MFW's - a dying breed?

setmefree2

Jonbvn wrote: »

We are siwtching to a lifetime tracker mortgage (with minimal fees), since it is clear that if you remortgage on a regular basis the fees are more than significant. Our new mortgage rate is slightly less than the best paying ISA rate. Given the marginal difference between the two we will fill up our ISA's then pay-off the mortgage (I realise we are fortunate to be able to do both).

Must say, we reached this conclusion too. Our tracker has the added advantage of being able to overpay unlimited amounts as well. I will worry, however, in the longer term if inflation starts to lead to increases in mortgage rates. Might have to rethink then.

LookAfterThePennies_4

To be honest, the Credit Crunch has made me even more determined in my quest to become mortgage free. I am throwing every spare penny at it in the hope that I have it paid off within the next 2 years.
I don't know any other mortgage free wannabees either (apart from on this forum) I don't even tell people I'm MFW anymore as they tend to think its impossible!
Do any other MFW's tell others of their quest to be motgage free? If so, what kind of reactions do you get?

Miss_Pink_3

LookAfterThePennies wrote: »

To be honest, the Credit Crunch has made me even more determined in my quest to become mortgage free. I am throwing every spare penny at it in the hope that I have it paid off within the next 2 years.
I don't know any other mortgage free wannabees either (apart from on this forum) I don't even tell people I'm MFW anymore as they tend to think its impossible!
Do any other MFW's tell others of their quest to be motgage free? If so, what kind of reactions do you get?

I actually told someone the other day and their reply was 'yeah, right!!'. Like itcouldn't be done. I'll show them that it can and I'll be pleased in a couple of years when my mortgage is alot less and can spend my money on me:T

whitewing

We're still trying but it's getting harder, not specifically because of the credit crunch. More because I was so unrealistic about our spending before that I keep setting goals and then realising they're not achievable.

I can't overpay each day, so am on the Live on £4K challenge thread and that's where I am daily monitoring what I'm doing.

OH is starting a part time job on Monday, and we're hoping tax credits will get sorted soon (outstanding from Jan) so hoping to make small regular overpayments in the near future.

I have overpaid £2380 in 2008 so far.

setmefree2

LookAfterThePennies wrote: »

I don't even tell people I'm MFW anymore as they tend to think its impossible!Do any other MFW's tell others of their quest to be motgage free? If so, what kind of reactions do you get?

The SMFs never stop talking about it as a family - that includes our kids:D. Don't know what effect it is having on them but I hope it's a positive one:D. Outside the family I think our friends and relatives do realise we are trying to POTM as it sort of creeps into our converation. I am not aware that anyone we know is actually overpaying their mortgage. "In real Life" I don't think I've met another MFW.:cool:

angelavdavis

wymondham wrote: »

With the Credit Crunch etc, the number of posts on this section has reduced .... will MFW's become a dying breed if things carry on?? :rolleyes:

That's cos we are working our sox off to overpay our mortgages!

We're too busy for social interaction

On a serious note, in the last two weeks, I have walked past the Evening Standard Sellers displaying headlines of joblosses in the City. I personally think overpaying your mortgage (and therefore being able to reduce your outgoings without extending your term and therefore the interest paid) is a good insurance in case of redundancy.

phizzimum

I never mention being a MFW to my friends - OH frequently does and I always cringe because people's reactions are usually negative. In fact they get quite defensive about it.

I have no problem that they are content to pay a mortgage for the rest of their working lives but they seem to have a problem that we don't!

People seem to view the mortgage payment as an inevitable bill - like council tax or utilities. Whereas I view it as a debt - we wouldn't pay only the minimum payment on a credit card debt if you could afford to pay more, because we all understand the interest will cost us much more than the initial purchase. why can't people apply this principle to mortgages?

sorry...rant over! I'm just having one of those days I think!

So IMHO, we are not a dying breed, simply a persecuted one (phizzimum sweeps off stage in a huff....no-one notices)

michaels

[quote=Dithering Dad;10267229
It's surprising that whenever people compare Savings v Mortgages, they always just do a direct comparison of %age rates and never factor in the costs of getting the next mortgage deal and the costs of getting out of that deal if you need to (and the associated hassles therein).According to the google search I did, many financial sites are focussing on the fact that Mortgage Arrangement Fees have doubled in cost over the last year (Example here).

Higher arrangement fees coupled with punative early repayment charges? No thanks. I remain to be convinced that I'd better off with a mortgage than without one .[/quote]

This is all quite correct, the headline rate is meaningless so I always work on the total cost in terms of interest, fees, charges, (lost interest on fees paid upfront), termination charges etc and choose the chepeast cost over a 2 or 3 year term (no longer as mentioned I don't want to lose flexibility with long lock ins. MY current deal overall is costing 5 basis points under base but as the fee is fixed, the more I borrow the lower the effective overall rate hence the 'additional' funds that are going into my isa paying 10%, my wife's paying 6.5% fixed and my wife's savings account (currently paying 6.5% net as she doesn't pay tax) are only costing me 4.5% as you quote. The sum involved is several times the 10k you mention so making say 1.5% net on a decent sum of cash is very much worth it for me but I am sure everyone's circumstances are different.

One thing I would say, the ISA allowance is use it or lose it so if the available isa rate is similar to the mortgage rate then paying in to an isa is financially equivalent and more flexible - for example suppose an unexpected lump sum (inheritence?) is received, if the mortgage has been paid down instead of an isa built up then the lump sum will have to be invested in a taxable account whereas if an isa has been built up the lump sum can pay of the mortgage and the tax free isa funds kept.

angelavdavis

phizzimum wrote: »

I never mention being a MFW to my friends - OH frequently does and I always cringe because people's reactions are usually negative. In fact they get quite defensive about it.

I have no problem that they are content to pay a mortgage for the rest of their working lives but they seem to have a problem that we don't!

People seem to view the mortgage payment as an inevitable bill - like council tax or utilities. Whereas I view it as a debt - we wouldn't pay only the minimum payment on a credit card debt if you could afford to pay more, because we all understand the interest will cost us much more than the initial purchase. why can't people apply this principle to mortgages?

sorry...rant over! I'm just having one of those days I think!

So IMHO, we are not a dying breed, simply a persecuted one (phizzimum sweeps off stage in a huff....no-one notices)

I had a conversation with a friend who said to me that "its not worth paying off your mortgage". Then I added that if I meet my MFiT challenge, I stand to save myself over £55k in interest as well as reducing my outgoings by nearly £1000 per month. Strangely enough, he shut up then!!!:D

Truth is, if the credit crunch continues, I will actually pay a lump off the capital, but keep the offset so, if I need to borrow money for work on the house, I can use my offset funds and continue paying the low mortgage rate, rather than taking out a higher interest loan (hopefully, as OH and I will be able to save £3k per month, this won't be required as we will be in a position to save for any works). Of course, if the rates go up, I will have to change plan.

By the way, I am also one of the lucky ones who is able to pay into an ISA, the odd NS&I bond AND overpay the mortgage so other investments don't pass me by if they are more sensible than simply overpaying.

Dithering_Dad

michaels wrote: »

... hence the 'additional' funds that are going into my isa paying 10%, my wife's paying 6.5% fixed and my wife's savings account (currently paying 6.5% net as she doesn't pay tax) are only costing me 4.5% as you quote. The sum involved is several times the 10k you mention so making say 1.5% net on a decent sum of cash is very much worth it for me but I am sure everyone's circumstances are different.

One thing I would say, the ISA allowance is use it or lose it so if the available isa rate is similar to the mortgage rate then paying in to an isa is financially equivalent and more flexible - for example suppose an unexpected lump sum (inheritence?) is received, if the mortgage has been paid down instead of an isa built up then the lump sum will have to be invested in a taxable account whereas if an isa has been built up the lump sum can pay of the mortgage and the tax free isa funds kept.

Thanks for this, though I'm still a bit lost on your mortgage rate . What is your actual APR rate on the mortgage (including fees, etc) quoted in %age rather than 'basis points' ?

How did you manage to get a cash ISA paying 10%!!???

If you have significant savings in your wife's name, is the interest she receives not using up her tax free allowance and pushing her into taxable earnings territory?

I'm assuming you don't receive Working Tax Credit or Children's Tax Credit as having significant saving (I think anything over £6k) reduces the amount you receive?

As far as the inheritance example is concerned, while it would be nice to have the problem of what to do with a large amount of money if my mortgage is paid off, I'm certainly not going to stop overpaying on the off-chance of receiving a lottery win or unexpected inheritance! If I did get extra money and my ISAs were full I'd probably hide it from the tax man in premium bonds and National Savings 2 yr bonds.