Operation Mortgage Free

Hello,

I used to post on this forum when my career was first starting out after university, saddled with debt - it was really helpful. Looking back I managed to clear debt fairly quickly but I remember it being very hard as we pushed ourselves with a mortgage of £1100 a month on a house we bought off plan for £182k….then there was the financial crash. I was a trainee earning £15k a year. Looking back on my old account which I’m frozen out of:

Lightbulb Moment : March 2008 @ £7512.77
Total Debt : [strike]£6912.77[/strike] [STRIKE]£6512.77[/STRIKE] [strike]£5987.00 [/strike]
[STRIKE]£3701.00[/STRIKE] [STRIKE] £1,150[/STRIKE] £357.00

DEBT FREE TARGET DATE December 2010

Fast forward which seems like a blink of an eye….3 kids later and the career has gone well. We built our own house in 2017 using a self build mortgage borrowing about £350k

That mortgage is now £303k and my plan is to clear that in 5 years maximum. It feels like a massive challenge, but I like a challenge. This will be my journey and somewhere to refer to, to help with discipline. I have a wife who likes to spend ….so wish me luck! 

I am allowed to pay down 10% per year - mortgage rate is 1.79% until May 25. I understand logic of saving rather than paying if saving rate is more than 1.79% but am I better saving it all then paying off in may 25 or using the 10% allowance each year? Any help appreciated cheers :)

Comments

  • IAAM
    IAAM Posts: 95
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    edited 11 November 2022 at 10:16PM
    Hi

    I looked into savings rates a few days ago and they significantly outweigh my own 1.64% mortgage rate**. That being the case, it just doesn't make financial sense to me to make OPs to my mortgage account directly. 

    (I've found a 5% pa regular saver, a 4.5% one and some 3.5% ones)

    What I'm doing instead is a combination of approaches which include setting up some 12 month regular savers accounts and paying in the maximum allowable. Once I've got the interest paid on those accounts in 12 months' time, I'll transfer the balances across to my mortgage. I'll then review what regular saver rates are on offer at the time and see if it is still better than my mortgage rate. If so, I'll take out some new 12 month regular saver accounts and repeat the process for another 12 months.

    To make me feel a bit better about this approach, I've set up a spreadsheet with my current mortgage balance on and I'm reducing this figure each month by the amount of money I'm paying into the regular savers. This might seem odd as, of course, my mortgage balance isn't reducing (beyond the usual amount). However, I personally need to see my mortgage coming down at this quicker rate so that I can see the impact my more-conscious spending and saving habits are having, and that spurs me on.
    Mortgage Balance: £162,615.84 (December 2022); £163,945 (November 2022)
    Current MF date: Feb 2032.  (Previously: Jan 2033)

    Target MF date: May 2027
    (Overpayments needed to achieve this: £1,750pm!) 

    Joint spend: £391.09 (Nov)
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