Prosperous soul embraces creativity & mortgage neutrality
savingholmes
Forumite 16.6K Posts
Today I completed on my biggest ever mortgage - £202K and switched from interest only between 2 of us to repayment on my own. I took the term for as long as I could - so 22 years - which means I would be 73.5 by the time I was actually free. There has to be a better way!
Financial info:
Financial info:
- Currently have c£1479 left to clear off CCs but they are both at 0% and I am debt neutral due to EF.
- EF of c£2K and am trying to keep it that way and grow it - but the next few months I have big car bills so may not be totally possible.
- I am trying to be debt neutral currently rather than debt free - as my recurring nightmare is losing my job and being unable to pay such a big mortgage.
- My job is pretty secure with reasonable pay, great sick pay coverage, redundancy pay and a DB pension so while I want a bigger EF and it is a high priority for me it is not as essential as it would be for some.
- My monthly mortgage payment used to be £130 and is now just over £800 more!!
- It's a 5 year fixed rate at 1.84%. It has hefty ERCs but I can theoretically pay up to 10% a year without penalty.
- Freshly divorced after a very long marriage - this is my first month of paying previously joint bills on my own - so doable but also a challenge as I am used to a second lot of money coming in part month which won't be there.
- Thankfully the new mortgage payment comes out next payday not this so I have time to clear remaining divorce related bills.
- I have healthy life insurance cover for my kids (age 18 and 23) - and am in the process of transferring a joint life policy into my sole name and making sure it is set up as a trust.
- I am in the process of doing a new will.
- My 18 year old DD is an apprentice and is partly at home and partly away with work. My DS is living away.
- Even if I repaid as small a figure as £20 pcm - over the term that would reduce my mortgage by 6 months - taking me to 73 instead of 73.5!! My current debate is whether to pay it directly off the mortgage (certainty) or do it via pension - so get 25% uplift.
- By age 55 I will have accrued full state pension and should be able to get it at 67. (I have checked multiple times).
- As I am only 3.5 years away from being able to access a pension (if desired) - I am seeing a SIPP (self invested pension) or equivalent - as the most likely route to mortgage freedom. I have one valued at £3,643 yesterday - so a long way to go before it's of much use!
- I had to give Ex half of one of my earlier DB pensions - but that still left a CETV of over £180K. If I can transfer that in a few years time - while I would want to leave it there and grow it on while I am earning - it would give me some reassurance of a 25% tax free lump sum to help repay the mortgage when I need it. This would knock circa 5 years off the mortgage which would take it down to normal retirement age at least. If I can't transfer it - it is due to pay £3 or 4K at age 65.
- I have a second DB CARE pension that is currently due to pay out c£9K p.a. from age 67 - or if I stayed all the way until then - closer to £25k.
- If I was mortgage free I would need around £26K gross to live on I reckon. So if I retire at age 67 I should be more than covered and probably financially better off than I am now - given I pay 8.5% into my work pension currently and have a hefty mortgage and life insurance premiums.
- The question is how much earlier can I 'retire' achieve 'financial independence' so I can pursue my creative side more fully.
During 2021: Target 1) Clear CC debt - £2128 to go (but debt neutral) @ 0% Target 2) Lose weight 3) Write regularly 38113/70000 words Book 2 4) Promote book(s) 5) Develop passive income streams 6) Build 3-6 mths EF 7) Declutter
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Fortune x
Tales from the Shire
All we have to decide is what to do with the time that is given to us - J R R Tolkein
Emergency Fund Target: 3 months saved ✅
OP Goal 2021 = 3% in OPs: £11,475 / £10,560 - smashed it! ✅
SOA CALCULATOR (for DFW newbies): SOA Calculator
I am hoping my costs come down. Time will tell.
Still waiting for login details from the mortgage company and confirmation of the size of my first payment.
Even if I don't manage to OP I am still due to make more mortgage progress in 1 year than we have in the 15 years we have lived here.
Tx
Mortgage outstanding - 30/11/20 - £42,000. 31/12/20 - £40,650. 29/01/21 - £39,250. 26/02/21 - £37,850. 31/03/21 - £36,450. 30/04/21 - £39,050. 28/05/21 - £41,650. 30/06/21 - £48,200. 31/07/21 - £47,100. 31/08/21 - £48,400. 30/09/21 - £51,400. 29/10/21 - £50,100. 30/11/21 - £48,500.
For there is always light.
If only we are brave enough to see it.
If only we are brave enough to be it.
Debt Free 25.07.20
Any small overpayments can help and I agree with emergency funds, I was able to utilise mine when I left my job, thankfully I was back in paid employment 7 months later......
Yes the pension is important, great if you can balance payments to both in my opinion.