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  • FIRST POST
    • SuperSecretSquirrel
    • By SuperSecretSquirrel 8th Sep 12, 12:07 PM
    • 706Posts
    • 3,145Thanks
    SuperSecretSquirrel
    Onwards to freedom!
    • #1
    • 8th Sep 12, 12:07 PM
    Onwards to freedom! 8th Sep 12 at 12:07 PM
    Hello and welcome to my MFW diary. Not sure how often I'll update as I'm going down the boring 'increase monthly mortgage direct debit' route, not the more interesting to read 'random repayment as and when a bit of extra money is made' route. Still, no harm in starting a diary here, even if it's just for me to look back on in a few years time!

    It seems like a good idea to start with a bit of background, so here goes...

    We bought our house in July 2010 with an 87k repayment mortgage, fixed for 10 years at 5.29%. Nearly two years of 525pm standard repayments allowed us to rebuild our savings, but after 20 monthly payments (over 10k paid out) the mortgage balance had only dropped around 2.5k thanks to all the interest being paid...

    We decided to make a small start on overpaying - small overpayments early on have quite an impact over the long term so why not start small and ramp up later? March 2012 we made our first regular overpayment, 50pm. Amazingly, if we were to keep up with this 50pm over the life of the mortgage we'd be mortgage free nearly four years early (Nov 2031) and save ourselves a tidy bit of interest. Not bad rewards for just 50 a month!

    A few days ago I decided to step things up a notch. From next month the regular overpayments will increase to 250pm, 200 less will find its way into my long term savings (paying 2.8%, minus basic rate tax), 200 more will find its way to the mortgage provider. Makes a lot of sense looking at the interest rates! I'll keep on saving in a normal savings account though and won't be putting every penny into the mortgage - I'm used to seeing my savings grow monthly, and like to try to be prepared for any eventuality, so I'll keep on squirelling away a chunk of my income in savings each month. I know this isn't the most efficient option in terms of reducing interest payments, but it's a balance that keeps me sane, if there's any major disasters the savings are there to fall back on, that kind of peace of mind is well worth a few pounds! Anyway, here's where the numbers get really interesting - by overpaying 250pm for the life of the mortgage we'd be mortgage free nearly eleven years early (Oct 2024). Wow!

    Seeing the massive savings I started looking into this stuff in more detail. We're allowed to overpay up to 10% of the mortgage balance each year without penalty. I don't want to increase overpayments over 250pm right now, but maybe after another year or so of growing my savings I'll step up the overpayments to 500pm. Two years later the overpayment would need to drop to 450pm (to avoid penalty), year after that drop to 400, and the following year drop to 350, and the years after that drop to 250 at which level the op's would have to remain until the end of the fixed period (August 2020). If we were to follow this plan, at the end of the fixed period our mortgage balance would be around about 20k which we could pay off with a lump sum from savings. Mortgage free fifteen years early, at age 36, sounds awesome, and what's incredible is that it also sounds very realistic.

    At the moment overpaying is my project. OH and I have our own accounts that our wages are paid into, and a joint account that we feed monthly to pay the bills. As I earn a little more I also do the grocery shopping, pay a few extra bills, and overpay the mortgage. Beyond feeding the joint account OH's income is none of my business, it can be spent on whatever OH likes, same goes for my income. This works well for us - if I want to splash out on a new computer game or a night out or whatever I can do so without needing to consult OH, and if OH wants to splash out on a night out or clothes or whatever no need to consult me. We're both debt averse and savers by nature, so as long as we spend less than what's coming in and all the bills get paid all is well. I'm hoping that seeing the mortgage balance reduce might convince OH to get involved in overpaying the mortgage (or at least split savings into two pots, one 'spendable' short term pot for holidays and home improvements etc, and a long term one earmarked for paying down a lump sum on the mortagage), but there'll be no pressure, if OH joins in that would be excellent, but if not that's ok.

    Finally, I know life doesn't always go smoothly - anything could happen in the next 8 years, babies, redundancy, armageddon, "the best made plans of mice and men, often go awry"... But if things don't go to plan, nevermind, we'll have made a great start on the mortgage regardless, any overpayments we make early on will benefit us later on, so we may as well give it a shot while circumstances allow It's nice to remember that circumstances can go up as well as down too - maybe there will be payrises and good fortune along the way that make achieveing the target easier, who knows!
    __________

    January 2014 Update:

    Things have changed quite a lot since I first started this diary... The new aim is to hit the MFiT3 target of a 40k mortgage balance by end 2015, and to have 40k in savings by that time too, making us mortgage neutral 20 years early! Anything can happen, but I think it's time to aim high!
    __________

    March 2015 Update:

    We did it! We are mortgage neutral (savings balance higher than outstanding mortgage) and are locked in to achieve the MFiT3 stretch goal of mortgage below 40k by the end of the year I'm going to keep this diary going, the aim is total financial independence now!
    __________

    January 2018 Update:

    Paid the mortgage off in full today (12/01/2018)
    Last edited by SuperSecretSquirrel; 12-01-2018 at 9:42 PM. Reason: We did it! :D

    Mtg [2013 64k|2014 51k|2015 38k|2016 26k|2017 14k] Zero!
    MN [2013-25k|2014-2k|2015+16k|2016+34k|2017+52k] +61,918.30(MFiT4:+60k)
    NW [2013 126k|2014 156k|2015 190k|2016 228k|2017 269k] 291,327.81 (2020:300k)
    FI [2013 -1.2%|2014 2.8%|2015 6.9%|2016 13%|2017 18%] 33.2% (exc SP)
Page 31
    • lindez
    • By lindez 5th Aug 18, 11:14 PM
    • 316 Posts
    • 1,113 Thanks
    lindez
    Congratulations SSS,
    what an achievement I stumbled across your diary and read it from start to finish it has taken me a few days. I am in awe of what you have achieved in such a short space of time. Loved the house and the bricks I have been searching for one to no avail.
    I to plan to try and cut my mortgage down I have 10 years left and that will take me to 69 !! Oh no it has to go much sooner that that. Thank you for your inspiration I hope to try and find a way to get this mortgage paid in 5 years.
    Payment A Day Chapter 18:
    MFWB#44
    • SuperSecretSquirrel
    • By SuperSecretSquirrel 6th Aug 18, 9:11 AM
    • 706 Posts
    • 3,145 Thanks
    SuperSecretSquirrel
    Thanks lindez, and good luck with your aim of halving the remaining life of your mortgage! I'd recommend joining the "Mortgage free in three take 5", due to start in January There are annual challenges too for shorter term targets.

    As for the brick house picture, the best approach is to draw up your own in
    a spreadsheet or drawing app, that way you can tailor it to your house value, mortgage balance, etc

    Mtg [2013 64k|2014 51k|2015 38k|2016 26k|2017 14k] Zero!
    MN [2013-25k|2014-2k|2015+16k|2016+34k|2017+52k] +61,918.30(MFiT4:+60k)
    NW [2013 126k|2014 156k|2015 190k|2016 228k|2017 269k] 291,327.81 (2020:300k)
    FI [2013 -1.2%|2014 2.8%|2015 6.9%|2016 13%|2017 18%] 33.2% (exc SP)
    • SuperSecretSquirrel
    • By SuperSecretSquirrel 13th Oct 18, 7:37 AM
    • 706 Posts
    • 3,145 Thanks
    SuperSecretSquirrel
    Hello diary, long time no write

    I've been enjoying an extended digital detox over recent months... Backed right off to fully enjoy summer, and not really got back in the habit since!

    All things financial are ticking over like clockwork. I now have a reduced number of accounts, most payments and transfers are automated, and there are no short term targets to micro manage. My more relaxed approach to tracking our financial world hasn't resulted in the wheels coming off, so I'm more than happy to do a full accounts audit just once a month and post a simplified net worth update here once every three months.

    With that said, the figures for 1st October 2018 were:
    • 291,327.81 net worth (+11,432.80 quarter / +32,212.73 year)
    • 33.2% financially independent (state pension not factored in)
    All good

    I hope you are all well and smashing your personal targets!

    Mtg [2013 64k|2014 51k|2015 38k|2016 26k|2017 14k] Zero!
    MN [2013-25k|2014-2k|2015+16k|2016+34k|2017+52k] +61,918.30(MFiT4:+60k)
    NW [2013 126k|2014 156k|2015 190k|2016 228k|2017 269k] 291,327.81 (2020:300k)
    FI [2013 -1.2%|2014 2.8%|2015 6.9%|2016 13%|2017 18%] 33.2% (exc SP)
    • Lexi-lu
    • By Lexi-lu 13th Oct 18, 9:18 AM
    • 164 Posts
    • 828 Thanks
    Lexi-lu
    Hello SSS

    Good to see that you are making great progress whilst enjoying being able to take a more relaxed approach. Thank you for sharing, your diary has kept me motivated whilst paying off our mortgage (almost there now) and I will likely be taking a similar approach to increase our investments and pensions next

    LL
    Mortgage Balance 0
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