MrWannabe & his journey to the MF Roll Of Honour

MrWannabe

Thanks South_coast.  In a month or so, I should have enough cash to clear the mortgage including the ERC, but doing so would leave me with zero savings.  I like to have the safety net of savings, so will likely ride out paying the mortgage for another 3 years (until the end of the 10yr fix), but will make further 'maximum yearly overpayments' in Feb 2022 & Feb 2023.  If I were to pay the ERC, it would be more cost effective than paying 3.84% over the next 3 years, but the saving would not be massive

An option which has crossed my mind, is to bolster my cash via a personal loan & then pay off the mortgage.  My bank is offering me a loan of up to £25k at 2.9% (maximum duration 5 years).  Part of me is tempted to do this, if only to be MF sooner than later....but another part of me thinks this would not be a good idea, as it is just another form of debt (but then again 2.9% is better than 3.84%).   Anyone on here ever taken out a personal loan to clear a mortgage?  Would this be a crazy idea?

South_coast

You wouldn't have to clear the whole amount. If you want a £10k emergency fund for example, then why not pay off everything bar £10k? 

Or, something I did last year when I was concerned about job security/not enough emergency savings was to take out a 0% money transfer card. There was an upfront fee of about £380 for doing the transfer, but within a couple of days I had just shy of £10k safely sat on my bank account and 2 years to pay it back. 

caeler

Hi @MrWannabe great feeling that must have been with your OP!  I'm in a similar position to you and I plan to deplete my savings in April to repay the mortgage and there is an ERC, my fix is due to end in 2024.  I have thought a lot about the consequences of depleting my savings but my thinking is I will be able to much more quickly replenish them without the mortgage.  Good luck with whatever you decide is right for you. 

floorspeed_2

Just reading you’re journey so far mrwannabe, well done for doing so well and all I can do is aspire to get my mortgage down to 39k. I would assume it’s been a while now so a update would be nice to get a idea if you are getting closer to being MF. 

Thanks for commenting on my journey. 

Dave.

MrWannabe

Thanks @floorspeed_2    It has been quite a while since I updated my journey.   I have continued to make the maximum yearly overpayments (10% of original mortgage value) each year.   This has impacted my savings, but I think it has been worthwhile.  When my current 10 year fix (3.84%) comes to an end late Feb 2024, I will (by default) drop on to the lenders standard variable rate, which is currently 7.99% (ouch!), so I want to pay off the balance completely once the fixed rate comes to an end.  The irony is that when I took out the 10 year fix in 2014, I did not think rates would drop any lower…but they did, for around 9 years.   It is only in final year of my fixed rate that I have benefited by having a rate applied to my mortgage payments which is lower than the current interest rate

Currently have a balance of £16k remaining & plan to pay it off completely at the end of Feb 2024 (just before I turn 50)

Once I am mortgage free, I plan to increase my pension contributions/build up my ISA savings.   I wanted to be mortgage free by 50 (on track)…the next goal is to be able retire at 60 (ideally even earlier), but I think that challenge could prove more difficult than being mortgage free by 50.

savingholmes

Congratulations. At least you've had cost certainty throughout. The ability and capacity to OP up to 10% of the original mortgage balance is also fab. Lovely that you are on track to be MF by age 50.