MFW's - a dying breed?

TurnaroundSue

Hi - Last year I re-mortgaged with Barclays - at a 10 year fixed rate of 5.65%, but as I only have 7 years left on my mortgage thought this would be okay. I am able to overpay 5% pa and thought that would be adequate as couldn't see that I would be able to pay that anyway!!

Now however my mindset has changed, am looking into cashing in SL endowment, and as will be completely debt free in August would like to throw my £500 per month debt repayments to the mortgage. Now this is where I struggle - I cannot pay more than 5% pa on my mortgage, but doing this alone will reduce by 1 1/2 years - so effectively will be paid off in 4 1/2 instead of 6. Is there anyway I can pay it off quicker using the lump sum without paying any penalties - or, as I guess you might say, that the minimum time I will be mortgage free is the 4 1/2 years?

Sorry if I sound thick, but not sure if there is something I am missing which I don't know about!

On another note, when I mentioned to my friend that we were MFW'ers - she just looked at me as if I had two heads and stated "what's the point in that, you've got to live haven't you?". Now when I am mortgage free in 4 1/2 years maximum (hopefully sooner), she will be saying to me how lucky I am at being debt and mortgage free, jibe me about being 'loaded' etc etc. Whereas in the meantime she will be out buying her new clothes, hair-doos, etc and think that I am LUCKY - no it will be down to shear hard work, and good financial management.

Dithering_Dad

angelavdavis wrote: »

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

What's even stranger is that if you said you were putting away money into an investment that will make you 55k, people will look at you as though you're a financial guru and never once say "Oh Angie, what's this daft notion about investing a small amount of money each month to get a return of £55k? Life is for living, not for sitting around eating beans on toast and watching every penny. Stop doing this investment nonsense at once, you silly girl".

setmefree2

Dithering_Dad wrote: »

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.

Off the point of the thread - but how does this work? Someone else said this to me. How can the tax man not know you have premium bonds and National savings since they are both govt owned?


PS. The SMFs stand to save £142k if we pay off our mortgage by 2012 - (10 years instead of 25)

FreedomGirl

Hi,

Given that VirginOne have NOT dropped their rates, and I hear on the MSE grapevine that offsets are in the banks' sights for getting more money from us, I am more glad than ever that we are MFW-ers. DD and Angela - that example is a perfect way to get across why we are doing this.

Unfortunately, we can't really talk to any of our friends about it, apart from one couple who paid it off a couple of years ago.

(We did mention to someone once that we had a low mortgage, and they always now bring it up in conversation, and appear a bit envious. Mind you they shop at John Lewis and upwards so I can see where their cash is going )

TallGirl - I love the chart - I was showing it to my other half today.

FG

Dithering_Dad

setmefree2 wrote: »

Off the point of the thread - but how does this work? Someone else said this to me. How can the tax man not know you have premium bonds and National savings since they are both govt owned?

The tax man isn't interested in the money you have in ISAs, Premium Bonds or National Savings because the money is tax free and so you don;t have to declare them on your annual return. It's not so much they don't know, it's that they don't care.

FreedomGirl wrote: »

Given that VirginOne have NOT dropped their rates, and I hear on the MSE grapevine that offsets are in the banks' sights for getting more money from us, I am more glad than ever that we are MFW-ers. DD and Angela - that example is a perfect way to get across why we are doing this.

Same here - this is our third rate drop from the BoE and my provider (Standard Life) has actually put their rate up! Makes me even more determined to get rid of the mortgage!

Frugal_Fox

I don't think so - having just become debt free yesterday (not obviously the mortgage! ), I'm looking forward to becoming Mortgage Free too. However, after very hard work over the last 3 years, I'm looking forward to a few relaxed months before I 'invite' hubby to join this new challenge!

setmefree2

Dithering_Dad wrote: »

The tax man isn't interested in the money you have in ISAs, Premium Bonds or National Savings because the money is tax free and so you don;t have to declare them on your annual return. It's not so much they don't know, it's that they don't care.

Interesting. Given that this has become a sort of "urban myth" I know where I'd be looking if I was a tax inspector. Strange.

Shineyhappy

I was planning on starting my MFW quest a while ago, but what with one thing and another it had to go on hold. The credit crunch has made me more determined than ever to start overpaying my mortgage and hopefully I will be able to start overpaying soon! Only down side is that I moved my mortgage to Abbey and you can only make 500 pound overpayments! But my piggy already has some money in it- although its a small piggy so wont be able to save the full 500 in there so at least I will get some interest on it in the meantime.

I have talked about this idea to other people and yes most people think I am mad, although my OH is on the wagon (he has a seperate property) and is also a mfw.

phizzimum

setmefree2 wrote: »

Interesting. Given that this has become a sort of "urban myth" I know where I'd be looking if I was a tax inspector. Strange.

I don't understand this post. ISAs and National Savings are tax free - that's the point of them. What is the urban myth?

setmefree2

Dithering_Dad wrote: »

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.

Sorry, since DD said he would hide*cough* his money from the tax man (not trying to get him into trouble;)), I assumed he was under-declaring his income. I have heard this before from other IT contractors (for years!) and I just can't believe it is still true (if it ever was) that people can hide money in premium bonds...I know the investment is tax free and I think DD knew what I was saying as he said that the tax man is not looking in this direction - ie Premium Bonds are off radar to the tax man. But given how long this sort of "evasion" *cough* has been going on, I'm just surprised that tax man hasn't cottoned on, that's all.