GAP and LMG, can we become mortgage free?

Well, not anytime soon but it's good to have dreams.


Hello


I am finally venturing over here after years on the DFW boards.


THE SITUATION


My DD (Little Miss Gap (LMG) age 21) and I have just bought a house together.  We were miserable in our old flat and neither of us could afford to buy on our own so decided this was a plan.  We moved in on Wednesday last week and have loved every minute since.


We have a 5 year fixed rate mortgage.  When that comes to an end LMG will be 26 and may well want to move on.  She tells me she has no plans to go anywhere for the foreseeable and has been saying that for years so with the current financial climate as it is, we thought 5 years would be a good fix.  Even if rates do go back down, it's manageable for our budget.


We both put in a deposit, LMG's from her savings and mine from net free proceeds of the sale of the flat.  We will get our deposits back and then any equity after that is to be split 50:50.


THE CHALLENGE


After the 5 years, one of four things could happen:


  1. LMG decides to move on so I buy her out
  2. LMG buys me out and I move on
  3. We sell and split the proceeds as above (on the assumption that the house has equity at that time)
  4. We get a new rate deal


I have to plan for the first and third ones as I'm 45 and I don't think my chances of getting a 25 year mortgage in the future will increase.  I need to have cash available.


At this time LMG is not keen to overpay as she is about to go back to college and her salary will drop a bit for a while so any extra cash she has, she'll be holding on to.  I need to work on her with this.  I don't think she understands the impact that regular op's can have on reducing the interest and term.  I can't make op's myself because of the 50:50 equity split.  It's a battle for another day though.


To make some kind of move towards killing the mortgage, I have to look at trying to become mortgage neutral.  The equity from the sale of the flat gave me a decent deposit for the house, plus a little left over which came directly back to me.  We need to get wardrobes, livingroom furniture (sofa/chairs/something that fits in the tiny livingroom) and I need a bed but I'll still be left with a reasonable amount for savings.  I'm going to keep whatever is left and add it to my current emergency fund, and start saving a buy out/mortgage neutral fund from scratch.


I'm no stranger to debt and saving, I have spent the past 15 years becoming debt free, becoming a homeowner, buying out the housing association of the equity they owned in the flat (originally bought using a shared equity scheme), making regular op's to the mortgage and saving an emergency fund from scratch.  I'm well versed in saving, budgeting and general MSE practices.  Sometimes I need a kick when I get a bit lax with the meal planning but we now need to get a grip on that.


I brought LMG up on my own and I've tried to drill some MSE ways into her.  For the most part she's great, she knows it's important to save and understands about meal planning and shopping smart.


We're a good wee team and I'm looking forward to seeing our progress.

Mortgage at 12/07/2022 = £175,000
Mortgage today = £166,457.86
300 282 payments to go.
House buyout fund £3,261.67/£40,000
Random Pick Fridays = £80.01
«13456732

Comments

  • Sarahwithlove
    Sarahwithlove Posts: 2,156
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    Some of the banks now have good regular saver interest rates and they only seem to be going up so maybe look at putting the OP into one of them. I use chase myself atm for 1% cashback on purchases, 5% round up account and there 1.5% savers which I have two of. 
    *Dad loan - £5300 - £3100
    *Virgin Credit Card - £3552.50 - £0
    *Barclaycard - £0

    *Total debt - £3100*

    *Sinking Fund - £1500/£3000*
    *Emergency Fund -£0/£3000

    *Debt Repayments Pot - £0/0*

    New diary- https://forums.moneysavingexpert.com/discussion/6474943/the-three-cs-coffee-clothes-credit-cards/
  • girlatplay
    girlatplay Posts: 3,883
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    Some of the banks now have good regular saver interest rates and they only seem to be going up so maybe look at putting the OP into one of them. I use chase myself atm for 1% cashback on purchases, 5% round up account and there 1.5% savers which I have two of. 
    Thank you.  I'll have a look.
    Mortgage at 12/07/2022 = £175,000
    Mortgage today = £166,457.86
    300 282 payments to go.
    House buyout fund £3,261.67/£40,000
    Random Pick Fridays = £80.01
  • savingholmes
    savingholmes Posts: 26,821
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    HSBC or FD offer 3.5% reg saver, San do  2.5% as do nwide
    Achieve FIRE/Mortgage Neutrality by mid 2030
    1) MFW Nov 21 £201,999 with 237 payments to go - now £184,341 Equity 26.26% (lower post move compensated by EF)
    2) Mortgage neutral by June 2030 AVC £7,613/£127,466 AVC target 5.97%
    3) FI Age 60 annual income target £12,500/30,000 41.66%
    Achievements: CC free since April 22. 1 year EF from Jan 24 & dedicated pot for home improvements
  • savingholmes
    savingholmes Posts: 26,821
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    Welcome to the mfw boards. I am sure you will make great progress and will follow as always.
    Achieve FIRE/Mortgage Neutrality by mid 2030
    1) MFW Nov 21 £201,999 with 237 payments to go - now £184,341 Equity 26.26% (lower post move compensated by EF)
    2) Mortgage neutral by June 2030 AVC £7,613/£127,466 AVC target 5.97%
    3) FI Age 60 annual income target £12,500/30,000 41.66%
    Achievements: CC free since April 22. 1 year EF from Jan 24 & dedicated pot for home improvements
  • girlatplay
    girlatplay Posts: 3,883
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    @savingholmes thank you for coming with me
    Mortgage at 12/07/2022 = £175,000
    Mortgage today = £166,457.86
    300 282 payments to go.
    House buyout fund £3,261.67/£40,000
    Random Pick Fridays = £80.01
  • joedenise
    joedenise Posts: 16,377
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    Also followed you over @girlatplay.  Always read by DFW diary but didn't post much.

    Definitely think a regular saver would be a good idea for your OPs until you can get LMG on board with them too.

  • girlatplay
    girlatplay Posts: 3,883
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    Hi @joedenise thank you for coming over.  I'm looking at places to put the OPs.  I think I've decided on one, just waiting for them to check my ID.
    Mortgage at 12/07/2022 = £175,000
    Mortgage today = £166,457.86
    300 282 payments to go.
    House buyout fund £3,261.67/£40,000
    Random Pick Fridays = £80.01
  • girlatplay
    girlatplay Posts: 3,883
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    Forumite
    I've opened a 95 day notice account with variable interest of 1.83% gross.  The first OP of £10 has now been safely transferred into that.  Here's to many more OPs.
    Mortgage at 12/07/2022 = £175,000
    Mortgage today = £166,457.86
    300 282 payments to go.
    House buyout fund £3,261.67/£40,000
    Random Pick Fridays = £80.01
  • girlatplay
    girlatplay Posts: 3,883
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    Forumite
    I sent another £1 to the mortgage as £174,001 was just annoying.
    Mortgage at 12/07/2022 = £175,000
    Mortgage today = £166,457.86
    300 282 payments to go.
    House buyout fund £3,261.67/£40,000
    Random Pick Fridays = £80.01
  • beanielou
    beanielou Posts: 89,263
    Academoney Grad I'm a Volunteer Ambassador Mortgage-free Glee! Name Dropper
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    Happy shiny new diary  :grin:

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    Lou~ Debt free Wanabe No 55 DF 03/14.**Credit card debt free 30/06/10~** MFW. Finally mortgage free O2/ 2021****
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