Becoming mortgage-free efficiently

the_alchemist · 11 May 2011 at 1:52PM

I'm book-marking this to keep reading, because although I'm overpaying at the moment I'm interested in additional and alternative ways of becoming mortgage free, and am OK with moderate amounts of risk.

[I'm in my mid-30s, and a basic rate taxpayer married to (and having a joint mortgage with) a 40% taxpayer, in case that influences what you choose to write about next.]

silver_4444_uk · 12 May 2011 at 9:55PM

I am also very interested in seeing any suggested methods of clearing a mortgage, as efficiently as possible.

My wife and I are in our late forties (my wife does not pay tax and I am a higher rate tax payer) and with now having to allocate more money than we expected to future university tuition fees.
We are certainly interested in making our money work as efficiently as possible.

starbucks · 14 May 2011 at 12:49PM

Hi jamesd,
very interested in hearing your views and thoughts on ways to pay off the mortgage. I have read some of the less than positive comments but think doing things (tax wise or not) efficiently could be in some peoples interests depending on each persons individual circumstances. Whether people are high rate tax payers really is irrelevant. If you can save money tax free in an ISA, why would'nt you ? this is open to everyone (as an example).

Keep up the thought provoking discussions / idea's, it was'nt long ago that I did not realise the full benefits and savings that could be had from making overpayments, but through discussion and education on boards like these, I now do.

Thanks again, keep up the good work.

Sepa74 · 14 May 2011 at 1:38PM

HI James,

I'm with the others who appreciate you posting about different ways to manage the mortgage, and by extension long term finances. I'm looking forward to reading your future posts, and those of others who also have ideas.

I'm a contractor with my own limited company so most of my income is dividends. I have a bit of a cash pile building up in the company, and investing in a pension is just about the most effective way I have at the moment of beating the abysmal corporate savings rates. However as I'm 37 I feel I need to keep a fair bit in the company as a safety net in case I end up out of work for a while.

black_taxi_2 · 14 May 2011 at 1:53PM

i think trying to pay off mortgage before your 55 could be a target to boost finances in later years

gives you 10+ years of disposible income before retirement

elantan · 16 May 2011 at 10:00PM

hey all ... just checking to see if any new posts with ideas were here ...

kingster2069 · 16 May 2011 at 10:04PM

Sepa74 wrote: »

HI James,

I'm with the others who appreciate you posting about different ways to manage the mortgage, and by extension long term finances. I'm looking forward to reading your future posts, and those of others who also have ideas.

I'm a contractor with my own limited company so most of my income is dividends. I have a bit of a cash pile building up in the company, and investing in a pension is just about the most effective way I have at the moment of beating the abysmal corporate savings rates. However as I'm 37 I feel I need to keep a fair bit in the company as a safety net in case I end up out of work for a while.

Hi Sepa74,

Have you thought about moving your money into your offset mortgage account? It might save you some interest and I'm sure it will be a better rate than your business account is paying you unless you're one of the lucky ones on an amazing rate.

silver_4444_uk · 22 May 2011 at 2:30PM

Hi Jamesd,

I look forward to hearing your ideas / suggestions for basic and higher rate tax payers, with regards clearing mortgages efficiently.

I do overpay at present ( for my own peace of mind , I find it reassuring to see the balance decrease each month, even if only slightly ) and I have a savings / investment pot as well.

I don't think that I would put the majority of my savings into a pension and rely on the 25% pension pot maturing when I retire, because I have been disappointed with an Endowment Policy in the past .

However I can appreciate that for some people who are prepared for the risk that their money could be working harder for them.

Sepa74 · 22 May 2011 at 4:22PM

@Kingster... It would be nice, but would expose me to paying higher rate tax as it would be a 'director's loan'. It's very frustrating!

Aless · 22 May 2011 at 5:14PM

jamesd the suggestion about pensions you mention above is very useful but it seems to me that it only suitable for a very small group of people. For example those who are 25 or 30 years away from being 55 may not be best advised in tying their money (or perhaps a substantial proportion of their savings) up in a pension scheme for that length of time, particularly as the last 10 years or so have shown how the government likes to tinker with pension rules. For example, you would need to rely on the fact that governments over that period of 25 or 30 years do not increase the draw down age or decrease the % that can be drawn down. That would be putting too many eggs in one basket for my liking.

I have spoken to a number of IFA's and generally all they can suggest is investing i.e. shares, bonds, ISA's etc and they have not come up with much novel. As I have limited confidence that IFA's are that great I do not mean to suggest there are not other "cleverer" ways, and I would be interested to hear anybody's suggestions.

Becoming mortgage-free efficiently

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