'll nip to the grocery store after work and maybe get a nice steak to share. I would usually buy a nice bottle of wine too but being pregnant means I'll probably just get DH a nice bottle of beer instead. That will save a little bit of money! My boss took me out for lunch yesterday and a friend is taking me out today so I feel pretty spoiled. Even when someone else is paying I try to get the best bang for my buck, so I'm not a bad lunch partner! :)

    No takers on any other craigl!st items so far but I'll leave them out there and renew them periodically. We have a basic electric guitar and amp that I haven't listed yet because I don't know how much to ask for it. We got given it by DH's work colleague who moved last year but we don't use it or need it and it would be better off out of our hands! Students will be back in town soon so I should get it listed asap though.

    Not much else to report. Fancied a twix from the vending machine yesterday - my pregnancy obsession - but held out. Now I'm challenging myself to avoid said vending machine all month. Good for the coffers and my rapidly expanding waistline. :)
    Deposit Fund = 9754/20,000
    OP Fund (2016) = 250/700
  • Hey Mum

    I'm really enjoying your posts because your situation is so similar to mine.
    It's great your DH is on board. It takes time I think for the penny to drop. I'm still waiting here but lately I've noticed my OH making better decisions - it's quiet cute really, he rings to tell me when he's saved money or didn't buy something he didn't really need.

    Well done on Diaper pail. I've about four things for sale at moment and I'm not in a rush but wouldn't mind a bit more action on my adverts!!!

    I think your idea to lob off as much of mortgage as possible is very sensible. You'll need as clean a slate as possible when you move back to UK.

    Hope you're feeling well. We definitely deserve a glass of something when we have our babies :beer:
    MFW Target Jan 2016 Sub €100k
    Mortgage June 2015 [STRIKE]€130,655[/STRIKE] July 15 €110,969
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