Getting rid of a London-sized Mortgage

Hello,

I tried to look for other situations which were like mine but you all seem to have everything so under control. :j You are all very inspiring so I thought I would put up my story too.

I bought a house in June with my partner for £425,000 (London) and our mortgage is £318,000. Our mortgage payments are about the same as we were paying in rent but we have over 3 times the space now. Yes this a huge mortgage, no, we don't make a lot but the time came for us to buy instead of rent.

Plan:
1. Call bank tomorrow and see if I can 'round up' our mortgage which will cut off 2 years from the term.
2. Get £10,000 in savings again as an emergency fund before over paying mortgage - I don't have any money at all any more.
3. Get in a tenant from November 1st and rent the second bedroom for hopefully £700/month and apply that as over payments.

It would be amazing if we could pay off the mortgage 10 years early. I would be just over 40. I have a lovely spreadsheet which calculates all of this for me. If we were to only apply the extra rental money to the mortgage, we would be able to pay off 10 years early.
Mortgage started at £318,000 in June 2016. Original MF - 2041 :eek:
2nd Property Mortgage at £275,000. Mortgage free: 2049 :eek:
Total OPs: £29529
«13456730

Comments

  • CathT
    CathT Posts: 7,111
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    Hi tropically. There are a few mfw with supersize southern mortgages.Tilly had a similar mortgage and is now mortgage free.a

    Good luck, the overpasyments really add up and make a difference. Having a diary is key too. You will find lots of tips and support on here.
    Feb 2024 - part 1 - £32,339 part 2 - £25,218 Total - £57,557 45 months to go!
  • User1489
    User1489 Posts: 400
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    edited 30 March 2017 at 7:26PM
    Hello! I started off with £185k and after a year am now at £165k. I'm on the south coast.

    Well done for taking the initiative to join us, and it depends on your approach but if you want some thrift, check out my threat,

    Man v Mortgage
    Baby Step 1 - £1k Emergency Fund - COMPLETE
    Baby Step 2 - Pay off all debts except the Mortgage - £9,326 to go
    Baby Step 3 - Save 6 months of expenses into full Emergency Fund - £4,300 to go

    Baby Step 4 - Put 15% into Pension
    Baby Step 6 - Pay off the Mortgage early
    Baby Step 7 - Live like no-one else :D
  • It sounds like a very good plan, good luck with it. Having a lodger will help a lot, but if you can just keep out of shops as much as possible, which is not easy in London, and reduce spending, you will soon see a massive reduction in outgoings. Why not try a no shopping day, followed by two days, then three.... If you don't go into a shop for one thing, there is far less chance of coming out with three things!
    Paid off mortgage nine years early in 2013. Now picking and choosing our work to fit in with the rest of our lives!
    Still thrifty though, after all these years:D
  • So you have to be a mixture of everyone :)

    Good luck
    Mortgage restart June 2018 £119950Re mortgage August 19 £110470, … Mortgage November 22 £85600 final 0% CC 3300Home renovations - £65000, mid 2018 - mid 2022
  • It sounds like a very good plan, good luck with it. Having a lodger will help a lot, but if you can just keep out of shops as much as possible, which is not easy in London, and reduce spending, you will soon see a massive reduction in outgoings. Why not try a no shopping day, followed by two days, then three.... If you don't go into a shop for one thing, there is far less chance of coming out with three things!

    Definitely good advice. I am going to try to go for a No-Spend October and only pay for travel and food from a supermarket (not out.) It's eating out that is a big killer.

    I have encountered the first obstacle. I tried to arrange an overpayment of my mortgage today. I asked if I could round up to the nearest £100. They told me that I would have to make an entirely new application. I would have to fill out the financial forms again and have two 40 - 50 minute conversations with the financial advisors to assess affordability. This seems excessive for an extra £50/month contribution. Is this normal? Why wouldn't they just round it up, given that I'm certainly not going to have a mortgage with them in 23 years and the rounding only cuts off 2 years?
    Mortgage started at £318,000 in June 2016. Original MF - 2041 :eek:
    2nd Property Mortgage at £275,000. Mortgage free: 2049 :eek:
    Total OPs: £29529
  • So I have now worked up a Statement of Affairs. I have spent the last two years collating and collecting data on our expenditures so this budget is from 2 years of real data. I split everything into separate accounts so things like gifts are saved up along the way. There is a glaringly obvious way to save sitting under that 'Entertainment' category... I know that it is truly terrible...


    Statement of Affairs and Personal Balance Sheet

    Household Information

    Number of adults in household........... 2
    Number of children in household......... 0
    Number of cars owned.................... 0

    Monthly Income Details

    Monthly income after tax................ 2250
    Partners monthly income after tax....... 2000
    Benefits................................ 0
    Other income............................ 0
    Total monthly income.................... 4250


    Monthly Expense Details

    Mortgage................................ 1309
    Secured/HP loan repayments.............. 0
    Rent.................................... 0
    Management charge (leasehold property).. 0
    Council tax............................. 75
    Electricity............................. 20
    Gas..................................... 10
    Oil..................................... 0
    Water rates............................. 42
    Telephone (land line)................... 0
    Mobile phone............................ 30
    TV Licence.............................. 0
    Satellite/Cable TV...................... 7.99
    Internet Services....................... 23
    Groceries etc. ......................... 300
    Clothing................................ 100
    Petrol/diesel........................... 0
    Road tax................................ 0
    Car Insurance........................... 0
    Car maintenance (including MOT)......... 0
    Car parking............................. 0
    Other travel............................ 280
    Childcare/nursery....................... 0
    Other child related expenses............ 0
    Medical (prescriptions, dentist etc).... 0
    Pet insurance/vet bills................. 0
    Buildings insurance..................... 20
    Contents insurance...................... 20
    Life assurance ......................... 0
    Other insurance......................... 0
    Presents (birthday, christmas etc)...... 70
    Haircuts................................ 0
    Entertainment........................... 700
    Holiday................................. 400
    Emergency fund.......................... 300
    Charity................................. 100
    Total monthly expenses.................. 3806.99



    Assets

    Cash.................................... 0
    House value (Gross)..................... 425000
    Shares and bonds........................ 2500
    Car(s).................................. 0
    Other assets............................ 0
    Total Assets............................ 427500



    Secured & HP Debts

    Description....................Debt......Monthly...APR
    Mortgage...................... 318000...(1309).....1.75
    Total secured & HP debts...... 318000....-.........-


    Unsecured Debts
    Description....................Debt......Monthly...APR
    Total unsecured debts..........0.........0.........-



    Monthly Budget Summary

    Total monthly income.................... 4,250
    Expenses (including HP & secured debts). 3,806.99
    Available for debt repayments........... 443.01
    Monthly UNsecured debt repayments....... 0
    Amount left after debt repayments....... 443.01


    Personal Balance Sheet Summary
    Total assets (things you own)........... 427,500
    Total HP & Secured debt................. -318,000
    Total Unsecured debt.................... -0
    Net Assets.............................. 109,500


    sorry to Stoozing - I can't post links.
    Mortgage started at £318,000 in June 2016. Original MF - 2041 :eek:
    2nd Property Mortgage at £275,000. Mortgage free: 2049 :eek:
    Total OPs: £29529
  • MallyGirl
    MallyGirl Posts: 6,510
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    Tropically wrote: »
    So I have now worked up a Statement of Affairs. I have spent the last two years collating and collecting data on our expenditures so this budget is from 2 years of real data. I split everything into separate accounts so things like gifts are saved up along the way. There is a glaringly obvious way to save sitting under that 'Entertainment' category... I know that it is truly terrible...


    Statement of Affairs and Personal Balance Sheet

    Household Information

    Number of adults in household........... 2
    Number of children in household......... 0
    Number of cars owned.................... 0

    Monthly Income Details

    Monthly income after tax................ 2250
    Partners monthly income after tax....... 2000
    Benefits................................ 0
    Other income............................ 0
    Total monthly income.................... 4250


    Monthly Expense Details

    Mortgage................................ 1309
    Secured/HP loan repayments.............. 0
    Rent.................................... 0
    Management charge (leasehold property).. 0
    Council tax............................. 75
    Electricity............................. 20 Brilliantly low - bravo
    Gas..................................... 10Brilliantly low - bravo

    Oil..................................... 0
    Water rates............................. 42 would probably be cheaper with a meter when there are just 2 of you
    Telephone (land line)................... 0
    Mobile phone............................ 30
    TV Licence.............................. 0 No?
    Satellite/Cable TV...................... 7.99
    Internet Services....................... 23
    Groceries etc. ......................... 300 You can drop this by £100
    Clothing................................ 100
    Petrol/diesel........................... 0
    Road tax................................ 0
    Car Insurance........................... 0
    Car maintenance (including MOT)......... 0
    Car parking............................. 0
    Other travel............................ 280
    Childcare/nursery....................... 0
    Other child related expenses............ 0
    Medical (prescriptions, dentist etc).... 0
    Pet insurance/vet bills................. 0
    Buildings insurance..................... 20
    Contents insurance...................... 20
    Life assurance ......................... 0
    Other insurance......................... 0
    Presents (birthday, christmas etc)...... 70
    Haircuts................................ 0
    Entertainment........................... 700 My word!
    Holiday................................. 400
    Emergency fund.......................... 300 Where is this now - you have no cash assets? Or is it a plan for the future?
    Charity................................. 100 Very generous but can you afford it?
    Total monthly expenses.................. 3806.99



    Assets

    Cash.................................... 0
    House value (Gross)..................... 425000
    Shares and bonds........................ 2500
    Car(s).................................. 0
    Other assets............................ 0
    Total Assets............................ 427500



    Secured & HP Debts

    Description....................Debt......Monthly...APR
    Mortgage...................... 318000...(1309).....1.75
    Total secured & HP debts...... 318000....-.........-


    Unsecured Debts
    Description....................Debt......Monthly...APR
    Total unsecured debts..........0.........0.........-



    Monthly Budget Summary

    Total monthly income.................... 4,250
    Expenses (including HP & secured debts). 3,806.99
    Available for debt repayments........... 443.01
    Monthly UNsecured debt repayments....... 0
    Amount left after debt repayments....... 443.01


    Personal Balance Sheet Summary
    Total assets (things you own)........... 427,500
    Total HP & Secured debt................. -318,000
    Total Unsecured debt.................... -0
    Net Assets.............................. 109,500


    sorry to Stoozing - I can't post links.

    It is great that you have accurate figures. It makes it very easy to spot the easy win.
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  • I echo Mally (nice work on the annotations!)

    I'm on my own and water is £10pcm, Shop Food £80pcm. I also don't have a TV licence :)

    Entertainment - if you feel you're getting value and real enjoyment, great. If you don't DITCH some of it. I don't think I could spend £700pcm if i tried.

    Charity... that's your values set, and your choice. But over 20 years for your mortgage, that's TWENTY FOUR THOUSAND POUNDS - even more when you take into account you could eliminate mortgage interest/accrue savings interest on it yourselves. My approach would be to say that I will spend a lot more time and donation on charity in my retirement when I need to be occupied.

    Just my thoughts, do what is best for you.
    Baby Step 1 - £1k Emergency Fund - COMPLETE
    Baby Step 2 - Pay off all debts except the Mortgage - £9,326 to go
    Baby Step 3 - Save 6 months of expenses into full Emergency Fund - £4,300 to go

    Baby Step 4 - Put 15% into Pension
    Baby Step 6 - Pay off the Mortgage early
    Baby Step 7 - Live like no-one else :D
  • MallyGirl wrote: »
    It is great that you have accurate figures. It makes it very easy to spot the easy win.

    Our actual water monthly is much lower - we usually end up lower than a 'one person' household around £20/month. But the monthly price now is a bit high because I am also paying for the last 8 months of water in monthly installments. When I moved into this house, there was no water meter and I got a bill of a whopping £500 for January to June 2016 at the old place, and June 2016 to June 2017 in the new place. I had them install a water meter instead (which they did very efficiently). The bill that I am paying now is for our monthly water plus the last 8 months as well. We aren't paying any late fees and I didn't get marked as overdue or anything, that's just how it ended up when I switched accounts.

    We only watch Netflix - I don't even watch BBC iPlayer.

    We DID have a lot of cash savings - it has all gone to the house because we wanted to get the rate associated with 75% LTV. Goal number 1 is to replenish that. It is incredible how much things around the house add up. £300 for a washing machine, £100 for paint etc.

    The charity aspect is important to me. Only about £60 of that is committed monthly deposits split between my partner and I. The other goes to support people's charity runs, bake sales, donations etc. I am incredibly lucky and giving a small amount to charity is the least I can do.

    My food calculation is a bit naughty because it includes lunches during work hours at Pret etc. Those SHOULD belong in the 'entertainment' category and SHOULD be £0 - I can make my own lunch. It is also surprisingly easy to spend £700 between two on entertainment...
    Mortgage started at £318,000 in June 2016. Original MF - 2041 :eek:
    2nd Property Mortgage at £275,000. Mortgage free: 2049 :eek:
    Total OPs: £29529
  • Council tax, gas and electricity do seem exceptionally low. A house with the value of yours would usually be about £200 for council tax. Are the utilities possibly weekly rather than monthly figures?

    Nice to meet a fellow spending tracker!
    Paid off mortgage nine years early in 2013. Now picking and choosing our work to fit in with the rest of our lives!
    Still thrifty though, after all these years:D
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