GAP and LMG, can we become mortgage free?
Well, not anytime soon but it's good to have dreams.
I am finally venturing over here after years on the DFW boards.
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.
After the 5 years, one of four things could happen:
- LMG decides to move on so I buy her out
- LMG buys me out and I move on
- We sell and split the proceeds as above (on the assumption that the house has equity at that time)
- 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 today = £166,457.86
300 282 payments to go.
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