How to be mortgage free after 8 years

SammyD_2

Well done TFG - but I am genuinely shocked by some of the negative comments posted.

Like you I make large overpayments (aiming for a five year repayment). Yes I have a good income. But I have plenty of close colleagues who are not in a position to make overpayments at all - why: (a) They bought in a "high status" area so have a big mortgage (b) they have two new cars, sky tv, gym membership, lots of holidays and have just enrolled their little ones in private schools, so my point is that it is not income alone that lets you make overpayments.

Any overpayment (especially in the first few years of the mortgage) makes a difference. We are still making overpayments even though we are now relying on my husbands very average income alone as I am on maternity leave. It is tough going keeping up with the overpayments, but we are determined to do it.

Most people have choices to make about how they spend their money DH's colleagues earn "average" incomes, but one of his friends at work was quite happy to spend £250 PER CHILD on Christmas (aged 2, 8 and 11) and bought a new car last year, while still complaining about the size of his mortgage. I am not criticising the choices he makes, but whatever your income you still have to play great defence in order to get ahead.

I hate Tesco, but their slogan really is great when you are standing in the supermarket trying to decide whether to spend on something you don't need.

carpool72

Thanks SammyD, hubby & I were discussing the other night about overpaying to be m-free in 8-10 years so I've been reading these threads with interest, but thinking these tips are all in the future for me as I'm about to start maternity leave & we both have a v. ave income (but also a small mortgage so it all evens out I guess). You've given me the spur to think that even on mat leave or as a SAHM we can still funnel a bit away.:T

roswell

surely paying a morgage off early is in the reach of everyone if they dont have other debts, lodgic says that a morgage is a multiple of your salary if you double the multiply you should be able to pay the morgage off in that amount of years ... ???
eg salary X 4 = morgage
salary X 8 years = morgage free

and thats not allowing for increases.

Jafa_2

Surely it's all relative? Big earners can afford big mortgages and can pay off the mortgage in bigger chunks. We're currently at the other end of the spectrum; a husband just graduated as a mature student with a £12k student loan debt, I'm at home looking after a young child and earning very little. We have a big incentive to reduce our mortgage - the mortgage comes to full term in 7 years and with an endowment policy that's unlikely to cover it we're faced with reducing the capital. I'm selling things we no longer need on Ebay, reinvesting interest payments, dividend payments, any small extra bits of money will go towards reducing the capital amount - even the savings we make on our monthly payments as a result of the gradual reduction of the capital, no matter how small, will be set aside in a separate account until we've got a reasonable amount (probably £250) to pay off a little bit more of the mortgage. Money coming in barely covers our expenses, but we're determined to knock £8k off our £48k mortgage in 7 years. Every little helps - good luck to anyone else attempting this - it makes so much sense I wish I'd had the gumption to do it earlier.

Jane

stolt

read this thread with interest, managed to get through the first few pages and will read the rest tomorrow in my lunchbreak. I think the majority rule that waht you have done TFG is excellent and has definatley inspied and my wife, we have just used the online calculator just to see if we overpay our morage 400.00 a month would save us nearly 30k plus we would pay it off in 8 yrs, i appreacite thats a lot of money a month and we will be making some big scarifices but thats got to be worth, we have two young kiddies aswell and we might not be able to make those overpayments every month but I will try to keep to them as tight as possible.

good luck with yours I;m really going to try to stick to this plan will probably be the best thing we did.

thanks for the incentive..

molesworth

TFG - your plan is obviously a good one. I have to say that with all my debt I don't regret a single penny of the money spent on taking my children (grown up now) to London occasionally, to the theatre etc and once to Paris (in all these cases if we were being sensible we couldn't really afford it). Otherwise, we were frugal a lot of the time! Living for the future (mortgage-free date) wouldn't have suited us. We're all different, as you obviously realise, I just wanted to put this point of view. Good luck!

steve_cov

I think some posters are being a little unfair to TFG.

I suppose I am also fortunate to earn good money (although I certainly couldn't pay off £2.5k a month), but it was not always thus. In any event, the amounts involved don't matter.

At my current pace, I plan to pay off my 20yr mortgage before I turn 40 in Dec 2014 and still manage to enjoy a nice lifestyle in the meantime. I pay the maximum allowance into my ISA, have two holidays a year and buy my groceries at M&S - so I'm certainly not a tight@rse and I don't pay off the mortgage to the neglect of everything else!!

How? I rarely drink, don't smoke and scarcely eat out. My primary vice is an unhealthy addiction to coffee and cake at a well-known chain. I've also moved my payments to the 1st of each month to save on the daily interest (in effect, this means making two payments from one month's salary, e.g. 25 Feb then again on 1 March, but I did it in a month when no council tax was due to soften the blow!)

When I took out my current re-mortgage in 2004 on a house I bought in 2001, even a £50 monthly overpayment would have reduced the term by roughly 3½ years and £100 by 5½ years. As it is, I'm two years in and have overpaid by £100 for the last year, so to meet my 2014 target I now need to find £350 a month on top of my £510 payments. I have increased it to £250 already and will find the other £100 in the next few months, so that the whole thing will be paid off inside 10½ years from the start of the term, saving me over £25,000.

In other words, the amounts involved are immaterial: TFG's principle holds, whether you can pay £50 or £5000 extra a month.

ListerS

Hi all,

Just a hopefully daft question,
Ive just taken on a Mortgage, I can afford to overpay each month, but the overpayment limit set on the mortgate is 10% otherwise we pay in the end if we finish early.
Can we get around this? Do I go and speak nicely to my mortgate provider? or should I have thought about this before.

BTW thanks to the OP, enlightening aspirational reading, definately will be making a good attempt at shaving the years of the mortgage!

Thefunkygibbons

How long does that restriction apply as it often is something that applies to the discount period on a load

Initially it may be worth saving up and paying that in one lump so you do not exceed the 10% allowance

However, if the limit is permanent, and you want to pay off more than this, it may be worth moving mortgage as the interest savings will be greater than the costs of moving the mortgage

Rebob

Me and hubby did a similar thing on our last house.

8 Years ago we bought a repossed excouncil house for £15k. :rolleyes: This was the most we could afford at the time as the max the bank would lend was not much more. Over 5 years we did a lot of renovation and paid off £9k which was nearly 2 thirds. :T We had a fixed rate and paid off the 10% allowed each year and then I rang the Abbey to ask if we could increase the amount we paid each month. At the rate it was reducing we would have paid it off in 7 years but we chose to move using the equity to fund a third of the price of the next house so we could get a better interest rate. :j

It can be done even when on a low income, as I can testify. :money:

We are now modernising our 100 year old detached house a bit at a time so that we can move to semi in an area that we always wanted but could not afford and we hope to shrink the mortgage with the move. :A

btw hubby is in a low paid job and I am on sda (£65pw) and cannot work and we have 1 child.