Cautious journey to mortgage freedom

MoneySavingMiss95

Hello, I'm a bit of a long term lurker here but finally have my own mortgage to overpay and so thought I would try to document the journey!

I'm not very good with all the calculations, I mainly keep track of what I have paid in a notepad and use MSE's Overpayment Calculator to give me a rough idea of where I am.

I am currently tackling two mortgages:

1. My house - £92,000 over 35 years (Jan 2057). Currently fixed at 1.19% until November 2026. I set up a standing order from day 1 to round up my monthly payment to the nearest £100, so far I am set to knock off 4 years and 6 months from the term but I'd love to aim for a 10 year reduction.

The house has been recently renovated in some parts, others are still extremely good condition (bar a massive septic tank issue we have discovered!), my To Do list is growing each day with thing's we would like to do but this is mostly cosmetic with one small extension I'd like to do.

2. Mum's house - £75,225 Interest Only with 13 years left on the term (July 2035). Currently fixed at 2.79% until April 2025. No overpayments were made until I took over this year so we are playing catch up very aggressively for our level of income. We are set to pay this within 12 years 11 months, however by 2026 we will be in a position to pay over the current 10% allowance so will see if a variable tariff wouldn't be more suitable.

The majority of extra payments come from unspent cash (not much these days sadly - electricity DDR has just gone up again!), survey sites and reselling anything we don't want or use, which are split between the two mortgages and house savings account.

L9XSS

That’s an excellent fixed rate you have. Would it make sense to move to a repayment mortgage to clear the capital from your mums house over time or do you have other plans once the interest only mortgage ends?

MoneySavingMiss95

Thanks @L9XSS, very mindful that it probably won’t be this low again and should overpay as much as possible while I can afford to. 

We are overpaying mum’s to pay the capital within the 13 years, sorry didn’t explain very well. We already pay a “normal” monthly payment that covers the interest. 

L9XSS

Sounds like a very good plan. Any overpayments you can make will have a big impact particularly with you low rate fixed mortgage. I as stuck in a 10 year fix at one point in 2008 at a rate of 5.85%........a lot of my overpayments were “eaten up” in interest. Thankfully I’m very close to being MF now. Keep focussed and you will reap the rewards. Very few of my friends overpay there mortgage ad they don’t see the point.......Seems a very select club which I’ve been part of for a good few years with lots of support and guidance. You won’t regret it, I promise! If I hit my deadline next year I will have paid my 25 year term off in 15 years. It is doable but with sacrifices.

MoneySavingMiss95

May Overpayments:

Mortgage 1 - £63.85
New balance: £91,091

Mortgage 2 - £470
New balance: £73,415

MoneySavingMiss95

June Overpayments:

Mortgage 1 - £69.58
New Balance: £90,843

Mortgage 2 - £430.33
New Balance: £72,984

MoneySavingMiss95

July Overpayments

Mortgage 1 - £52.39
New Balance: £90,612

Mortgage 2 - £417.42
New Balance: £72,567

Quietly celebrating that my increased average overpayments for Mortgage 1 will see me knock off over 6 and a half years from the term, originally this was 4 with the "set" overpayments  so those extra few surveys a month really do make a difference!

MoneySavingMiss95

Been a little MIA here, but still working hard behind the scenes!

Current balances are:
Mortgage 1 (mine) - £86,300 as of March 2024
Mortgage 2 (mums) - £65,898 as of Jan 2024

Mum's fixed term is up in April 2025, her 10% overpayment balance for this year is £6,589 which if we carry on overpaying the amount we are, we will be shy of by £1500 (still a hefty achievement in itself!). Given that next year she will definitely be able to hit 10% and more with each following year (if nothing drastic changes *touch wood*), but then taking into account the awful interest rates out there she isn't sure whether she will go for another fixed term and save a lump sum to overpay when that ends, or try a variable and keep ploughing on. We will wait to see what her broker comes up with. 

My property, we have decided on some small extensions and a conversion we would like carried out, so my current goal is to get down to £80k by the end of my fixed term (Jan 2027) and then look at additional borrowing to fund this. I hope this will be my forever home as I love the layout, location and space, I am firmly on Team Love It!

Archerychick

There are a couple of lenders who allow more than 10% over payments if that is the primary concern. First direct is unlimited (that’s who we are with), and it’s either NatWest or nationwide who allow 20% (I can’t recall which it is)

MoneySavingMiss95

Archerychick said:

There are a couple of lenders who allow more than 10% over payments if that is the primary concern. First direct is unlimited (that’s who we are with), and it’s either NatWest or nationwide who allow 20% (I can’t recall which it is)

Thanks Archerychick, it’s a BTL so will need to check they offer that kind of mortgage but good to know