Onwards towards mortgage free living

gillynomad

Flo08 said:

In 4.5 years we will be 55

We have 4.5 years left on a 5 year 1% fixed rate

The balance on our mortgage will be approx: £55k

We currently have £25k saved in a high interest rate account

We also have £5k in an emergency fund

We intend to keep saving so that in 4.5 years we can pay off the mortgage balance

Only debt is a 0% interest loan which has £6k remaining (will be paid off in 18 months)

Not sure is this is the best plan...or if there is a more obvious/more efficient way?

Thanks for any advice! 

You might want to post a thread for this rather than in this diary (which is essentially my personal journey to mortgage freedom).

Having said that, it sounds to me like you are probably doing the right thing. With such a low mortgage rate it is definitely best to put any money you do have into savings accounts. Additionally, I don't know what your personal circumstances are but a 5k emergency fund could be on the small side if you still work/not yet retired so might be something you also want to look at say over the next 6 months. 

gillynomad

Added another £200 to the mortgage bringing the total overpayment to £600 for December so far. Money got transferred in from Chip so going to move that across to Zopa tomorrow. 

Been reading up on tips regarding Zopa so will probably put a big chunk of the money in the 95 day boost, some in a 31 day boost, and the rest as readily available. This money is mainly money for renovations in the future so not money I need to have quick access to at this point.

gillynomad

Final payment for the year made - £250 so overpayment for December is £850! Managed a total of £2,200 over three months for the 2022 MFW challenge which is £400 more than I was aiming for. 

I've also stopped using Chip as I noticed I was now being charged for each autosave. I think I have a pretty good system in place now for budgeting so happy to not use the autosave feature. Going to move my money and close the account in January. The money currently left is for the mortgage anyway, so makes sense to just pay it into mortgage sooner rather than later.

gillynomad

I withdrew the small amount of money I had in a S&S ISA - used half of that to reduce my phone "loan" to £200 (this needs to be cleared by June to ensure I don't pay interest) so means smaller payments next year needed. Also paid the small CC amount I had from this month. 

I'll probably put the rest of the money back into the savings pot I have to make that around a grand. Which is a nice number to start to grow from in 2023. 

Just thinking about my goals next year and what to focus on. Mortgage is still really important for the next three months until I can re-mortgage but I don't want it to be the only thing financially I am working on.

savingholmes

Lovely when you meet your goals. 

Hope you are having a lovely break.

gillynomad

Had a nice Christmas although a bit manic. Find I never really stop and rest and become quickly overtired...need to work on that next year! Somehow managed to stick within budget for gifts etc. and have barely spent this month. Being able to use points etc. was something I hadn't done before and was well worth paying a little extra at the stores for those points. (Rather than using amazon as an example)

Unfortunately I have to go back to work tomorrow. Not really ready for it. Work is pretty stressful at the moment and it's going to be a painful last few days of the year! 

gillynomad

Been looking at my 2023 financial goals. Think I am looking at the following:

• Pay £10,000 off mortgage

2023 has me remortgaging so not too sure if this is even feasible as I don't yet know what my rate/deal will be. At the moment, I'm looking at moving to a tracker as this is currently less interest than a fixed price deal. However, by April a fixed deal may be a better option. If I go to a tracker then I can swap to a fixed at any point so have a bit of flexibility if needed.

I managed to pay off around 7.7k this year but my monthly interest is looking to increase from approx. £300 a month to approx. £500 a month. I didn't start properly overpaying until September (up to that point was only a DD of £150 a month) so even if I don't overpay as much as I have been over the last three months I think my goal could still be achievable...

• Raise pension to 7%

I was paying 7% with my old company but when I moved jobs earlier this year I was put on an auto 5% - so want to put this back up to 7% by the end of 2023. 

• Reduce Student Loan to £5000

I will be paying my student loan off before it "expires" and according to forecasts that will be within the next 3 years. I feel its now worth making extra payments to pay off my loan as quickly as possible (preferably in the next two years). It would give me an extra £240 a month (which would rise if I get any pay rises in 2023 too).

I've set a target that currently requires around £75 extra a month (on top of normal PAYE amounts) but if I get a pay rise in May or any bonuses then I can look to reduce any extra contributions if needed.

• Increase Emergency fund by £2000

I did some workings out and based on my current wage and outgoings (i.e. bills/car payments etc), my EF needs to be around £10,000. I am 4 grand short so want to start making a little bit of headway towards that figure.

• Increase Savings by £2000

My savings took a bit of a hit this year, with home needing some repairs so want to build some of this back up. 

_________________________

I am not going to be attacking all of this at once. My mortgage and savings will be my main priority for the first 4-5 months of the year. Once I've remortgaged and know what the second half of the year will look like then will switch focus onto my EF and student loan. 

savingholmes

Always good to have a clear plan. 

Happy New Year

gillynomad

Well....not had a great start to 2023. Noticed some weird markings on the wall behind the sofa so pulled it away to check it out....only to discover damp. So going to need to get the wall damp proofed (on top of fixing the cracks at the front). I had previously had the interior walls damp proofed but the wall that now needs work, was at the time, judged to be ok. 

It's definitely not ok anymore. Huge bummer but glad I have my project fund (which is essentially house renovation fund) so although annoying I have the money to get it fixed quickly. Just not how I wanted to start 2023. 

savingholmes

That does sound distressing. Hope it's not a huge job. Glad you have the money for it.