Daring to Dream: Mortgage Free by 63

DrSpendingLittle

Hello and welcome to my new thread. I'm graduating myself from the Debt Free Diaries board, where I have been on and off since 2017.  

I am about to embark on the next stage in my building wealth journey - becoming mortgage free! 

I successfully paid off all my debt back in 2019 and, having taken a hiatus from MSE, returned a few months ago to refocus myself on my financial goals.   

For background, myself and my Fiancé (DF) are in the process of buying our next home, having completed the sale of ours back in June. We broke the chain and are currently renting until our purchase completes. We're hoping this will be sometime in November. We have a 2 yo who is in full time nursery and we both work full time.  

We're about to take on a mortgage of £357,000 over 22 years on a 5 year fix with a 60% LTV. The interest rate we have been offered is 3.77%. I will ask our broker to do a rate check in a few weeks to see if we can secure a better deal.  

Our new home will be our first proper family home now we have our little boy and one we anticipate staying in for a good 10 years at least. DF has ambitions to eventually move further out into the countryside but for now we've decided to live closer to our places of work to make the every day grind of daily life as easy and convenient as possible.  

We are hoping to cash flow as much of our buying fees as possible, though we might need to dip into savings to cover some of these costs. 

So, my new diary is a space for me to share my thoughts and experiences as I take the first few steps in a much longer journey towards becoming mortgage free. Watch out for many rookie errors! I am really looking forward to reading your diaries and learning from your journeys to help me on mine. 

DSL

DrSpendingLittle

First things first - I need to update my signature to reflect my new priorities and goals. Top of the to do list and hopefully I'll get to that shortly. 

DrSpendingLittle

Here is a back of the fag packet zero-based budget for when we move into our new home and activate our new mortgage.

It's based on a comfortable-to-us standard of living during our nursery years. Our son goes to school in 2027 and we'll get more free hours in Jan 2026, so we should be in a better position to start overpaying the mortgage more properly by then, though we will need to balance overpayments with saving for his future.

We have been contributing into our workplace pensions since we started our careers and I paid off my student loan about 12 months ago. 

We have a decent emergency fund and some separate savings to use as set up costs for our new home. Other than our car loan (£5K remaining) we are debt free - we decided not to pay it off as the interest rate is lower than our savings rate.

Joint Net Monthly Income: £7,600

Fixed Expenses: £4,250, headliners inc: 

• Mortgage £1992
• Council tax: £189
• Nursery £950
• Car payment £309 (took out a low cost bank loan in 2022 rather than using savings, ends 2026)
• Life insurance £170
• Energy £240

Fluid Expenses: £2,000, headliners inc:

• Groceries £900 (yes I know... we like our grub and this is likely an overestimate!)
• Petrol £120
• Commute £250 (probably an over estimate)
• Cleaner £100 (undecided on whether to have one as of yet)
• Child-related expenses £100
• Family entertainment £100

Yearly Expenses: £550, for car, house & garden maintenance, insurances and gifts.  

Savings: £130, divided into a measly £69 mortgage overpayment for now and £60 for little ones future. 

Personal Fun Money: £300 for me, £350 for DF (pro rata based on income, 1/3 intended for personal savings) 

We have no big holidays planned for the near future as we can use a family property we have access to for staycations. I do want to take LO abroad before he starts school, so that will be a short term savings goal to consider.

DF and I have had separate finances up to now, so it will be a bit of a learning curve for us in pooling things and making financial decisions based on a household view, not a personal view. 

DSL

DrSpendingLittle

Managed NSD yesterday though the temptation to pick up a snack on the way to nursery pick up was strong! 

Haven't spent any money this month yet, as my ch4se app is so gallantly reminding me every time I log in. However, I do need to do a small top up shop after lunch to get ingredients to make a meal with some freezer meat.  

WFH today - it's cold this morning and we have had started having the heating on every now and then over the past few weeks. The little one sleeps so much better when it's warmer, so I am sacrificing a bigger energy bill for a full nights sleep! 

I've finally received all the interim statements I need to complete the fraud check with the solicitors, so I must send those over today with the narrative statement about where the deposit funds are coming from. The EA rang yesterday to find out when our survey was booked in as our vendor's vendor was asking. I think we're all trying to push the transaction through asap. It would be good to complete in mid November, but that would only be 8-9 weeks after the chain was completed and 10 weeks since our offer was accepted. Our vendor is buying an empty house and we're renting, so it's a small chain but one of the properties is leasehold so we do just need to be patient. An extra month in rented is an extra month of saving and accruing interest on the deposit. 

DSL

beanielou

Happy shiny new diary 

DrSpendingLittle

Thanks @beanielou  

Well yesterday turned out to be another NSD as DF did the top up shop when he went out. However, he forgot a couple of crucial items - coffee for one! - so I'll get those today.  

I booked a xmas delivery slot yesterday. I did use our current address on the assumption I can change it if we have moved by then (which I hope we will have!). We're not moving that far from where we are currently renting so I don't see how it will be a problem. It's still within the catchment area of the supermarket. It's the first time I have actually booked an xmas slot but I think it will be useful now we have a rambunctious toddler to manage.

Lots of direct debits came out of the bills account over night, so YNAB has been reconciled. 

I'm thinking of turning October into a no buy / low buy month seeing as I have managed to get to the 4th without spending any money. I need to do a little more thinking about what is and isn't included before I commit as from watching a few online videos about it, that does seem to be the key to success. However I am fully dialled in to saving as much as possible at the moment, so maybe the timing is right. 

Little one has woken and is chatting to himself in the cot so I'd better get our day started. WFH today, no spends planned other than the micro top up shop. 

DSL

DrSpendingLittle

Before I forget, I'm going to do some overpayment sums later using the MSE overpayment calculator to see where we stand and now much of a different various overpayment ££s will make.

Overpayments won't be something we can get stuck into for at least 12 months given nursery fees and new home set up costs but the exercise will give us some idea of ambitions / goals and what we could achieve.

Its obviously going to require a different mentality than the more aggressive, short term debt repayment methods I used in the past, so coming up with a realistic approach that we can commit to over the long term and really get behind will be important.   

DSL

DrSpendingLittle

A quick lunch break to do some mortgage overpayment calculations. Assuming the same interest rate, the calculator reveals:

£290 monthly overpayment reduces the term by 4 years
£210 by 3 years
£130 by 2 years
£65 by 1 year

My initial budget was for £69, which would reduce the term by 1 year and 1 month.

A token £50 overpayment will reduce the term by 9 months, so not to be sniffed at!  

The £290 overpayment is not feasible until 2027 at the earliest.

£50 or £69 is certainly feasible in the short term, certainly immediately after we have moved in. Getting that habit established as normal from the beginning will I think be a good course of action.

Once we've settled into a financial rhythm and got used to the new budget, we can begin to see where we can cut back to increase overpayments. My thought it that we do it incrementally, so an extra £10 a month for a few months then an extra £20 etc etc. 

DSL

DrSpendingLittle

Finally spent £8 yesterday on some coffee, milk and snacks for little one to keep him entertained on the drive back from nursery. Had freezer meal for dinner. Will need to do a weekly shop over the weekend plus we do need a few household items too. 

We have a quiet weekend planned as we’re all full of the first nursery cold of the season. I really hope this autumn / winter is better than last year; we were so ill with every cold and bug going thanks to little one going to nursery. I’ve been taking vitamins so hopefully that will help and I must book a flu jab!

The weather is looking lovely today so I think we’ll head out for a forest walk at some point to give LO a chance to burn off some energy.

Enjoy your weekends!

DSL

beanielou

Was just going to say high dose vitamin c works & remember your vitamin d for winter! 

DrSpendingLittle

Hoping on whilst having a quick 'mental rest' from a particularly mentally draining task at work. We had a food delivery arrive on Sunday with a good range of dinner options for this week. That also included some stocking up of household essentials, so it was on the more expensive side. We then went out for the afternoon and spent £18 at our family fun destination which was lovely. We resisted coffee / cake options and waited until we go home for a late snack before dinner. 

This week should be relatively normal in that we have no social events planned during the working week and it will mostly just be the usual daily grind. We're both in the office a couple of times this week so we have some easy dinner options planned for then to avoid the temptation to order a takeaway as an easy option. Easy options have also been planned for the little one on those days to minimise the mental load. 

This week I will however need to pay for the L3 building survey in advance of it being done in a few weeks time, so it will be an expensive week. I'm also expecting our former energy provider to deduct the reversed charges bill from my bank account this week, which is another £360. 

This morning I went via h0me b4rgins on my way back from nursery drop off to collect a couple of toiletries I had run out of. It was quite interesting to browse all the seasonal aisles to see what was available and how much of a ££ drain all that stuff can be. I can see why people get carried away with decorating for halloween and xmas when there are so many cheap trinkets available to buy. The issue is that it all does add up and once you're committed to, for instance, decorating for halloween, I can see how easy it can be to get carried away and spend a lot more than anticipated. As the little one gets older, I am sure we will get involved in all that, but whilst he is in his early years, I think we will try to keep those types of decorations to a minimum. Once he is in preschool and school, we will undoubtedly get pulled towards the world of competitive parenting and the egregious overconsumption that can entail. For now, we are quite well insulated from all that, so I will revel in that peace whilst I can.  

I'm not expecting much of an update on the house move this week. The solicitors are continuing to work with each other to raise and respond to enquiries, so I assume we won't hear from ours until they are done and ready to produce the property report and contract to sign. We still need to sign and return the mortgage deed but I'm waiting until our broker does the rate check to be honest. Other than that, I have done some preliminary scoping of prices for house insurance, which all seems within cost expectations. I just need to ask the vendors about locks (though we will change them when we complete). 

DSL