Mortgage free by mid 20s... Big ask or feasible feat?

NewStart3r

Sorry for the title, it's the best I've got right now!

Long story short, bought my first house at 19 but moved shortly after and have now settled in a 2 bed detached. At the time, took out a mortgage of just over £150,000 as a 5 year fix which ends in 2026.

I used to, somewhat flippantly, say 'wouldn't it be good to pay of the mortgage before the fixed term ends' but most folk told me that was near on impossible.

The more I've worked through it, the more I think it's more do-able than people have said. I've managed to meet the 10% overpayment allowance that I can make penalty free for the last two years and intend on keeping this up for the remainder.

I know I could probably get a better return via investing but the ultimate goal for me is to get the mortgage paid off so I have more flexibility with my working hours and can actually enjoy more of my time whilst I'm (relatively) fit and able to do so. 

So, I'll continue to document the journey here and see if being debt free by my mid 20s is a feasible feat or simply unrealistic. I'm always open to suggestions, advice, constructive criticisms etc. so if anyone actually happens to read this - please say hello  

2 years down, 3 to go!

beanielou

Happy shiny new diary 

NewStart3r

So a quick update to say I've met my 10% overpayment allowance for this year (2022/23). I amnaged it sooner than I'd planned as I had anticipated spreading out the overpayments right up until it renews in a couple of months. I'm quite pleased with this as it means more of my wage is mine to use as I need, rather than a chunk going on overpayments. However, to keep up the momentum and make the most of interest rates, I'm going to keep putting a set amount away every month. 

My mortgage is at a relatively low rate (2.32%) and all savings accounts currently beat this. So my plan for the next couple of months is to put my usual overpayment amount into a fixed saver or notice account. As it currently stands, most of these fixed/notice accounts are double the interest of my mortgage.

My thinking (and I'm prepared to be challenged on this!) is that whilst I've still got approx 3 years on the mortgage, if I can use the higher savings rates at the moment, I can grow my money before putting it directly onto the mortgage where I can't get it back. At least in fixed accounts, I still have access to the funds once they mature. 

Let's see how it goes...!

TimSynths

I like your plan, even if you don't clear it in full during your twenties, just imagine the position you'll be in on your 30th birthday and the savvy financial mentality you will have developed along the way.

I'm a lot older than you (nudging 50 soon) and have 5 years left on the mortgage come August and two at my cheap rate, my plan is to be able to clear the lot once the deal ends in May 2025 and I'm saving/overpaying into a S&S ISA, so far I'm on track.

NewStart3r

TimSynths said:

I like your plan, even if you don't clear it in full during your twenties, just imagine the position you'll be in on your 30th birthday and the savvy financial mentality you will have developed along the way.

I'm a lot older than you (nudging 50 soon) and have 5 years left on the mortgage come August and two at my cheap rate, my plan is to be able to clear the lot once the deal ends in May 2025 and I'm saving/overpaying into a S&S ISA, so far I'm on track.

That's very true, and something I often lose sight of when I think about my plan i.e. if I don't achieve what I'm setting out to do then I've missed the mark, but in actual fact I'll have learned so much. 

Good luck with your plans - it sounds like you're nearly there. If you don't mind me asking, have you always set out to pay off your mortgage early or has it been more of a recent goal? 

Youthgonewild

Wow, I wish I had your focus in my early twenties! I'm 37 now and got a long way to go to clear the mortgage. I'll be watching this thread with interest.

NewStart3r

Youthgonewild said:

Wow, I wish I had your focus in my early twenties! I'm 37 now and got a long way to go to clear the mortgage. I'll be watching this thread with interest.

Appreciate that - thanks! I realise I'm in an incredibly fortunate position to be thinking about this kind of stuff. Good luck with your journey.

NewStart3r

Update time!

Thanks to everyone who has commented on this thread so far. It's been a surprising motivation to know people are actually reading it!

Yesterday, I applied for a 0% balance transfer credit card. It'll be my fourth 0% credit card - some have been for balance transfers, and others have been a mix of balance transfers and purchases. It was only recently I found out that the method I've been using has a name - stoozing. 

I've never used a credit card to buy anything that I wouldn't already be buying, and the timing for this one is perfect as I have a couple of big expenses coming up between now and the end of August. 

Rather than locking all the equivalent funds in fixed savings accounts, I'm going to sacrifice the extra interest in lieu of having the cash available if I need it. There are a few things around the house that I'm thinking of doing - things like solar panels and new windows (before the windy winter comes around) but I've not committed to any of those yet.

The other credit cards I already have a balance on, remain at 0% until mid to the end of next year, so it's a decent amount of time to build on the cash. I think this is particularly important for me given that I have 3 years left on the mortgage fix, but my monthly income is approx 2500 (30k take home per year) before bills - and the outstanding mortgage amount currently stands at ~117k. So it's pretty clear I need to make my money go further if I'm to meet my goal. I do have some bits invested but it's really minimal at this stage and still wouldn't be enough to make up the gap!

NewStart3r

It's been a while since my last update and a couple of things have happened. 

First off, I've had, and will have, a few bonuses at work (one of which is a pay rise!) so I'm pleased about that. However, I'm also conscious that it's pushing me ever closer to the higher tax bracket so I'm trying to be as tax efficient as possible. I pay into a company share scheme pre-tax and have maxed that out every month. I've also upped my pension contributions by another couple of % so it's the maximum that the company will match. If, nearer April next year, I see that the bonuses have put me near or above the higher tax threshold, I'll make an AVC to put the difference into my pension too. 

I got a few quotes for solar panels but I think it's a plan on hold for now. It just doesn't seem like I'll recoup costs anytime soon. I'm on a fixed tariff from 2021 where I'm only paying approx £35 per month for both gas and electricity. I realise how fortunate that is in the current climate! My fix is due to end in August so I've just had a look at the latest tariffs and MSE's guide on fixing or staying on the cap and decided that even on the new fixed tariff, my payments are still manageable. The main thinking behind solar panels was if the payments would be extortionate, it would be better to pile that money into the investment of panels and start that off sooner rather than later. But, the big stickler for me is a battery. I'd need one to maximise my usage when I'm not in but that rockets the price and it just doesn't seem to make financial sense right now.

I've also decided to hold off with the mortgage overpayments once my allowance renews in August. Instead, I'll commit the same amount into a high interest savings account and either do a lump sum at the end of the account year or keep it tucked away until the end of the mortgage fix. I'll focus on maxing out the tax-free wrappers first too, at least then I'll have access to the cash if I need it. I may, depending on how the interest rates go, find that I need to reduce my balances to avoid tax on interest. If that's the case, I'll reduce the amounts by overpaying the mortgage - but for the time being, the mortgage overpayments are not top of my list whilst rates are high and my mortgage is only at 2.32%.

How are all you folks getting on lately?

LeighofMar

Congrats on the upcoming bonuses. They will certainly help although I understand the need for tax efficiency as well. Lump sums later sound like a good plan. 

Similar over here. I'm making OPs while saving money in high yield savings and CDs plus retirement savings. We need to give ourselves a raise as things just keep getting more expensive. It would be so anticlimactic to pay off the mortgage but end up having the same expenses because of cost of living. 

NewStart3r

LeighofMar said:

Congrats on the upcoming bonuses. They will certainly help although I understand the need for tax efficiency as well. Lump sums later sound like a good plan. 

Similar over here. I'm making OPs while saving money in high yield savings and CDs plus retirement savings. We need to give ourselves a raise as things just keep getting more expensive. It would be so anticlimactic to pay off the mortgage but end up having the same expenses because of cost of living. 

Thanks! You make a very good point about living costs. That's one of the reasons I got solar panel quotes, as a means of seeing if I can cut my living costs longer term. I'm yet to find something worthwhile investing in that will help on that front - solar panels just aren't financially worth it for me at the minute. 

It looks like you're doing well in your journey (going off your signature). Are you still on track to be mortgage-free by the end of this year?