Damn ERCs

Having checked all the sums, could have been mortgage free at the end of last month, there being enough in the bank to cover all debts (Owe on the mortgage, more below, and the car - though as that was on zero percent with a £750 contribution to the deposit, we'd have been mugs to pay on the nail - the dosh can sit in the bank where we can access it if required in the meantime). I'll admit, it would have been close, leaving only a couple of hundred quid, but it could have been done.

The only thing stopping this desirable event happening is the Early Repayment Charge. It actually works out cheaper to pay the mortgage+max overpayment for the remaining 23 months of the fix, then a lump for the remainder, than to pay the lot off today. And that's before we allow for any interest on the funds in the bank.

So, I'm declaring Effectively Mortgage Free, even if I have to wait for the actuality.
Hopefully will be back on this thread in a couple of years time to post the Actual Mortgage Free.

Haven't been keeping a diary on here - but the 7 year plan is going to target. Had some minor wobbles and adjustments, but the end date has not slipped. The spreadsheet has got more and more complicated - now well over 9 meg. Can be summarised as

Phase 1 [Yrs 1 and 2] - take £165k 75% LTV 25 year mortgage fixed for 2 yrs. Keeps payments relatively low, sell existing house (£95K) - pay for major works on new house.

Phase 2 [Yrs 3 and 4] - pay lump sum at end of 2yr fix. New 10 year mortgage for £65K fixed for 5 years (mistake here, should have gone for a shorter fix at the time). Continue with big works, make standard payment on mortgage.

Phase 3 [Yrs 5,6 and 7] - yippee, no more major works. Max the allowed overpayments on the mortgage - counting down to November 1st 2017. Car lump sum payment 4mths later. New 5 year plan then required to gain funds for a little pipe-dream by the time we're 55 ...


  • LuckyinlifeLuckyinlife Forumite
    1.6K Posts
    Sounds like a great plan and MF by the time you 55 will be great :]

    Could you not stay in the place your in now ? 95k one ?
    Mortgage--- [STRIKE]£67700 March 15[/STRIKE] [STRIKE]£65221 April 15[/STRIKE] [STRIKE]£64983 July 15[/STRIKE] [STRIKE]£64780 sept 15[/STRIKE] Remortgage [STRIKE]£67295 oct 15[/STRIKE] [STRIKE]£66599 Nov 15[/STRIKE] [STRIKE]£65878.73 Dec 15[/STRIKE][STRIKE] £64834 1st Jan 16[/STRIKE] [STRIKE]Feb 16 £64,511.89[/STRIKE][STRIKE] March 16 £64,056.40[/STRIKE] [STRIKE]April 16 £62550[/STRIKE] [STRIKE]May 16 £62,396.20[/STRIKE] Feb 17 £60.800
    Emergency fund 23k
  • edinburgheredinburgher Forumite
    13K Posts
    Part of the Furniture 10,000 Posts Name Dropper
    Nothing wrong with a little pipe dream in your 50s. I'd like a cutesy cottage with a sea view :)
  • JP08JP08 Forumite
    851 Posts
    Ok - should clarify - now on year 5 of that seven year plan. We are in phase 3. Just under two years to go until that mortgage is dead. Right at the beginning it was intended to be mortgage free by 50. It has slipped very slightly - we're now looking at by 50 for one, and when 50 for the other.

    The pipe dream involves selling up again round about 55 (ie seven years time), cashing in the house and throwing in some savings for a small B&B (3 room or less - easier on the officialdom) whilst still young enough to do it. Hopefully staying mortgage free. Health permitting, that should keep us occupied for the following 10 years. :) Should also be able to take a decent early pension at 55 (when you've been in a fully funded final salary scheme from a semi-public-sector employer for 30+ years by then, it looks a not unreasonable hope/assumption) to help the day to day funding along.
  • freedomby30freedomby30 Forumite
    38 Posts
    have you considered calling the bank and asking to shorten the term? It means you pay more each month but stop yourself paying so much interest. We are considering going from 30 years down to 14 and it only puts the payment up 300 a month. It will cost us a £30 admin charge and thats it. If you have enough savings to cover until the end of the fix they are willing to shorten loads more =) good luck and well done!
  • JP08JP08 Forumite
    851 Posts
    Interesting idea Freedomby30. Made me reach for the spreadsheet and do some number crunching.

    The results were a little underwhelming for us. Taking the term down from the original 10 years to 5 years (the end of the fix - I'm assuming they won't let us go any shorter than that),still overpaying to the max allowed, and allowing for any interest lost on savings due to the increased payments for the shortening gave a grand saving of under £250 ... less any admin fees.
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