Bit the bullet

getmore4less

andys15 wrote: »

Tropically. The car is a Merc on a PCP deal. This is my third one doing the same. I basically give it back after 3 years. I have had this one 2 months. Its probably not worth £30k now, and although it shows I owe £35k, the reality is that I won't pay £35k back, as I will just get a new one in 3 years. Its not money saving and it is a waste of money, but I like hassle free motoring and this provides me with this.

Take the car value off the assets list it does not exist,

you are renting it.

so the debt bit can go away as well or just make them the same so they neutralize

Only becomes real asset/debt if you decide to buy it.

getmore4less

Amount left after debt repayments....... 1,234.88

I put £1000 aside each month for me. I never go over that.

That should be in the spends section, you are down to £235pm spare

Might be worth a joint SOA to see the bigger picture

What's your target retirement income in 9 years time to lats the 7 years till the SIPP kicks in

funding the 7 year window and a SIPP and the mortgage for just 9 years may not be enough depends how much you think you need going forward.

Is the wife getting to retire as well?

andys15

Hi thanks for your replies.
The 2.58% mortgage rate was a 5 year fixed taken in Dec 2015. I am sure it was a good deal at the time. It was originally taken over 25 years, and then I reduced the term last month to 3.5years, as I could only over pay 10% a year and I was saving 4-4.5K a month getting no interest. When I worked it out, it seemed to save me about 10k.
I cannot get out of the mortgage unless I pay 4% charge, which is about 7.5K and I think I am only going to pay about 9K in interest.
Is it worth trying to get a new mortgage?
I have already got out of my final salary pension a few months back, which has enabled me to do my mortgage free journey now.
My CETV value was a million, and I believe reading through all the forums etc, and the newspaper, that this CETV value was in a bubble, So 1 million is now invested in my SIPP, and I also got a 31% pay rise effectively. 25% my company pay as salary, and 6% I no longer pay into my pension.
The 60K you see in shares, is an investment in a FTSE250 company, I hope will do well, but which I don't plan in my retirement strategy. That is all tied up in ISAs and I hope it will be a dividend paying company one day.

getmore4less

The 2.58% mortgage rate was a 5 year fixed taken in Dec 2015. I am sure it was a good deal at the time. It was originally taken over 25 years, and then I reduced the term last month to 3.5years, as I could only over pay 10% a year and I was saving 4-4.5K a month getting no interest. When I worked it out, it seemed to save me about 10k.
I cannot get out of the mortgage unless I pay 4% charge, which is about 7.5K and I think I am only going to pay about 9K in interest.
Is it worth trying to get a new mortgage?

With 3 years to recover 4% it would have needed a very low rate.

even with a 9y term to be mortgage free by 50
£191,600 @ 2.58% £2,000pm interest £23,175

in the first 3 years £12,600 to recover £7600 needed a rate of 1.21%

definitely not now

£191,600 @ 2.58% £4,794pm 42 months £8,952 interest.
first 3 years £8,750 to recover the erc needs a rate of 0.61%

Still think you are missing a trick with debt at 2.58% and tax relief on pension at 40% worth boosting that.

what about maxing out ISA contributions each year(use or lose) ahead of the mortgage payment to secure the tax free income in the future.

by prioritising the mortgage you will lose £60k of ISA protection over those 3 years.

The £1m in the pension is probably good for £40kpa before drawdown.

Really depends what you forecast you need, taking out the mortgage all of what's on the SOA is covered by the wife contribution anyway.

Just leaving your £1k pm fun money to find dump the car and 1/2 of that is covered from the wife leaving you £500 to fund yourself.

8 years that's a pot of £50k till the pension kicks in

andys15

Thanks for all that advice.
I am clearly not the most savvy with all this.
My priority for clearing the mortgage has always been peace of mind really. The fear of something happening which would cause me to lose my income, with a big mortgage, has always been my driver to get rid of the mortgage. Each month I last in employment is that risk reducing. If god forbid anything happens once my mortgage is clear, then I will own my house and could get a lower income job, just to put food on the table.
Another consideration for ending my final salary pension was that I kept getting closer and closer with each pay rise, to exceeding my life time allowance.
The figures on my SIPP are £60K a year after taking my lump sum. Based on 4% a year(medium to high risk). I need to save around £400k to retire at 50, and that figure reduces the longer I stay in work. Thats saving 6K a month for 5 1/2 years once the mortgage is clear in 3 1/2 years( assuming my shares are worth £0).I am 41 1/2 now. In 3 1/2 years the mortgage and 2 loans are gone which will then enable me to save £5889, but with pay rises to come and also fingers crossed my shares worth more and toes crossed paying an interest free dividend, I could retire earlier.

getmore4less

It is very easy with big incomes with loads of surplus to be far from non optimum.

From what you have said you are far from extravagant on the day to day except maybe the car and are ploughing loads into securing a future, often the spending grows to match the income

Seen a few with this sort of income come looking for ideas with bigger mortgages and a couple of car loans and hefty CC balances although you do have two with £44k balance and 4 years to run going past the mortgage)

With that income from the SIPP maxing out ISA will give an essential tax break on that pot.

Debt free has it merits BUT it is net position that really determines the debt free status and investing should give better returns than the mortgage rate and if income recedes the cash is still there even if it takes a while to liquidate.

Number of children in household......... 1

Any biggies like UNI coming up for that one?

andys15

Well things are going well up to now. My mortgage now stands at £156000 and I have started overpaying by another £445 a month, which shaves another 3 months off.
I would love shave another 2 months off and then it is paid off when my fixed rate deal runs out. With a monthly mortgage payment of £5239, its getting quite hard to shave any more months off. It has become my mission though..

andys15

Now down to £100000. I am paying £5500 a month now and 17 months left I think. I am not sure how it works as I will have it paid off before the term is up, but will have it repaid when the fixed rate deal is up. I am still ok regarding keeping inside the 10% over payment but that might get hard soon as overpaying by £706 a month.

fresh_cotton

Wow

That progress is amazing. Its so wise to use your income to pay off your mortgage, rather than over-spending, which I am sure so many high earners do.

Well done and keep going

andys15

Thanks fresh cotton.
It has definitely concentrated the mind. My wife has never got on board with it, but I am determined to stick to plan. She wants a loft conversion but I will find it hard watching it drop below 100k in a few days and then watching it go over.
I am literally taking it one month at a time. Each month I put her off is another month closer to the mortgage going. No idea what happens after it’s gone though.