MrWannabe & his journey to the MF Roll Of Honour

MrWannabe

Inspired by the MF journeys I have read about on this forum over recent weeks, I have started this thread to help me stay focussed on my journey to being MF.  Today has seen my most significant step to date on the road to MF status.   So let's begin:

Just me paying the mortgage

Property is worth around £160k to £170k (I think!)

Just over 6 years into a 10Yr fixed rate mortgage (mortgage duration was 20 years at start)
I was a fool to take out the 10Yr fix...seemed a good idea at the time, I did not think rates would fall any lower (how wrong I was!)...paying 3.84% at the moment
I have been overpaying since the outset (via increased monthly payments); started off around £50 per month overpayment, but the 'overpayment' has steadily increased each year, as the mortgage balance has reduced
Last month, I increased my monthly payment by £100 (so now overpaying by around £180 per month I think)
As of this morning, my mortgage balance was just over £58k
This afternoon, I phoned my mortgage provider & made a single overpayment of just over £4K (yikes!)
....so my mortgage balance is now around £54k & my goal is to clear the mortgage before I am 50 (Spring 2024)

Like many people, the situation with COVID-19 prompted me to have a rethink about my finances (which led me to this forum).  Just before lockdown, I took out a loan to fund a new kitchen...but lockdown has kind of put me off doing the kitchen this year, so for now, I will settle for a new kettle & toaster and a lick of paint on the kitchen walls!  The loan which I took out to help fund the new kitchen was at 2.9%, so I figured it would make sense to use the capital from the loan to maximise my overpayment on my mortgage (as interest rate on my mortgage is higher than the interest rate on the loan).  Need to keep in touch with my mortgage provider, as I am meant to be able to make overpayments of 10% of outstanding balance per year...I calculated this to be around £6k for this year, but the guy I spoke to today told me that my overpayment allowance for this year was just over £8k (think he might have got that wrong, but maybe he was correct?)...did not want to risk going over my overpayment allowance, but will call back again in a few weeks to check if I really do have more scope to be overpay this year than I originally thought.

Anyway, I will stop waffling on now & hope to work my way to being Mortgage Free at 50, without being too thrifty!  The journey has begun 👍🏻

Good luck to all you other wannabe MF's 😉

South_coast

Welcome and good luck 😀 Ouch to the fix, is there any way you can get out of it early? I think there is a "ditch the fix" calculator somewhere. If not, then at least your OP's are going to save you a huge amount of interest!

MrWannabe

South_coast said:

Welcome and good luck 😀 Ouch to the fix, is there any way you can get out of it early? I think there is a "ditch the fix" calculator somewhere. If not, then at least your OP's are going to save you a huge amount of interest!

Thanks for the welcome.  Have thought about ditching the fix, but would incur a 4% ERC this year, reducing to 3% in 2021, 2% in 2022 & 1% in 2023.  I think it is probably worth me staying put with my current deal until next year at the earliest (who knows, maybe rates will be even lower then?), but may crunch the numbers in the New Year.  For now, I will focus on reducing as much of the outstanding balance that I can (within the constraints of maximum overpayment)

longway2go

Welcome and good luck on your journey. You will get lots of inspiration on these boards. Remember every single OP makes a difference. 

LeighofMar

Welcome. Being MF by 50 is a wonderful goal. Enjoy the journey. 

MrWannabe

1 week on since my MF mission started in earnest.  I phoned my mortgage provider this afternoon, to enquire/confirm that a low value over payment (£10) from last week had been received via Faster Payments.  This was my first overpayment via Faster Payments, thus, I wanted to test/check that this payment method was working correctly, before I make any future (larger) overpayments.  The £10 had been received & applied to my account.   

More importantly though, I took the opportunity to ask again about my overpayment allowance (before incurring fees), as I had been left slightly confused after speaking to an agent last week, who suggested that I could overpay in the region of £8k...this figure seemed too high, as my mortgage balance was around £61k at the start of the year & I had it in my head that I could overpay 10% of the outstanding mortgage balance each year (thus, anticipated on overpayment allowance of around £6,100).  The person I spoke to today cleared up the confusion...turns out that the conditions applied to my mortgage state that I can in fact overpay 10% of the loan amount each year not 10% of the mortgage balance each year. This is welcome news, as I now know that I can overpay far more than I expected without penalty (up to £8300 every year until 2024); took advantage straight away & made another OP today 🙂

LeighofMar

That's great news MrWannabe. With OPs allowed like that, you'll be MF in no time.

longway2go

Great to get confirmation that the OP has worked. I did similar with my first online payment. Happy days in the extra OP allowance. 

LadyGnome

My mortgage is the same. It’s 10% of the original balance / loan amount not the current balance. 

Good luck with your journey 

MrWannabe

Have been waiting patiently for this week, as my yearly overpayment allowance reset yesterday.  I paid the maximum yearly OP back in June, inspired the posts which I read on here daily & an improvement in my finances due to WFH/COVID restrictions.  In the meantime, since June, I have continued to improve my finances during lockdown, still WFH, so saving around £160 per month in petrol, plus, not throwing money away on daily takeaway coffees, dining out for lunch etc.  

So today, I made another leap towards my goal of being mortgage through by March 2024 (when my 10yr fixed rate finally ends & when I turn 50), by making a dent in my savings (which were earning peanuts in interest) & making an overpayment of just over £8300 (my maximum allowance for the next twelve months).  This takes my outstanding mortgage balance to just over £39k & I am now within touching distance of being mortgage neutral.   Without wanting to sound like I am wishing my life away 'Roll on 2024'!  Feeling more confident than ever that I will have this damn mortgage paid off before I hit 50 

South_coast

Well done 😀! If you have plenty of cash on hand which is earning poor interest, have you crunched the numbers to see whether it might work out better overall to pay another big chunk off and just pay an ERC rather than wait another year, all the while paying interest on the mortgage? If your mortgage is 3.84% and your ERC is now 3% you could be better off?