How to be mortgage free after 8 years

Miss_Penny_Pincher_2

Thefunkygibbons wrote:

Just had some unexpected good fortune

Share options grew in value due to impending merger, so I paid the proceeds off the mortgage

I have now brought Mortgage Free date down to Oct 2007, which is 6 years 10 months from the beginning

I hope you don't mind me asking but I'm just curious about how much was your mortgage to begin with? Just be interested in the comparison - mine is 25 years at £95,000 and I'm hoping to pay it off in around 8 years which approximately means mortgage payments of around £15.5k a year.

aliwatts

Not been on ere for a while, but great to see your all doing so well, well done ! Keep going !

macca64

Miss_Penny_Pincher wrote:

I hope you don't mind me asking but I'm just curious about how much was your mortgage to begin with? Just be interested in the comparison - mine is 25 years at £95,000 and I'm hoping to pay it off in around 8 years which approximately means mortgage payments of around £15.5k a year.

I think according to TFG's first post on this thread that his mortgage was £180k.

Thefunkygibbons

Miss_Penny_Pincher wrote:

I hope you don't mind me asking but I'm just curious about how much was your mortgage to begin with? Just be interested in the comparison - mine is 25 years at £95,000 and I'm hoping to pay it off in around 8 years which approximately means mortgage payments of around £15.5k a year.

The original mortgage on this house was £135,000, although we spend about £35k doing it up when we moved in and then £40k on an extension

But I have always thrown money at the mortgage so the mortgage was a lot lower than it should have been because of the equity I carried over from previous houses

[Deleted User]

Thefunkygibbons wrote:

I have a little note in my signature that I will be mortgage free after 8 years, and as a result I had some private messages asking me how I did it.

None of this is rocket science, but since I have been asked, I thought I would set out how I achieved this. Hopefully others can then add further tips.

Background
We bought the house in 2000, with a mortgage of £135k and in 2003, borrowed a further £45k for an extension.

How we paid it off
1. Choose the right product. I have always made capital repayments so I knew what I wanted when I got the mortgage. We have a mortgage with the Skipton building society that has interest calculated daily. It allows overpayments without penalty, and in addition it is a base rate tracker at base plus 75bp. I know I could get a lower rate, but I would then be restricted to 10% redemption each year and the new rate would only be for 2 years whereas mine is for the life of the mortgage.
2. Salary: I recognise that I am very fortunate in that I earn a high salary. Most people cannot do anything about this. However, I started as the eldest child of six and my mum was a single mother living on benefits. By study and hard work I qualified as a Chartered Accountant. Many people try to gain this qualification but many fail because they do not put in the hard work required. I guess that I believe that investment in your skills and training is always worth while and it is sometimes much easier to grow your salary by £1k having skills your boss will pay for, than cutting the same amount from your living expenses.
3. Priorisation: I am not a classic tightwad, and spend quite freely on the children and on my collection of Dream Theater rarities. I know that I could shave money off my outgoings. However, I am not one for spending money by big ticket items. I do not have sky, I don't pay for expensive foreign holidays. I don't have lots of electronic toys in the house. It would not be hard to look at the Jones and say lets keep up, but for me, being debt free is more important. Lets be clear, I invest my time to make sure that there is joy in the house, rather than spending money on the kids as a substitute.
4. Make mortgage overpayments first. As a result of the above, I have spare cash. My monthly mortgage should be about £500 (I don't know for sure because I ignore that figure). However, I have an arrangement with the Skipton that they take £2,650 a month (which is a massive overpayment) and that they do not reduce the monthly payments to reflect the overpayment. This money goes out of the bank on the first of the month. Therefore, in my mind, what remains is what we live on. I regular look at whether there is extra and if so whether the monthly payment can be pushed further. I always look at the payment following pay review in January and any extra goes to the mortgage. If I did not do this, I would have shed loads of money in the account, and the temptation to splash out on a sports car or fancy holidays would be too great.
5. Know how to make repayments: I use internet banking and in my address book I have the account details for the Skipton, so if I get any spare money (such as a bonus or a SAYE maturing) it is easy to send it to them. Making the admin easy removes the barriers to doing it.
6. Don't withdraw the equity: I know have nearly £700k of equity in the house, but there is no way I would withdraw that for spending on... (fill in the gaps). If you keep moving the goalposts how do you ever finish paying it off. It is there for the Grand purpose.
7. The grand purpose: Having a big reason for doing this helps. In my case, I have 5 kids and in a few years, they will need help with college or University costs or a house deposit and by being debt free, I will be in the best possible place to help them.

So, if anyone wants to follow suit, my advice would be to see what they can budget to have spare every month and add that to the monthly mortgage payment. Even if it is only £50. Then see how it can be turned into £100 and then £150. Regular amounts off the mortgage really kick a hole in its life.

Hope this helps some, and feel free to add any more.

Hardly rocket science is it?

Be a tightwad and earn loads of cash and pay off your mortgage !!!!

If we didnt eat or pay any other bills we still wouldnt have £2K a month to pay off the mortgage with !!!

jonnydoe

Yes I agree with paulfoel here, but apparently the idea behind this forum is to encourage each other. Obviously a big salary and being a tight wad helps And of course timing..

If i earned say £50k yr I don't think I'd really be bothered about saving a few quid a year but hey that's me and everyone's different..

I'd be very interested to know how much anyone has saved directly from the money saving forum, think I'll start another post, what do you think?

aliwatts

halloweenqueen wrote:

Disappointed as I didn't get my monthly mortgage statement today with all my little overpayments on it!!

I only get an annual statement, can I ask for a more frequent 1, do you know?

Thanks

comping_cat

aliwatts wrote:

I only get an annual statement, can I ask for a more frequent 1, do you know?

Thanks

You can ask, but they might charge you for the extra statement (then again, maybe they wont!!!). I get quaterly statements, but rang my mortgage company last week and got my balance over the phone.

esthomizzy

meanmachine wrote:

Again, you people make me smile.

"I have a whopping £40K mortgage and am happily on the way to paying it off early. I'm not going to boast but...oops, too late."

Now answer me this - if you had to buy a property at TODAY's prices, how would your overpayment plans stack up?

Count yourself fortunate that you bought when house prices weren't crippling, then went through a period of rapid wage inflation, and are now in a low interest rate phase (although possibly not for much longer).
.

Firstly well done Funkygibbons. I'm really happy for you. I'm not as disciplined and now I've got money (after having relatively nothing as a child) I like to have what I want but within reason. I'm happy that through smaller overpayments I've got our mortgage down to 15 years left to go. I figured I could do it in 7 but that would be no holidays no fun, disciplined home cooking and no luxuries. I want some of those things so the full whack wasn't for me. For people who are willing to make those sacrifices then they deserve the results.

Now to Meanmachines message. I do feel very sorry for the people trying to get a toehold on the market now. It's very difficult. And the governments ill advised but headline grabbing - buy 40% of a property for all your spare money- is definitely not helping matters (inflationary pressure worsens things for everyone in the long run except those already in). What is happiness to one person about a rate drop would be despondency to another. That's always going to be the case. However 8 years ago when I was buying my first place all my friends were spending like mad on credit cards getting themselves into debt buying cars and fancy clothes. I earned 1/3 what I do now back then and I still saved up a deposit and bought an ex council flat (not directly off the council because they wouldn't have given me one in the first place). In the worst times I lived on own brand baked beans, rice and cornflakes. Some of the snobbier people I know looked down on me because I lived on a council estate because it was all I could afford to buy. I was very glad that after 5 years living there I could sell up at a profit and move to a nicer area with a mortgage of only half the new properties worth. If people think I don't deserve that then sod them. Everyone lives by the choices they make, if someone makes lots of money it might be because they trained for years, or made astute life decisions which resulted in good outcomes for them. It might be because they are just lucky. Even so it probably doesn't mean that they dont deserve it.

Everyone on this site probably wants to be richer. Lets be happy for the success stories rather than envious

jonnydoe

Well done esthmizzy,

I agree it makes me laugh seeing these kids driving around in brand new cars that will depreciate so much. Oh well maybe 5-10 yrs time they will have paid them off (with all that interest the loan company charges)