Thinking about a journey to becoming mortgage free

josephine82
josephine82 Posts: 449 Forumite
First Anniversary First Post Combo Breaker Debt-free and Proud!
edited 13 April 2020 at 12:34PM in Mortgage-free wannabe
Hello
I was a MSE forum member 10+ years ago now, using all the great advice to pay off my debts. I became debt free in 2009 :smile:
Bought my first property on my own in 2013, a 1 bed flat in the suburbs of South East London. Bought for £180,000 with an £18k deposit; I consider myself incredibly lucky to have managed to buy before prices massively increased, but also proud that I learned from the errors in my 20's and saved for my future (I'm 37 now). 
In late 2016 a flat in my block sold for £275,000 and I realised that I could afford to move into a 2 bed property in the same area with not a huge amount of additional debt. Sold my flat in 2017 for £295,000 and bought my lovely 2 bed house for £350,000, increasing my mortgage to £200,000. LTV 58%. My mortgage deal will renew in May 2022. Current amount remaining is £188k.
In the last 3 years my salary has increased, and I live a fairly financially secure life. I spend my money quite carefully; I have the things that I need and some of the things that I want! I try to balance my inherent inclination to save for the future with a knowledge that I also need to enjoy the benefit of working hard and being paid a reasonable salary. 
I have savings set aside for a wedding (£10k), and monthly I set aside money for an emergency fund, car maintenance, holidays and Christmas but I definitely have money left over and think this could be better contributed to overpaying my mortgage rather than just sitting in a savings account earning no interest. I can overpay up to 10% a year. 
Having thought about it, my plan is to do the following:
1) Focus my savings on increasing my emergency fund over the next 3 months (May, June, July) so it actually reflects 3 months worth of mortgage and committed spending; so I can then just leave that aside. I don't have a big holiday booked this year and already have £3k set aside so I'm confident I could skip holiday savings for 3 months. 
2) Re-look at my budget in August to identify how much to split my extra cash between my savings and what I could start overpaying and then make my first overpayment!
3) Set up a regular overpayment so it goes out automatically
4) Review in May 2022 when my deal ends
Hoping to use everyone else's diaries and experiences as motivation to focus on this goal and look forwards to a mortgage free future! 
Josephine x
Debt free as of 2 October 2009
Mortgage free as of 27 March 2024

Comments

  • Hi Josephine, 

    Welcome back and congrats on becoming debt free all those years ago. 

    Also congrats on the sale of your flat and purchase of your new home, thats amazing!

    I think focusing on improving your emergency fund, as I am myself currently doing, is a great idea. The advice and guidance I have received and seen on these forums is to have 3-6 months wages set aside to cover anything that could happen such as job loss, boiler blowing up, car problems etc etc. That seemed like a lot and like it might take a long time to save but I feel its a great idea and to have that in the bank has really relieved some stress and worry for me personally. 

    Identifying how to split your budget is a great idea and another good tool I have personally used is Martins budget planner from these very forums. Once you have absolutely everything listed out in there to show all of your outgoings you will then see what you have left to play with and then can make informed decisions about how you wish to split it. 

    As I have understood it, so long as you are still saving, have 3-6 months wages in an emergency fund and your job is as secure as it can be, then overpaying is recommended, presuming that the interest rate on your mortgage is higher than that you can get in savings rates. 

    I ticked over into my 2nd year of my mortgage in Jan this year and began by making my first over payment then, its an amazing feeling and it gets very addictive. But with the end goal to be mortgage free, saving thousands in interest along the way and working towards financial freedom, thats all the motivation I need and I am sure you will be the same. 
    MFW - #133 - 2020 Challenge - £1230.67 / £1159
    MFW - #133 - 2021 Challenge - £1328 / £1270
    MFW #56 - 2022 Challenge - £325.35 / £1296
    Mortgage began Jan 2019 - £115,900
    Mortgage Currently            - £105,160
  • josephine82
    josephine82 Posts: 449 Forumite
    First Anniversary First Post Combo Breaker Debt-free and Proud!
    Thanks regularsaver that's good to hear- I'm definitely on board with saving any money and having more financial freedom! I have a budget spreadsheet that I maintain so will be very easy to identify how to split it out. Have worked out that by September I should have a solid emergency fund which is separate from my other savings (which I always knew were there and could use in an emergency) and then I should be able release some money for overpayments while still making modest savings payments. 
    Yay!
    Debt free as of 2 October 2009
    Mortgage free as of 27 March 2024
  • josephine82
    josephine82 Posts: 449 Forumite
    First Anniversary First Post Combo Breaker Debt-free and Proud!
    edited 31 May 2020 at 12:43PM
    Since I posted in mid April I've been working on directing all of my available additional funds (a lot more than usual thanks for lockdown) into my emergency fund, which stands at £4150 now just after payday. I think I should be in a position to make similar large payments from my June and July pay, and be ready to make my first overpayment in September. I've been through all my direct debits and standing orders today, and ensured that what I'm putting aside in savings for annual payments (car costs, etc)  is sufficient to cover everything comfortably. Hoping to start with a regular overpayment of £300 and see how it goes, and then start channeling extra cash towards it here and there. Looking forward to making my money work harder for me in the future. 
    Debt free as of 2 October 2009
    Mortgage free as of 27 March 2024
  • LeighofMar
    LeighofMar Posts: 672 Forumite
    First Anniversary First Post Name Dropper
    Welcome. Sounds like you have a solid plan. It is exciting to see the different ways you can make your money work for you. 
    Mortgage start date Dec 2015 - $64,655.00
    Mortgage end date Dec 2045 - NOT!!!!
    Mortgage balance  - $4600.00
    Business Savings $43,310/100k
    Hope to be mortgage-free by end of 2023 
  • Sandyra
    Sandyra Posts: 255 Forumite
    First Anniversary First Post Name Dropper Cashback Cashier
    Hi Josephine
    Just having a read of your diary, we are the same age with a London mortgage, similar circumstances - salary and wedding at some point 👍🏽. You have made the move to house which I'll hope to do. Good luck.

    MFW 2024 #32 £X,XXX/£3,000; MFW 2023 #32 £5,238.84/£4,000; MFW 2022 #32 £8,246.43/£8,000; MFW 2021 #32 £8,982.73/£8,000; MFW 2020 #32 £12,000/£6,000

    Save £12k in 2024 #26 £1,155.37/£6,000; Save £12k in 2023 #31 £11,500/£6,000; Save £12k in 2022 #32 £7,180.24/£7,000; Save £12k in 2021 #32 £9,500/£8,000; Save £12k in 2020 #147 £9,370/£8,000

  • josephine82
    josephine82 Posts: 449 Forumite
    First Anniversary First Post Combo Breaker Debt-free and Proud!
    edited 27 June 2020 at 12:09PM
    Updated all my accounts today and my emergency fund now stands at £5200 :smile: So getting close to my target and getting closer to making my first overpayment. My fixed term work contract will be extended until December 21 (was due to finish this December) so feeling much more permanent and I've been offered a temporary 3 month 'acting up' additional role which will be July-September so hoping that the additional salary payment for that will get me to my emergency fund goal a little bit sooner. So, doing well and on track! 

    Debt free as of 2 October 2009
    Mortgage free as of 27 March 2024
  • josephine82
    josephine82 Posts: 449 Forumite
    First Anniversary First Post Combo Breaker Debt-free and Proud!
    Another month has passed and I've managed to continue making big payments into my emergency fund. It now stands at £6400, so pretty much met my goal, just another £100 to go! Which makes it possible that next month I'll be able to start making my overpayments and properly start my journey towards becoming mortgage free! I'm still going to carry on paying a small amount into my emergency fund, and start saving back into my holidays pot in the hope that sometime soon I'll be able to travel Down Under to see my family; but I should be in a position to start overpaying around £400 a month. 
    Yay!
    Debt free as of 2 October 2009
    Mortgage free as of 27 March 2024
  • 1 September and I've managed to make the progress I wanted for the most part. My emergency fund has reached £7500 so I'm happy with that! Feel much more secure now knowing I have a specific pot allocated for emergencies should anything happen job-wise :smiley: 
    As I've been funnelling all my spare cash into my emergency fund I need to re-assess where I am and how much I am ready to overpay when October rolls around. As well as making an overpayment, I also want to look into making some additional pension contributions, start paying back into my holiday and ISA pot so will spend September looking into that I've got a good plan set up going forward. Feel really stable financially now which is great. :smile:

    Debt free as of 2 October 2009
    Mortgage free as of 27 March 2024
Meet your Ambassadors

Categories

  • All Categories
  • 343.1K Banking & Borrowing
  • 250.1K Reduce Debt & Boost Income
  • 449.7K Spending & Discounts
  • 235.2K Work, Benefits & Business
  • 607.9K Mortgages, Homes & Bills
  • 173K Life & Family
  • 247.8K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.9K Discuss & Feedback
  • 15.1K Coronavirus Support Boards