Big mortgage - Big dreams

Zulu_Dawn

Hi everybody. 

New to this group after a long stint when I was successfully working to become debt free, something I finally achieved earlier this year.

After debt-free wannabe, this feels like the grown ups board!

My current situation is that I have an interest free mortgage of around £300k, and am currently on a long term fixed deal at 1.94% (£488/month), which expires in January 2024.  I am able to overpay up to 10% per annum without penalty but to take out a new mortgage or change my deal would cost around £7k.  The mortgage is due to finish in May 2028 so I need to clear it by then.  I have decent savings and a good pension pot and the house is worth a lot more than the mortgage so I am in OK shape but would love to pay it off if at all possible and don't want to trash too much of my pension to clear the mortgage, particularly as i will hopefully still be working in 2028 so could get hit with a lot of tax.  By my calculations, that means finding around £3,800 per month until 2028 which might be difficult!  However if I could save £1,900 per month, I could pay off around £22k per year and then use my remaining savings to clear the balance without having to touch the pension.

Savings are held in a mixture of ISA's, Premium Bonds, shares and crypto and yield has been around 10% per year over the last couple of years.  They would be more than enough to cover me for 12 months without working.  Both my wife and i are in full time employment currently and have no plans to stop until mortgage is cleared.

I have become pretty good at saving through debt-free wannabe so am confident about not wasting money.  My thoughts as to how I might be able to clear this damn thing are as follows;

• I have a reasonable amount of spare time.  Is there an additional income stream I can create that will bring in an additional £1,000 per month?
• How easy would it be to extend my mortgage deal by a couple of years once the fixed deal comes to an end in Jan 2024 as I plan to continue working until December 2030.  That would give me more time to clear it, which would be nice.
• Should I consider grabbing a mortgage deal now at a lower rate as 1.94% is not that competitive?  How easy would that be (my credit rating is 999).
• Is there anything I should be doing that i am not?

All thoughts welcome.  I plan to try and check in regularly and update as I found regular posting very helpful in clearing my debt.


ZD

South_coast

Welcome! No real thoughts from me (except for congratulating myself that I also worked out you need to pay off around £3.8k/month to clear it in time - maths is not my strong point 🤣!), but just wanted to say a massive well done on getting debt free! I'm not sure switching to a lower rate would be worth it though, 1.94% is still pretty good and you'd probably have to pay exit fees to switch early? 

happymum37

Sorry I'm not familiar with interest only mortgages.  But for long term quality of life I would be tempted to fling everything apart from my pension at the mortgage.  All savings, the lot. And then as soon as that's cleared focus 100% of my attention on my savings.  Good luck 

kaycastle

Well done on becoming debt free!! I always like reading the big mortgage threads

Zulu_Dawn

kaycastle said:

Well done on becoming debt free!! I always like reading the big mortgage threads

"Big mortgage".  Ooh don't say that.  I'll start to panic.   

Thank you.  Debt free was a big deal.  It was not far off the size of my mortgage and took 15 years.  Still, I learnt so much and am in a much better place as I move on to the mortgage.

So it's been a good few days.  A short trip to York to watch my wife run the Yorkshire Marathon and then a few extra days in the Howardian Hills to recuperate.  I've been doing some research on Ebay, looking at things I could possibly buy and sell at a profit.  I've decided that you can pretty much sell anything so after reading an article about decluttering, I thought it might be good to start selling the 30 years of accumulated detritus that is sitting around the house and filling up cupboards, the loft and the garage.  I have the important asset of time and so if I can use that wisely, I believe that will be the key to a tidier house and a mortgage free future!

Zulu_Dawn

happymum37 said:

Sorry I'm not familiar with interest only mortgages.  But for long term quality of life I would be tempted to fling everything apart from my pension at the mortgage.  All savings, the lot. And then as soon as that's cleared focus 100% of my attention on my savings.  Good luck 

Thanks.  I am only allowed to pay up to 10% of my mortgage each year without penalty so that is my plan for the next three years at least.  Not sure I will be able to pay £30k this year  without some additional income but I'm hoping to pay off about £15k.  Then the goal is to do the 10% for 2022 and 2023 so by the time I come to renegotiate terms, it will be down to around £235k and this will make it easier to get a better deal.

Zulu_Dawn

So I decided to check out Ebay to see what i could sell and how I might raise some money for the mortgage.  One hour later and I've spent £3.50 on some old cigarette cards and bid on nearly £100 worth of other stuff for my various collections!  Not going well.

LadyWithAPlan

Yes I think a rule of only selling on ebay might be worth it for a month, and onlu spend what you have put away as 'treat money' 
Do you both work off a tight budget? As a bit more sacrifice now on both extra income and less spending will pay dividends.
I currently have what feels like a high monthly savings goal and somehow I seem to be reaching it or nearly there most months so maybe a fresh look at your budget to see if you can hit 80% or something of this years 10% OP.