Lightbulb Moment!!!!!!!!

FairyElephant_2

Just done some calculations....actually did them 3 times as I couldn't quite believe what I was seeing.....

If I add up ALL our bits of savings, incl. ISA's, couple of little fixed-term bonds, few premium bonds, monthly savings accounts, etc. etc.......

ALL TOGETHER THEY ADD UP TO £50 MORE THAN WE OWE ON OUR MORTGAGE - WOW!!!!!!!!!!!!! So technically we could be 'Mortgage Free'......

For various reasons I don't want to pay it off at the moment - not sure if all these are valid reasons though:

1/When I say 'our' they are mostly 'my' savings - well I know that when we got wed we promised to share everything, but he still pays CSA for his kids from previous marriage, and no way am I going to let 'my' savings benefit his ex-wife with additional CSA payments if he gets re-assessed having no mortgage (he already pays her loads and 'his' disposable income is practially nil - which is why I have the savings!).

2/The bulk of the savings are in mini-cash-ISA's which are earning more than our mortgage rate of 5.19, which is fixed until June 2010 (def NOT paying it off beore this as NO WAY am I paying the early settlement fee!) - I figure that it is better to leave them there earning the interest than use them to reduce the mortgage?

3/I like to have a 'cushion' available in case of emergencies.....my ex was a notorious spender and left me with loads of debts, which I have struggled to pay off and get to the happy position I'm in today.

4/We have a rather decrepit old car, which is probably going to need to be changed this/next year before it dies completely.

5/DH is about to change jobs.

6/We haven't totally given up on TTC, although we are at a 'lull' in fertility treatment at the moment - if we carry on it is very expensive, and some of the savings will need to be earmarked for that, let alone for spending on the 'little one' on the slim chance we ever succeed.....

Still - it is a good feeling to know that we are winning!

All being well, we'll be able to almost clear the mortgage in June 2010 when we get to the end of our fixed rate - which will also hit my 'target' of being 'Mortgage Free at 40' - WAY-HAY! I'm a happy bunny today......

DrGUID

Sounds great!

Now is not a good time to be cashing in all your savings to repay the mortgage though, the economy seems to be sinking fast and you never know what uncertainties might be around the corner.

FairyElephant_2

Thanks. Just what I was thinking - nice to know I could though!

Kaz2904

Fabulous position to be in and yet you have still thought through everything calmly and logically and realised that it is not in your best interests to pay off the mortgage- yet. So now you can be happy in the knowledge that you owe less than you own and could pay it off if the bank called in the loan. Not many of us who could say that is there? Give yourself a pat on the back!

Trying_to_be_good

What a brilliant discovery! You must sleep really well after knowing your 'safety blanket' is so good!

Quick question for you, though - I thought the CSA didn't take into account mortgage (or rent) costs - just income before tax, then the tax, National Insurance and pension contributions?

dimbo61

hi trying to be good that is csa2 not csa1 but lets not get into all that.
Hi fairy elephant please make sure you are getting the best return on your ISA,s the TSB are paying 6.5% fixed for one year ISA if you pay in over £9000+ and martin,s latest email talks about barclays 6.5% ISA as well.
you can transfer all your other isa,s from other banks and as long as you keep it below £35,000 ( dream on ) it should be safe !!!
premium bonds have just got worse ! so now may be a good time to cash them in and fill your ISA in april.
dont pay off the mortgage until after june 2110 and if you have to move to a bigger house and take out a bigger mortgage think offset

getmore4less

FairyElephant wrote: »

1/When I say 'our' they are mostly 'my' savings - well I know that when we got wed we promised to share everything, but he still pays CSA for his kids from previous marriage, and no way am I going to let 'my' savings benefit his ex-wife with additional CSA payments if he gets re-assessed having no mortgage (he already pays her loads and 'his' disposable income is practially nil - which is why I have the savings!).

Great news the net worth £50 + the house.

Don't know how these CSA work but there are ways to have a mortgage with a big payment and low interest payments that last along time(25y) using some offset arrangments.

SPL

HI

Well done - what an inspirational story - it is reading updates like these that inspire and compel me towards my MFW goal

You mention TTC and I send all my very best wishes to you both

Keep us updated in what you decide to do and with any other news


xx

Martinslovechild

Congratulations FairyElephant for taking such a rational view of your personal finances. You're totally right to not redeem your mortgage just yet because of the reasons you've indicated, notably your ISAs paying higher rates than your mortgage is currently charging.

You're in a fantastic position and that's great news.

Well Done.

natman

Hello, Your story was very inspirational so i decided to do exactly the same and see what the ratio of money in savings versus money owed in a mortgage-

We bought our house at a really fortunate time in 1999 and had a mortgage for £43,000 over 25 years. In 2004 we decided to overpay every month and agreed for the mortgage term to be reduced to 10 years. We currently have 6 years 9 months left paying around £425 a month any how the figures........


Mortgage Outstanding -
£28,000 - Britannia Tracker +0.75 above base rate

Savings -
Isa - £6200
Tesco Savings Acount - £15,000
ICICI Save Acount - 3700
Premium Bonds - 100

Total - £25,000 - WOWZERS!!!!!!!!!!!!:eek:


This means I have just £3000 to be at a point where i will have the same money saved as i owe in my mortgage - this is very scarey and exciting....

House was valued 12 month ago at £145,000
To be honest i dont know what this means or what the heck i should do, but feels really good to be at this point. Really like the idea of paying it off, but really scared to put all the money in the house with the UK looking quite dodgey with regards to finances.

I am 31 and my wife is 29 - So with good luck, good planning and determination i would like to be mortgage free, any one any real ideas what i could do??? Was thinking of extending the term to 25-30 years and paying minimum off and saving the rest, i dunnno, my brains frazzled!!

setmefree2

You should read Martin's Article on Mortgage & Houses - (Purple above), "Should I pay off my mortgage?" (sorry I can't get the link to copy:rolleyes:)

Don't think he'd believe you should be left with no savings in this climate:o....are you getting the best interest rates that you can on your savings

And well done!!!!