5 years to freedom? 21 September 2018 at 12:18PM in Mortgage-free wannabe 5 replies 1.1K views

hjghg5

My remortgage completed today, so it’s time to put in place a plan to pay it off. Unlike previous remortgages, I approached this one with the intention of it being my last, so I’d better put that plan into effect now.

The numbers:

Loan - £100,000
Term – 10 years
Fixed rate – 5 years at 2.2% (or possibly 2.25%)
Overpayment limits – entirely unlimited
House value approx. £300,000

The ability to overpay cost me a slightly higher rate, but it’s still lower than the deal I’ve just moved from.

The plan…

• Overpay each month by keeping my payments at what I’m paying on my current deal rather than taking advantage of the fact that they’re £150 per month cheaper on the new rate.
  
• I’m due to receive an inheritance late this year or early next year. I’m an executor as well as one of the beneficiaries so I know what the numbers are and have control of the process. We’re currently in the process of selling a house, then the proceeds need to be divided up. I’m planning to use some of this for other things, but around £30-40,000 will be paid off my mortgage. (I did consider staying on my old SVR until I received this and only remortgaging for a lower amount afterwards without the need for as much flexibility in overpayments, but for various reasons it was easier to remortgage first).
  
• I’m currently also putting money into other places each month - £200 5% regular saver, £250 SIPP, £350 S&S ISA, £100 LISA, plus some AVCs into my work pension – so I could divert some of this money to mortgage payoff, but I’d prefer not to put all my eggs in the housing basket as the mortgage rate is relatively low.
  

Points 1 and 2 combined would allow me to clear the mortgage in slightly over 5 years, so at the 5 year point I may pull something from cash savings to just clear the balance rather than reverting to whatever the SVR is by then.

Does that sound like a plan?

beanielou

Happy shiny new diary
Sounds like a plan to me!

louloubelle79

We in similar position as you, 10 yr fix with 6 yrs left with £102k outstanding. Will be following :beer:

zcrat41

Sounds like a great plan!

julicorn

Happy new diary! Can't wait to see how you get on

hjghg5

A bit of a change of plan, but some progress. I realised that trying to clear my mortgage as quickly as possible might not be the best use of my money, so I've come up with a bit of a plan to pay it down but not quite as aggressively, and spread my money around a bit more as follows...


Mortgage - I've just repaid (today!) £15,000. That brings my balance below £80k, and my term to 7 years and 10 months. I'm holding off on deciding whether to make regular overpayments too.


Pension - I've massively increased my contributions to my workplace pension from 5% to 20% (plus 7% employer contribution). A pay rise helped here ;-) I'm also still contributing £250 per month to my SIPP (although as the workplace pension is salary sacrifice I might dump this contribution and bump up the workplace one a bit more).


ISAs - I paid in the full £20k for the last financial year (£16k S&S, £4k LISA) and will do the same again this year (£11,800 already paid in, then carrying on with £350 + £100 per month to the S&S ISA and the LISA).


Regular Savings - still £200 per month, but now only at 3% :-(