How to be mortgage free after 8 years

Spendless

Been following this thread with interest. Firstly congratulations to the OP on managing to pay his mortgage off quickly.

I see both sides of the views of 'he has a high salary' and 'its the principal of telling us how he does it'

To me though it's because it's a high salary combined with a comparitively low mortgage that makes this possible (even taking into account that overpaying the previous house made this possible) and I guess bought at a time when the jump from one house to the next one the ladder wasn't as big a jump as it would be today.

Thefunkygibbons

Yes and no

The house moves (as I recall were)

1st Bought £72.5K with £63k mortgage in 1991 (14.5% interest rates, yikes)
sold for £61k in 1996, but mortgage reduced to £30k

2nd Bought for £135k with £110K mortgage in 1996
Spent lots of money on it
Sold in 2000 for about £280K

This house: Bought for £385K with £175K mortgage in 2000, kept back some of the equity for repairs
Spent £80K on it
Mortgage now down to about £80K
But will be fully paid off in next 3 years
Now worth about £800K

So we lost on one and gained on 2, but at the end of the day, the house is somewhere to live, and the mortgage is a debt that I want to get rid of as soon as possible

For the grand purpoose of course

meanmachine_2

Interesting.

Now imagine your 2000 self having to buy at 2005 prices.

I'd like to see your prospects for overpayment in that scenario.

Anyway, I'm being unnecessarily churlish. As I say, I love your kind much more than those on the debt free part of the forum, so well done you.

Happily I drive a rust bucket, haven't had a holiday in over 10 years and earn above average.

I'm careful with my cash and my instincts tell me that a jump from £380K to £800K in five years is, erm, how shall I put it, a little on the hysterical side.

I don't think prices will drop back to 2000 levels, but a correction to the mean is certainly possible. I'll make my purchase then. Who knows, maybe I'll even be buying off Lush, if he's still in business by 2008...

Kenny4315

You don't have to be mega rich to make over-payments on your mortgage, even small overpayments can make a big long term difference. I think THEFUNKYGIBBONS has done pretty much the same as myself, and I congratulate him on it, he has kept things tight, bought at the right time, and made over-payments rather than squandering loot on rubbish a priority.

A £135k mortgage in todays market would be relative small, so as I have said loads of times its the timing of the purchase that makes the most difference. Incidentally I'm a qualified management accountant, so obvious the concept of prudence, is drilled into us from the start of our training.

Its not rocket science, if you spend your cash on booze, fags, nights out, flash motors, expensive holidays and chicks, you ain't going to have any cash for over-payments, (unless its a rich chick), anyone who has bought within there means has the ability to make overpayments if they really want to. Most don't because they want the latest sports car, flash holidays, or want to impress by whatever means. It's not about being tight either, but its about getting the balance right.

Thefunkygibbons

meanmachine wrote:

Interesting.


I'm careful with my cash and my instincts tell me that a jump from £380K to £800K in five years is, erm, how shall I put it, a little on the hysterical side.

You are right

Prices that rise like that are simply mad

I would guess that about half of the increase came from work we did on the house, both in spend and in the labour put in. It is now a 7 bed family home in a secured location

The rest is general house price rises

I am not a fan of high house price rises
1. For one, it means that it will be hard on the kids
2. It results in a mis-allocation of resources, with society investing in wealth creation through house rather than activities that create income

But I don't see our fixation with property changing any time soon

meanmachine_2

Thefunkygibbons wrote:

But I don't see our fixation with property changing any time soon

Oh I think things are changing.

No more easy money to be made. No more pig ignorant boasting at dinner parties.

Now property has lost its aspirational sheen I think there's a small chance they'll start seeing a house for what it is - a form of shelter rather than the secret to eternal happiness.

Or am I just being naive?

Thefunkygibbons

The trouble is two fold
1. We do not build enough houses so supply and demand are out of kilter
2. People have got used to rising prices

What some people do not realise is that as a house rtises in value then the costs rise, not just council tax and stamp duty, but also maintenance costs as workmen look aty the house and decide to charge more on the basis of ability to pay

And don't even mention inheritance tax

[Deleted User]

This is an interesting thread with many thought provoking points already made. The OP has done really well - congratulations!

My mortgage is down to under 4 years using virtually the same strategy and 'rate tarting' on the mortgage. I too, have cut back on other things, i.e holidays away, gadgets and gizmos, just 'cos I want to get rid of the mortgage.

But life is also for living. So I do keep a little back just for the occasional splurge or treat. I hate the thought of ploughing all that extra in only get wiped out by a bus the week before it's all paid off! What would I have gained?

The most important point here, already raised - paying a little extra, when you can, is always better than paying off nothing extra.

You don't have to be earning megabucks (although of course, it helps). If you can put aside whatever small amounts you can, these will build up to make whatever minimum overpayment your lender requires.

You will get the satisfaction of knowing you really ARE chipping away at the mortgage and when that statement comes thru the door - that's a nice feeling - 'cos you can see it in black and white.

Rob_B_8

A lot of talk about falling prices etc will only affect high house prices, ie that 800k house may fall to 2000 prices maybe as much as 1/2 however for the 'normal' people such as myself with an 80k house they wont fall %-wise as much.

Regardless of what rates are or any other situation the bottom line is 'overpaying is good' im very jealous of people who can afford 400K house but im living my life not theirs & im very very happy! Lot of jealousy on here with reagrds to salary which spreads through all the boards, maybe we should try and avoid the 'i earn £xxxK a year?!

[Deleted User]

Unfortunately jealousy is a part of life whether you are talking new cars, new houses, better looks, slimmer figures or more income.

Life is what you make it to a certain degree.

In my book, if someone has worked hard and worked their way to a good position in life, without having had it all handed to them, or inherited it to give them a head start, as far as I'm concerned they can mention their success all they like.

They set a good example to others and show that by hard work, it can pay off, and not just financially.

The people who get up my nose are those who've had it handed to them with little or no effort - and who then brag about how much they've got.

The OP seems to have earnt his/her success.

Let's be pleased for them.