Quarter of a million reasons to be Mortgage Free!

coxj2901

My monthly payment has gone out today for £1045.09 and my regular standing order for my over payment has gone out for £546.00. I have checked my online banking and interest has been added to my account of £468.98 which averages around £15.63 per day for November.

Dec 2015 Target

Monthly Over payment Target . . . £1,750.00
Actual Monthly Over payments . . . £546.00
Shortfall / Surplus . . . . . . . . . . . . (£1,204.00)

2015 Targets (Only 2 months!)

2015 Overpayment Target . . . £3,500.00
2015 Actual Overpayments . . . £2,296.00
Shortfall / Surplus . . . . . . . . . (£1,204.00)

Total Summary - Nov 2015 to present

Cumulative Overpayments . . . . . £2,296.00
Cumulative Interest Saved. . . . . . £1,878.00
New estimated Daily Interest . . . . . £15.50

Mortgage End Date

I was playing around with some figures and if by some miracle I keep on making overpayments of £1,750 per month and interest rates remain unchanged my mortgage would finish in 8 years and 1 months time, which happens to be 2 days before my 47th birthday! It's a big ask but at least I'm putting to paper a provisional date in the diary of 27th January 2024!

Luckyinlife

Great graph and even grater Figures :] I hate the amount of interest they charge us :[ really in crazy when u sit down and think about it ohh because we want to own a home we are the ones who got to pay the int rest grrrrr rant over

Does your int rest come down a bit every month ?

lippy1923

Loving your energy on this thread. I am subscribing

coxj2901

We've received our dividends early this month so I have made an overpayment to the mortgage of £1,204.00 which hits December's target :j I am also awaiting a refund from Northern Rock for around £150 for a complaint so if that comes before the end of the month I could even exceed my target

Dec 2015 Target

Monthly Over payment Target . . . £1,750.00
Actual Monthly Over payments . . . £1,750.00
Shortfall / Surplus . . . . . . . . . . . . £0

2015 Targets (2 months)

2015 Overpayment Target . . . £3,500.00
2015 Actual Overpayments . . . £3,500.00
Shortfall / Surplus . . . . . . . . . £0.00

Total Summary - Nov 2015 to present

Cumulative Overpayments . . . . . £3,500.00
Cumulative Interest Saved. . . . . . £2,881.00
New estimated Daily Interest . . . . . £15.43

Daily Interest

It's really nice seeing the daily interest coming down and I think monitoring all the little benefits you get from overpaying really helps in keeping you focused!

MFW_ASAP

coxj2901 wrote: »

Hi MFW_ASAP, you make some good points! In response to your comments I have been thinking about my pension contributions for a while and was unsure whether to start increasing them sooner rather than later but I haven't so far because the mortgage balance makes me nervous! It's a lot bigger than it should be for someone of my age and I really wanted to have a good old blast to reduce it now that my unsecured debt has all but gone.

However to make matters worse my wife doesn't have a pension at all so my first priority was to start a pension for her. It makes sense to split our tax allowances once we reach retirement with all other things being equal so from January we will start contributing £250 per month to her pension scheme.

I have around £25,000 in my pension scheme which again is a small amount for someone my age so I need to increase this sooner rather than later and as you say it is tax efficient to have an employers contribution on top of my personal contribution. This will be on my list of things to review Q1 2016!

It is also a good point mentioning the extra running costs of the annexe. I need to factor these into next years budget as this will obviously have a negative impact on our disposable income.

With regards to your last point my understanding was that you lose the child benefit when 1 member of the family earns more than £50,000 per annum. When we set the company up our accountants advised me to split my shares with my wife and the majority our income is received through dividends. Therefore neither one of us has gone above the £50k threshold so far. It seems a strange rule that we can earn £99,999 as a couple and qualify but if I was the sole wage earner and earned £50,001 we wouldnt qualify :huh:

Ahh, that makes sense now. I saw the Income Support payment in your SOA and so assumed that your missus was in receipt of this and so you were the only wage earner. The £50k threshold for CB is a bit random. As you say, a family with an income of £55k loses out (if one partner earns all the £55k) yet a family with an income of £99k keeps it (if both partners earn 49k each). I don't understand though how you can receive income support though if you're both earning so much? Again, I'm just being nosy to crib ideas if I ever go back to contracting, so don't feel you have to answer.

I was freelance as an IT consultant for a few years and 'hired' my missus as a secretary. I paid a company pension to both myself and my wife. It was a good way to get money out of the company for free (though we couldn't touch it) and reduce my corporation tax. We did the same as yourself and used the dividends to blitz our mortgage. The trouble was we then bought an even more expensive house and so we're back at square one. D'oh!

I also had income protection insurance that paid a set amount of money until retirement age if I had an accident or illness that prevented me from working. It was quite cheap (again, the company paid so it reduced my corporation tax bill) and it gave great peace of mind.

coxj2901

Christmas is all paid for now and I've worked out that I can pay an extra £150 off the mortgage which exceeds my December target! I have also received a massive 81 pence from a dividend from my monthly share builder account! I really like the thought of increasing my passive income to the point that it exceeds my monthly outgoings! A long, long way off though

Dec 2015 Target

Monthly overpayment target . . . £1,750.00
Actual monthly overpayments . . . £1,900.00
(Shortfall) / Surplus . . . . . . . . . . . . £150.00

2015 Targets (2 months)

2015 overpayment Target . . . £3,500.00
2015 Actual overpayments . . . £3,650.00
(Shortfall) / Surplus . . . . . . . . . £150.00

Total Summary - Nov 2015 to present

Cumulative overpayments . . . . . £3,650.00
Cumulative interest saved. . . . . . £3,006.00
New estimated daily interest . . . . . £15.44

Cumulative Interest Saved

I've worked out that I have now saved just over £3,000 in interest payments by making the overpayments that I have in the last 2 months. As per usual a graph would fit quite nicely here :rotfl:

Luckyinlife

Amazing :] such a good month For you well done and the money saved on interest would pay for a lot of things :]

Dalradian

Would definately second the advice re pensions. I made sure i was investing for retkrement plus had emergency fund before starting to seriously overpay my mortgage. There are great tax benifits, but paying in over years and using cummulative growth rather than scra bling around 10 yrs before retirement is to be recommended, especially with the tax breaks due to owning the company

MFW_ASAP

Dalradian wrote: »

Would definately second the advice re pensions. I made sure i was investing for retkrement plus had emergency fund before starting to seriously overpay my mortgage. There are great tax benifits, but paying in over years and using cummulative growth rather than scra bling around 10 yrs before retirement is to be recommended, especially with the tax breaks due to owning the company

With successive governments threatening to remove the tax break for higher rate tax payers, it's not a bad idea to try and maximise pension investment while you can.

coxj2901

Thanks for the posts regarding the pension and it's made me take a second look at what I am contributing each month. I have played with some figures on various pension calculators and I can see that there will be a huge gap between my required income at retirement age and my current projected income levels. (ignoring any state pension)

Therefore I have increased my pension contributions to £400 per month starting from Jan 2016 and have also sent back all the forms to my financial advisor to open a pension for my wife which we will start at £400 per month also. I think our initial target is going to be a pension of £15,000 per annum each at retirement age. Out of the £800 we will be putting into the pensions each month my company will be contributing £400 of this to ensure we receive the tax advantages of doing this (NB: figures to be confirmed after discussions with the other shareholders)

It has also prompted me to look at my existing pension and it appears that my annual management costs are 1.3% which seems excessive. After doing some research it appears that the UK average has dropped to around 0.51% so this is something I have challenged so watch this space!

I have worked out my expenses grouped together as a % of my income and can see that my mortgage payments are still taking the lions share of where any spare money is going. I am now contributing 6.2% of our household income as a personal pension contribution and my company is contributing the same. I think this is one to review on a bi-annual basis.