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What to do after Mortgage free?

edited 30 November -1 at 1:00AM in Mortgage-Free Wannabe
15 replies 3.4K views
ptkloonptkloon Forumite
177 Posts
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edited 30 November -1 at 1:00AM in Mortgage-Free Wannabe
Hi,
I have been overpaying my mortgage by £400 per month and put in several lump sums of between £5k and £10k over the past 4 years. I have reduced the mortgage from £140k to under £30k and will hopefully have it paid off within a year.
My question is - what do we do once the mortgage is paid off? We will have an additional £1500 per month - are there any decent savings accounts that would be worth paying into? Do we get a buy to let mortgage, a holiday home or just stash the cash under the bed for a rainy day?
What has everyone else done that have successfully paid off their mortgage early?
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Replies

  • edited 25 April 2016 at 10:40AM
    LadyGnomeLadyGnome Forumite
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    edited 25 April 2016 at 10:40AM
    I have been MF before, it's a good feeling. We decided to move to a different area so got a new mortgage and rent out the old house. The rental income is part of our retirement planning.

    I would suggest that you have a think about using some of the cash you free up to create future income streams for retirement. The options will depend on your age, whether you already have a decent pension pot, your future plans and how much risk you want to take.
    Mortgage
    Start Nov 2012 £310,000
    May 2021 £180,773.53
    Reduction £129,226.47

    End Sept 2034 (but I have a cunning plan...)
  • greentgreent Forumite
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    We paid ours off less than a year ago. Since then we have paid for a new boiler (it literally went bang!) and a couple of extra radiators, new windows and doors (the old ones were very draughty) and have the money set aside for a kitchen refurb when we find someone to do it. We are also going on a 3 week holiday to Florida - which for 6 of us is not at all cheap! - but should be worth it :D We have a BTL which we will look to save up to repay when it finishes its course (in 7 years) and then the income will be fully ours (excluding minimal charges such as insurance and any ongoing repairs) Finally, our daughter starts uni this year and then we have 3 more children (at least one other of which will be off to uni) and we will be helping out - so our money is well and truly taken care of for the next few years at least! :D
    I am the master of my fate; I am the captain of my soul
    Repaid mtge early (orig 11/25) 01/09 £124616 01/11 £89873 01/13 £52546 01/15 £12133 07/15 £NIL
    Net sales 2021 £209.04/£500 Decluttering 2021: 600/1000
  • Pocket9sPocket9s Forumite
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    Well done on paying it all off hope to get there one day but having kids has slowed down my plans!

    Would advise against BTL at the moment due to all the coming tax changes making it not worth the hassle as you pay tax on the income not just the profit. Prices might come down over the next few years so might be worth a look in say 2020 if you can save cash and pick something up with low to no mortgage and a decent yield but I would want min 10% due to hassle of dealing with tenants, repairs, certificates voids etc etc.

    I would max out pension contributions then look at a mix of cash and low cost trackers from Vanguard or similar
  • bownyboybownyboy Forumite
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    Do you have an emergency fund?
    Do you have a pension?
    What about S&S ISA's?

    How old are you and when do you want to retire?

    All of these things will influence what you should do next.
    early retirement wannabe
  • hildosaverhildosaver Forumite
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    First things first - well done on getting to this position within 4 years, that is an amazing achievement.

    If I was you once the mortgage is settled my next focus would be retirement planning. Also don't forget to enjoy yourself! After all that hard work it is ok to splash out a little.
    I am insane and have 4 mortgages - total mortgage debt £258k. Target to zero = 10 years! (2030)
  • enjoyyourshoesenjoyyourshoes Forumite
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    Reiterate what bownyboy has suggested:-

    1.0 SIPP (Pension) contributions are tax efficient, but its a long term investment.

    2.0 Stocks and shares ISA. Again investing not saving and its for the long term (min 5+ years)

    3.0 Standard savings are detailed on MSE site, current accounts including Lloyds Club, TSB Classic plus, Santander 123 & I think Nationwide. Also look at Regular savings (£250-400 pm providing 6% interest) You could use a number roof these consecutively)
    Debt is a symptom, solve the problem.
  • ptkloonptkloon Forumite
    177 Posts
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    bownyboy wrote: »
    Do you have an emergency fund?
    Do you have a pension?
    What about S&S ISA's?

    How old are you and when do you want to retire?

    All of these things will influence what you should do next.

    Yes, we have enough to keep us going for at least 6 months

    I have a pretty good final salary pension that I have been paying into for over 10 years

    I started a S&S ISA approx 2 years ago and am hoping to add to it in the future

    What about AVC's? How much of these am I allowed to pay into?
  • edinburgheredinburgher Forumite
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    Would advise against BTL at the moment due to all the coming tax changes making it not worth the hassle as you pay tax on the income not just the profit.

    But you always paid tax on all of the income?
  • LadyGnomeLadyGnome Forumite
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    I think you can contribute up to your annual earnings or £40k which ever is the lower. However, if it is a defined benefit scheme then there is a method of valuing the employers contribution which reduces the £40k annual allowance. I would check on the pensions board as there some more expert posters than me on there.
    Mortgage
    Start Nov 2012 £310,000
    May 2021 £180,773.53
    Reduction £129,226.47

    End Sept 2034 (but I have a cunning plan...)
  • LadyGnomeLadyGnome Forumite
    599 Posts
    Sixth Anniversary 500 Posts Name Dropper Combo Breaker
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    But you always paid tax on all of the income?

    You used to be able to offset mortgage interest against the income for tax purposes. GO did away with this from April for private individuals but not corporate landlords.
    Mortgage
    Start Nov 2012 £310,000
    May 2021 £180,773.53
    Reduction £129,226.47

    End Sept 2034 (but I have a cunning plan...)
This discussion has been closed.