Snug & Sorted: Our Race to Mortgage Freedom

kaycastle

Thank you both I feel so relaxed in this house, really nice neighbours too. Its better than what I hoped. 

A more sizeable mortgage to get through so this will be interesting challenge

kaycastle

Right, finally the juicy financial update!

Former mortgage for first house: Reduced from £228k to £167k over about 7 years. Various house improvements to maximise potential as much as possible without spending lots and increased value by +19%. I'm really proud of this Considering in this time also got married, had a child, had maternity leave, and then on top of maternity leave had 1 income for a year when OH moved careers. So much of that progress was due to overpayments in the first couple of years and inspiration found on MSE. 


New mortgage: £295k     
House worth £450k so okay LTV of 66%

ISA: £37,039.3  @ 4.3%
Emergency fund: £1,515.56  @ 6.78%
Pension: ~£38k 

Joint monthly income: £5.2k
64% of the income is from my job


New challenges and next steps:

• My last mortgage and bills were far under means for a while so I've been able to save tons, I've had a budget but I've not ever had to be careful if I need to buy something 
• Monthly mortgage payments are now +85% higher as was still on low interest that was coming to an end this year before too 
• I absolutely love love this house, it has everything we ever need - I was really worried after moving I'd be like ughh why did I spend all this money but it has made a huge difference to our lives already - amazing location, more space, and a more homey cosy old style that gives me a warm feeling all the time
• Which has surprised me as I've been so objective about where I live until now and didn't think I'd ever need a "forever" home until I found this one
• Moved in 3 weeks ago now and its been very spend-y as you just land up needing to pay for small fix items that add up, we have a much bigger house to fill and wanting to enjoy the area a bit
• So next post I need to finish up writing about monthly expenses and budget 
• And plan for how I'm going to pay this mortgage down quickly so I can have more freedom in future
• YIKES

Aside from this I also planted lots of seeds, veg, chilli and flowers as have a lovely garden to look after and the seeds were about to be out of date. Not sure how much luck I'll have with them but there is also a community seed/garden swap this Saturday that I'm going to attend

kaycastle

Hiya All, LONG POST WARNING

I know I'm in a better position than a lot of people at the moment so I feel very lucky.

Its really hard to work out how I'm going to make a dent in such a large mortgage without sacrificing on life way more than I want to. I keep trying to think about what I've learned on MSE but it sometimes feels overwhelming - I need diaries about large mortgages for motivations.

And oh my gosh how I frickin hate how much banks make from mortgages. Payment towards principal is under £400 a month and they get £1100 in interest. It feels so wrong. Obviously I've made this choice but it just seems absolutely crazy that they need to make this much. I did just work out that 25% of my income goes on being able to work: childcare and train costs. But must not think about this too much or I get very annoyed at the world.

I'm trying to balance saving for the future and living well now.

I'm going to be 33 this year and probably have a second child soon. I want to be able to look back at 40 and find:

• I did full year of maternity leave, not just 6 months like before (as we were on one income)
• I retrained and moved to more hands-on work OR I work for a company that aligns with my values, perhaps something linked to sustainability/charitable which will mean a lot less income. I'm lucky to now work in a company of lovely people, better for my mental health but I still just so want to do something that's not staring at a computer screen every day/focused on making more money for rich men....  would love to do this sooner if I can! Not sure how I'm going to do this - the thought of paying £9k a year to do a course at a college sort of disgusts me so I think I might find more low key options/apprenticeships etc.
• Feel and be connected to my family and community, spending quality time together, shopping locally and supporting each other.
• Gone on some little adventures with my family round the UK 

How to do this:
- Build savings to support us for full maternity leave. It would be SMP for 8 months of maternity leave.  Goal: £15,000 Complete - will dip into ISA if needed but will also try to live very frugally on maternity leave
- Pay down mortgage to reduce term and the interest/monthly payments when remortgage is up. I know its hard to predict but I think it would be great to get the mortgage payments closer to £1000 a month rather than £1500.


- OH pay is guaranteed to increase to 40k over the next 7 years which will be very handy, his already in his dream vocation too, its just cost a bit to get there. So his income would be £2500 a month rather than £1900 so that's a huge leap even with inflation costs.
- There will be £400 extra from 2026 just from paying off student loan and family loan. This could immediately go to more overpayments or into building savings for career move. 


Current outgoings total: £3760.55

Mortgage	£     1,512.00
Life insurance	£           24.82
Internet	£           32.99
Council tax	£         312.00
Pet insurance	£              7.11
Mobiles x 2	£           22.99
Gas/electrics	£         124.95  (this is how much the direct debit has started off, don't know how much it will actually be. Getting smart meter installed)
Water bill	(not sure yet, needing to get water meter installed...)
Childcare avg.	£         575.00 (Only for 3 days a week (family help with rest). Includes 2 year funding. This will exist until both kids are school age)
Groceries	£         500.00
Petrol	£         100.00
Train to work	£         280.00 (just once a week, daylight robbery!!)
Spotify duo	£           14.99
Furniture finance	£           46.36 (Interest free)
Family loan payback	£         100.00
Charity	£           15.00 (£5 of this is RSPB membership so free days out too)
Teachers union	£              7.04

Then there is £85.30 towards the annual bills. Car insurance, tax, buildings insurance, TV license.



Leftover is £1563 for everything else each month. Days out, Savings, overpayments, haircuts, house improvements. eating out etc. 

Which is so much more than what others have so I'm really lucky.

My goal is to lump sum £5000 every year which already have in ISA technically so should be fine to achieve this but I want to put £400 in savings every month for this which should be totally doable, this would mean the mortgage is paid off 10 years and 6 months earlier when we're 52 if I did this every year.

I don't have any plans to do house improvements but I want to keep money back and save a bit for now just in case unforeseen problems crop up in the house, especially during winter that need fixes. Would rather have the money to make sure any issues are rectified quickly.

I'm being a bit unambitious for a couple of months as I don't know quite what our living costs in new area will be like so just want to see how it goes with that £1500 each month.

South_coast

kaycastle said:

I'm lucky to now work in a company of lovely people, better for my mental health but I still just so want to do something that's not staring at a computer screen every day/focused on making more money for rich men....   

I can definitely relate to this! I'm in the best place career-wise that I ever have been, and my work-life balance is probably is good as I can hope for, but yet.... I've resigned myself to continuing to chug along for now while I get my FI war chest in a better position, but I do still feel the urge to help people that might actually be grateful for my help 🤣!

kaycastle

I love the term FI war chest! I'm glad I'm not the only one who feels that way, do you know what kind of work you would do?

LadyWithAPlan

How exciting, your new home sounds wonderful. 
I am sure with your focus that mortgage will be coming down fast.

My mortgage will be £300k+ so I am feeling your pain on the bank interest

South_coast

kaycastle said:

I love the term FI war chest! I'm glad I'm not the only one who feels that way, do you know what kind of work you would do?

Not sure yet, I'm thinking either something for a charity or with the local council 🤔 Some way off at the moment though, unfortunately!

kaycastle

I've always been intrigued to know what it's like to work at the council or for an emergency service. I sort of hope in my 40s I can go through a time where I just try a few different things out.


Also first mortgage payment went out. Feels very official now!!

Thank you @LadyWithAPlan I like reading your diary, I've been seeking out some of the high purchase diaries recently for a morale boost

LadyWithAPlan

Yeah to first mortgage payment! 

Can I ask the term as my calculations for £300000 are more like £1900 + but I am older so shorter mortgage length 

I would not get too excited about my diary - it’s me running off on holiday and being fabulously frugal whilst also trying to get my house deposit up further - YNAB the budgeting software has helped more than I knew over the last few months 

I haven’t actually pulled the trigger yet - although may do what @South_coast suggested and look within a mile radius of a London Lidl  

Watty1

i retrained late after what is best described as a portfolio career.  Our initial mortgage was very high but it was possible to become MF(although i would never now recommend that for the unmarried). It is just that word "focus" but reading through my initial thoughts were to build a child EF so that you can take the full year off without worry.  If for any reason that fund is not needed it becomes a lump over payment.  
Just my thoughts as I read feel free to ignore