Mortgage Free by 50

APWhiteSavvy

Hi. Been lurking here for over a decade, and thought I'd finally register, participate in the community and set up my mortgage-free wannabe diary after reading through many others over the years.

Age: 33
Married.
1 child aged 2.
Outer London
Purchased house for £300k in 2019.
Current mortgage balance: £223k.
Current house value: £365k
Current equity: ~£142k

Would like to be mortgage free by aged 50.

We may move house one more time, we're undecided. Depends if we have another child, generally need more space, or decide to move to a nicer area a bit further outside London. Currently in a 2-bedroom terrace. Nice garden, easy commute into London Bridge and currently work 4-days a week at the office, 1-day from home. Wife is SAHM currently until child is in pre-school probably.

For the first 5 years we overpaid a bit to help bring LTV down for the first remortgage after our 5-year fix ended.

This came at the cost of pumping money into my pension fund, which currently stands at ~£23k. I think for aged 33 this is too low, and I need to boost this to allow time to grow and then refocus on mortgage overpayments in the future.

Current mortgage is another 5-year fix at 4.51%.

I have recently become a higher earner after an internal promotion to a sales role, so gone from £50k salary to ~£66k including commission. Salary varies.

Current priorities:

• Build up an emergency fund as we don't really have one right now after putting a big chunk into a mortgage overpayment to reduce balance just before remortgaging. We have a Santander Edge Up account and plan to keep this above 10k, which would give us more interest than using the Edge Saver account which is capped at £4k total. We feel £10k is a reasonable emergency fund.
• Build on pension contributions and claim additional 40% tax relief now that I am a higher earner, and reinvest that into pension too.
• Not been able to get Salary Sacrifice set up in my current role despite asking multiple times (being looked into...!), so I have opened up a SIPP with Vanguard and begun putting ~£300/mo into that. I may move to a Santander Personal Pension once that launches, as there are some funds on there I like from my Stocks & Shares ISA. Appreciate this isn't for everyone, but it's a personal choice and Santander have been great with us mortgage and security wise over the years.
• Ideal scenario would be to get the pension up to £100k by the time we next remortgage, so that's the current goal.

The idea is that £100k can then compound grow with minimal contributions whilst we refocus on bringing the mortgage balance and term down. I think this is a better approach than doing the mortgage first as otherwise I'll be 45, mortgage free, but then have £50k in the pension at most which puts the pressure on to get a decent retirement income. I feel doing it this way round is the best of both worlds, especially whilst I can benefit from the additional tax relief.

Not sure how often I'll keep this updated, but sometimes I like to talk about where I'm at and get a sense check, and I don't really have anyone to talk to about it, so hopefully I can get to know some like-minded people here and learn some things along the way, as well as give back some of the knowledge i've got from lurking hard over the past decade on here, Reddit and so much more.

My vice is oat mochas. Would probably be mortgage free already. 

I also had no personal finance education growing up, no money given to me when I became an adult, like a maturing JISA etc, and I spent money on silly things because of this throughout my 20s. I am now smarter and more savvy, and in a position where I can make up for lost time, so this diary is also to remind me of that and keep myself on track. I also want to make sure I provide some valuable knowledge to my own daughter as she gets older, and we do have a JISA for her presently which has some gifts from the family, which will be a nice gift for her when she turns 18.

Nice to meet you all.

Brie

Just popping in to wish you well on your journey.

And to state the obvious that the more you can pop into your pension the less tax you'll pay.  (assuming nothing changes later this month!)

You sound like you are being sensible and are trying to pass on that sensibleness.  And the less said about oat mochas the better.....

APWhiteSavvy

Brie said:

Just popping in to wish you well on your journey.

And to state the obvious that the more you can pop into your pension the less tax you'll pay.  (assuming nothing changes later this month!)

You sound like you are being sensible and are trying to pass on that sensibleness.  And the less said about oat mochas the better.....

Thanks and yes I think I might be at MochasAnonymous soon.

APWhiteSavvy

Baseline stats (I'll try and post a monthly update of this here in the diary!):

Age: 33
Mortgage balance remaining: £223,285.58
Target mortgage-free age: 50

Current house value: £361,467*
*Based on L&C Value Checker

Current equity in the home: £138,181.42*
* Current value minus mortgage balance remaining

October 2024
This month's mortgage payment: £1,088
Of that, capital towards equity: £248.24 
Of that, interest to the bank: £840.11 

Mortgage term remaining: 32 years and 9 months*
* Aim to reduce this with overpayments

Current focus: Pension contributions and emergency fund boost.
Once workplace pension and SIPP have increased to a suitable level I am happy with, I will then focus back on mortgage overpayments whilst pension pot is growing nicely alongside.
1-3 years on Pension focus, evaluating each year.

APWhiteSavvy

Age: 33
Mortgage balance remaining: £223,036.41
Target mortgage-free age: 50

Current house value: £361,467*
*Based on L&C Value Checker

Current equity in the home (amount): £138,430.59*
Current equity in the home (percent): 38.3%*
* Current value minus mortgage balance remaining

October 2024
This month's mortgage payment: £1,088.35
Of that, capital towards equity: £249.17
Of that, interest to the bank: £839.18

Mortgage term remaining: 32 years and 8 months*
* Aim to reduce this with overpayments

Current focus: Pension contributions and emergency fund boost.
Once workplace pension and SIPP have increased to a suitable level I am happy with, I will then focus back on mortgage overpayments whilst pension pot is growing nicely alongside.
1-3 years on Pension focus, evaluating each year.

Sarahwithlove

Now you are a high earner and moved to next tax bracket it makes sense to increase pension contributions. Does your wife have a pension? Can you increase your pension payments at work or make any additional voluntary contributions? The more you can do through work the better tax relief you'll get.