FinancialBliss: My mortgage free journey…

chirpchirp

Great news on the mortage front, any chance you'll bring it down to the 12.12.12?

Even better news about the BOE base rate but I'm not expecting to see that go up until October unless we have a change of government.

kiwi_wales

I would like to ask for a bit of advice please. I can see you are an expert. I have been lurking around and I admire how you are so clever at all this financial stuff.

I have the chance to pay off my 70,000 mortgage that has another 13 years to run I will be over pension age then. There's a possibility of selling a house I have (which I rent out) and it is mortgage free.

I would feel more secure if I can clear my current mortgage. Is it wise to pay off a mortgage completely or would it be advisable to keep a small amount mortgaged, I was told by someone there are financial benefits like tax allowances.

I'm hopeless with financial dealings so any help would be wonderful.

Thanks in advance
Chrys

SmlSave

I will complete the mortgage in August 2014 - a month earlier from the letter received last month. :T

That's great news FB! congratulations!

Kiwisaver_2

kiwi_wales wrote: »

I would like to ask for a bit of advice please. I can see you are an expert. I have been lurking around and I admire how you are so clever at all this financial stuff.

I have the chance to pay off my 70,000 mortgage that has another 13 years to run I will be over pension age then. There's a possibility of selling a house I have (which I rent out) and it is mortgage free.

I would feel more secure if I can clear my current mortgage. Is it wise to pay off a mortgage completely or would it be advisable to keep a small amount mortgaged, I was told by someone there are financial benefits like tax allowances.

I'm hopeless with financial dealings so any help would be wonderful.

Thanks in advance
Chrys

Ohh a Kiwi? Are you?

There is no tax benefit in having a mortgage, there used to be many years ago, so I guess that advice may have come from someone who is a wee bit out of touch. Some people like to leave a £1 or something outstanding, so that the mortgage company or bank keep the title deeds and then you don't have to pay to have them kept somewhere secure. Also depending on the terms there may be early redemption fees, but in the grander scheme I expect the fee would be reasonably insignificant.

When we were mortgage free for a short while we paid the whole lot, but did pay a nominal sum (no more than £20 if memory serves) to have the building society keep the deeds.

kiwi_wales

Yes a Kiwi born and bred in Dunedin, Vauxhall. Went to Grants Braes then Bayfield High living in Wales.

Thanks very much for the great advice especially about the safety of the deeds. I'll be keeping a small amount of mortgage for the bank to hold them. :T :A

Kiwisaver wrote: »

Ohh a Kiwi? Are you?

There is no tax benefit in having a mortgage, there used to be many years ago, so I guess that advice may have come from someone who is a wee bit out of touch. Some people like to leave a £1 or something outstanding, so that the mortgage company or bank keep the title deeds and then you don't have to pay to have them kept somewhere secure. Also depending on the terms there may be early redemption fees, but in the grander scheme I expect the fee would be reasonably insignificant.

When we were mortgage free for a short while we paid the whole lot, but did pay a nominal sum (no more than £20 if memory serves) to have the building society keep the deeds.

financialbliss

chirpchirp wrote: »

Great news on the mortage front, any chance you'll bring it down to the 12.12.12?

SmlSave wrote: »

That's great news FB! congratulations!

Thanks chirpchirp / smlsave.

When I started this diary from January 2008 I divided the outstanding balance by the then 60 months until December 2012 and generated an ideal repayment to hit 12.12.12. I'm currently about 6k behind where I need to be.

But, the May payments will see my own mortgage completion date (based on payments I'm expecting to make) just drop into 2013, ie December 2013. I then just need to keep clawing that forwards until I get to December 2012.

I don't actually anticipate completing the mortgage until the last 3 months of the MFiT-T2 challenge - earlier would obviously be nice, but that depends on income and to an extent, the BoE base rate. Ideally Mrs Bliss will get a job before our fix ends in March 2011 (daughter starts school this September), and all extra surplus income gets diverted to the mortgage, but I'm taking it a month at a time...

FB.

financialbliss

kiwi_wales wrote: »

I would like to ask for a bit of advice please. I can see you are an expert. I have been lurking around and I admire how you are so clever at all this financial stuff.

Erm, not really an expert :eek: I pretty much hated maths when I was at school and didn't get around to "enjoying" maths / financial matters until I had an income of my own. Since no-one else is going to do the job for me (without a fee), I just roll sleeves up and get on with it.

kiwi_wales wrote: »

I have the chance to pay off my 70,000 mortgage that has another 13 years to run I will be over pension age then. There's a possibility of selling a house I have (which I rent out) and it is mortgage free.

Ok. You have two properties:

• Residentilal property - mortgaged @ £70k
• Rental property - mortgage free

Not 100% sure about tax relief on rental properties as I've never had one, but I think you used to get a certain amount of tax relief on by to let properties, but I have pretty much no idea.

Say your mortgage rate is 5% - it would cost £3,500 in mortgage interest each year on your £70k property. Unless you have a minuscule mortgage rate, which you can beat the rate via savings, I can't see any benefit in NOT selling up your rental property to clear your residential mortgage.

Be careful about early repayment charges (ERCs) on your mortgage - pretty much as Kiwisaver has highlighted.

FB.

curlygirl1971

Kiwi_wales,

I am NOT an expert by a long shot. But my BF has a rental house and he keeps some mortgage going on it - he says that he can offset the cost of any repairs and maintenance and the interest he pays on the mortgage against the tax he pays on his rental income.......or something like that. Anyway he reackons there is some kind of tax benefit - and it works for him in his case - so perhaps was this is what the person was inferring. However I see that your rental property is mortgage free in anycase.


FB,

Your diary is FAB. Like everyone else has said - the mix of subject matter works a treat and there is some great MFW know-how on here. So am busy working my way through - have done about 50 pages so far and to keep my place am 'Thanking' posts as I go along.

I spent a very pleasurable half hour last night updating my 'Net Worth' sheet with the value of my house adjusted by the HPI (ie. value I bought it for and then adjusted every month since). However despite doing it by postcode I found the figure way out by almost £40k too much - so I then looked at actual sell prices for my neighbours (we all live in terracced houses) and where there was a sale in a particular period, input that figure into my sheet. So some months are an actual sell price and then following months are HPI adjusted until another sell price etc...............It's worked out quite well and I reckon the current valuation is reasonably accurate. Phew.

financialbliss

curlygirl1971 wrote: »

I spent a very pleasurable half hour last night updating my 'Net Worth' sheet with the value of my house adjusted by the HPI (ie. value I bought it for and then adjusted every month since).

Just to prove I do read every post here, I've just checked and the site I use for the house price indexes has been updated for March, so here's year to date January to March:

2009 year end house value: 244,917.64

Month: Change / Value / LTV

January: 2,533.79 / 242,383.85 / 19.49%
February: 678.69 / 243,062.54 / 18.91%
March: 2,669.52 / 245,732.06 / 18.19%

Reasonably big index jump by 5.90 points, so price goes up by £2,669 in March. Nice to see that the loan to value (LTV) is dropping too!

FB.

financialbliss

Quick post this evening. Not mortgage, not numbers, but kids instead.

Daughter (Aged 3). Deserves a mention as she has been really good this last week with regard to food. In the past, she has had an almost phobic reaction to pasta and would turn her nose up at it. This often resulted in us cooking 2 or 3 evening meals, one for myself and Mrs Bliss and often two separate meals for the kids.

In the last week, she has really come on leaps and bounds in her attitude to food. Last Sunday she helped to make and ate home made meatballs in tomato with spaghetti.

Last Friday we ate lasagne with salad and garlic bread. Wasn’t expecting her to entertain that, but just put it down in front of her without any other choice and she ate it.

Finally, we had a home made korma curry on Saturday. Again, I had my doubts, but it had yellow rice and “was just like the one at nursery”, and that went down really well. Here’s hoping she saves us a little money by cutting our food bill slightly, but that said, she’s eating a little more now – growing spurt?

Son (Aged 6). At the other end of the spectrum, our sons second tooth came out today and with my tooth fairy hat on, just put one pound under his pillow. No doubt he’s going to be disappointed with that, after getting 3 sets of £2 (us plus both sets of grandparents), ie £6 for his first tooth. :eek:

Financial Bliss.