My plan seems solid, any advice gratefully received :)

BiBi

Hello,

I had a plan and now it looks like it's finally coming to fruition. I'm SO close!! But please tell me if you can see any issues/mistakes/warnings I should be thinking of now....

I have been overpaying my mortgage by 50% each month for years now and really building up my ISA. Then in January I put my house on the market to downsize and be debt free

Then my 28yr old daughter moved back home!!!

So my plan will take a little bit longer to be totally debt free, but I should still be still be mortgage free next month. This is all so I can start building my pension pot so I can still have nice holidays etc when I retire in about 15 years.

Here's where I'm at currently:
ISA is currently £18,000
Selling my house for £195,000 and buying a house for £137,500. Waiting to exchange contracts
Current outstanding mortgage is £81,000

After selling and buying I have £57,500 which takes the mortgage down to £23,500. I'm going to pay £14,000 from the ISA (leaving £4K for moving costs etc) which takes it to £9,500. There are no Mortgage Redemption Fees (Yey!!).

Later this month I am applying for a loan for £10,000 so that the first loan payment comes out when the normal mortgage payment would have been taken. I can still afford the payment on top of my mortgage payment, in case contract exchange drags on. My mortgage is the only debt I have so far m confident I will get the loan on my salary.

Officially I will be mortgage free, but I know that the loan is really the last of the mortgage. So I won't consider myself truly mortgage free until I have paid off the loan.

I can overpay the loan anytime and pay it off early with no fees, so if I have money left from the £4,000 moving budget that will go in, and I have some shares paying out a bonus next week so that will pay hopefully a couple of thousand off the mortgage also. Then I will overpay the monthly loan payments (as without the mortgage I'll be £650 a month better off). I aim to have the 2 year loan paid off inside a year (life happens so im taking it out for longer in case the new house is a money pit!).

Then I will be totally debt free!!!

It's so close I can taste it! But it could all fall in a heap any day - I'm living on the edge!!!

Mr.Generous

I would just have a smaller mortgage rather than a loan, just keep plugging away. What is the interest rate on loan v's mortgage?

Well done on paying it off, if you keep it at suddenly the balance tips in your favour, less interest leaves more money to repay capital.

Every time I got any other income I wasn't normally getting I paid it off the mortgage at the end of the month, I got some good lump sum bonuses that helped. It works, and being mortgage free is a great felling.

Mortgage. Mort - death, from French, i.e mortuary, mortality etc.
Gage. French word meaning pledge. So a death pledge. The loan was so great people handed on the debt at death to children or gave back the property. You were chained to the debt for life.

Your aim is to break the chain and free yourself from the pledge.

BiBi

Mr.Generous wrote: »

I would just have a smaller mortgage rather than a loan, just keep plugging away. What is the interest rate on loan v's mortgage?

Well done on paying it off, if you keep it at suddenly the balance tips in your favour, less interest leaves more money to repay capital.

Every time I got any other income I wasn't normally getting I paid it off the mortgage at the end of the month, I got some good lump sum bonuses that helped. It works, and being mortgage free is a great felling.

Mortgage. Mort - death, from French, i.e mortuary, mortality etc.
Gage. French word meaning pledge. So a death pledge. The loan was so great people handed on the debt at death to children or gave back the property. You were chained to the debt for life.

Your aim is to break the chain and free yourself from the pledge.

Hello Mr G and thanks for your comment

Keeping the lower mortgage was my original plan. But the bank advised that as I'm moving the mortgage would be on the new house so they would need to do the homebuyers survey, then there were fees etc to pay. Along with all the usual stress that goes along with getting a mortgage. Whereas I can apply online for the loan and get the money the same day.
After costing it out the price for the survey and fees was about the same as the interest on the loan when paid off over a year. So I decided to go with the low stress option

I feel very grown up doing all this. And it's great reading about you guys - it's all very inspiring!

bubblycrazy

I think you've got it covered BiBi, good luck.

Mr.Generous wrote: »

Mortgage. Mort - death, from French, i.e mortuary, mortality etc.
Gage. French word meaning pledge. So a death pledge. The loan was so great people handed on the debt at death to children or gave back the property. You were chained to the debt for life.

Your aim is to break the chain and free yourself from the pledge.

Thanks Mr G that is fascinating, and also very depressing :rotfl:

A_Frayed_Knot

Looks like you've done all the figures.

Totally get your way of thinking as have been doing the same figures myself . Question is;-

Do I want to be -MF and have a loan, or
just keep plugging away at the mortgage or
be Mortgage Neutral ???.


Have a few months yet to decide as mortgage term ends end of Oct this year.

A lot depends on when your mortgage term ends and what rate you have v what the new rate would be, along with the fees for a new mortgage term. Not sure if they would still need a new home report anyway as although you can transfer (take your mortgage with you to the new place) they I would imagine need to know everything is viable.

To re-mortgage some lenders will not lend under £10,000 forcing you to either go with the SVR (in other words new new deal) or a loan (which would presumably be at a higher rate than the mortgage would be.

Good Luck.