26 Feb 2015

A question about : The Mortgage-Free Mission

Hello MFWs,

I’m a long time lurker on these boards and have decided to take the plunge and start a diary. I’ll be joining the ranks of the six-figure mortgages thanks to a property move in September 2013.

So here’s a little bit about me. I live with my husband in north London, no kids (yet, but that could change in a couple of years). I’m 32 and he’s 35.

We bought a place in 2010 and did it up and luckily benefited from the work and also a huge rise in house price in our area. We did a fair bit of overpaying on that mortgage (which started at Ј210k) and walked away with Ј160,000 after fees and stamp duty etc.

We decided to buy 30 seconds down the road (!) and in Sept 2013 we put down Ј120k deposit on a Ј400k property so our mortgage is a whopping Ј280k. We used the other Ј40k to start very extensive renovation work and have spent another Ј120k on top since (gulp).

We’re nearly there – just a bit of decorating to go which is great considering we lived without a roof for two months!

So as it stands the house is nearly finished. We owe my sister Ј40k (very kindly interest free) and the mortgage is still at Ј274k (or thereabouts) – so not much paid off over the year despite putting in Ј1316.80 a month in repayments. Ouch!

The house we bought is now 4 bedroom so we have no need to ever move again (thank goodness) so we really want to overpay the mortgage and live mortgage free as this is the largest out- going we have.

The mortgage-free journey will have to start with repaying my sister back but I’m sort of seeing that as part of the mortgage/ house costs.

There’s also a few other things we need to put money away for this year, including Ј6k into a savings account (which was decimated in the house renovation) plus we need to pay out Ј4k for a new bathroom and new kitchen in a rental place we had to buy last year for a family member to live in (long story!).

Oh, and there is a few quid lying around on credit cards too.

OH is full time in a secure job earning decent money but although I earn good money too I’m freelance so the amount I earn obviously fluctuates. Last year was a good year and I’m hoping this year will be too!

I’ll post an SOA etc later but just wanted to say ‘hello’ and hope I haven’t waffled on too much!

SR

Best answers:

  • Hi SavingRaven,
    Great to see you and an interesting story behind your current mortgage situation.
    Its nice to see someone else with a mortgage of Ј200+k.
    We are in a similar position as you - we bought a similar sized property in 2012 but luckily, being in South London it was somewhat cheaper
    Do you have a MFW goal in mind...? there's a few people lurking around the MFW board with big numbers and 10year (ish) MFW targets.
    We are optimistically looking at 10/11 years with some nice milestones in the meantime......e.g. less that Ј200k 50% equity that kind of thing.
    Wishing you and your OH lots of luck
    MIB
  • Hi MIB,
    Thanks for being my first reply! I'm sure there are a few Londoners with great big whacking mortgages on here! We live in one of the less salubrious parts of north London but still managed to borrow a load of money.
    To be honest we haven't set a goal - we've got just under 24 years of our term left (which turns my stomach) - but I think that 10 years is probably a good place to start!
    I'll have to get whizzy on some of the calculators I've seen and work out just how much I'd need to pay to achieve that.
    First goal is definitely to put some money into the emergency fund.
    Do you have a thread so I can follow?
    SR
  • Hi,
    The calculators get stupidly addictive....I love my spreadsheet so much
    Don't have a diary - although I do need to start one. I did have one from years back when I lived up north and my mortgage was, ahem, Ј70-odd-k
    Have fun with the mortgage calculating and getting your emergency fund filled up.
    MIB
  • Right so I took the plunge and added up the debt that we have, although I haven't got round to completing a SOA yet as that will have to be done with OH.
    Update from the mortgage company
    Our balance is Ј271,659.89
    Mortgage rate is 2.89% fixed until Sept 2018 (monthly payments are Ј1316.80)
    We also owe my sister Ј40,000 which she loaned to us for our house renovation which I see as part of the mortgage. It's very kindly interest free but I want to pay it back asap as she wants to buy a property with it some time next year.
    On top of this we have some credit cards and overdrafts plus there are immediate needs that we need to address before chipping away at mortgage and loan from sis.
    CC1 763.78
    CC2 c.1570 (total not completely up to date online yet)
    OD1 213.52
    OD2 c.1800 (OH's OD and he's not totally sure off the top of his head)
    Total debt = 4347.30
    Also need to top up the emergency fund
    3 month's outgoings = 6000
    Also have to shell out for a new kitchen and bathroom for our BTL
    Don't want to spend anymore than 4000 total
    So that's 14,347.30 to pay off/save up before chipping away at the mortgage/ loan.
    That's going out, and this is coming:
    Money from end of Jan pay has already been allocated/ gone towards credit cards etc so the figures above are what's left.
    Work I have completed in January (so will be paid at the end of next month because I work for myself so always paid a month behind) will be able to save 4637
    OH's wages paid at end of Feb able to save 750
    OH's payout from some old shares - 1500
    Total 6887 to use
    Once CCs and ODs are paid off, left with 2540
    Going to put that towards the emergency fund so only 3640 to find.
    That means by end of Feb we will be free of unsecured debt and of those pesky interest rates (whoopee!) plus we'll be building up the emergency fund again which makes me very happy.
    I will do my SOA next. Apologies for the long post and if you've read this far, thank-you!
  • So I went on to the SOA calculator and realised it didn't quite fit with the way we spend our money (maybe this is part of the problem and I am happy to receive pointers on whether you think our spending patterns should follow an SOA style/ hear from anyone who does it differently)
    For starters, my income is unpredictable as I work for myself but I earn enough to cover my half of the bills and my 'spending money' for the month. Everything else is a bonus.
    So I thought I'd breakdown our monthly spending for you using the SOA as a guide
    Mortgage payment 1316.80
    Council tax 148
    Gas and electricity 56
    Water 27.30
    Internet and TV package 40 (no landline)
    OH's mobile 50 (mine goes through a business acc)
    TV licence 12.12
    Travel 50 (this is for both as we ride our bikes)
    Building and contents ins 37.11
    Life insurance 19.37
    My critical illness policy 26.59
    Food 200 (maybe an area we can work on)
    Ikea kitchen repayments 132.50 (last one in July)
    Payment to help family 135 (this is for the foreseeable future)
    Gym 34
    OH's bike ride-to-work scheme 30
    Charity 5
    These bills total 2319.79
    * We also have a car but planning on selling it before MOT etc needs renewing in May because we don't use it enough to justify it so haven't added in those costs
    We then give ourselves 400 each a month for 'spends' which we use to pay for entertainment, clothes, presents, dentist etc.
    2319.79 + 800 = 3119.79 outgoing a month
    Writing all the outgoings feels quite overwhelming actually.
    As I said before, my earnings are pretty unpredictable but I try and aim to earn around 5500 after tax each month (I have managed this over the past year as work has been good but obviously there is no guarantee it will continue in this way and I am always nervous that it will stop) and OH earns around 2200 after tax. So that's 7700 between us a month.
    In 7700
    Out 3119.79
    = 4580.21 to save each month.
    As you can see from the above post, we have a few thousand in debt and no savings (thanks to house renovation demolishing them) plus a whacking great mortgage and loan.
    My goals are to
    1. Get rid of all CCs and ODs by end of Feb
    2. Save 6000 into an emergency fund by end of March
    3. Pay for a new kitchen and bathroom in BTL by end of April
    4. Pay off sis 40000 loan
    5. Start chipping away at mortgage at beginning of 2016
    But while we're doing this we also like to save into a holiday fund as we work hard and enjoy our holidays. We need spending money for a trip to Thailand in March and need to save for another Asia trip in October.
    Realise all of this may be quite confusing and fragmented but just trying to get everything down 'on paper' as it were!
    Thanks for reading
    SR
  • OK so OH has paid off almost all of his 1800 overdraft bar Ј240 which is great. This money has come from some of his January wages but mostly from cashing in some old shares that he did well on.
    I've decided that, if I can manage to get the work, I will pay my sister off (40k loan) at 4000 a month and so hopefully it will be done and dusted not far after the end of the year.
    Me and OH have a system where we pay in equal amounts to cover the bills (although I'm paying slightly more at the mo to cover the kitchen costs) and then then out of the money we have left we give ourselves 400 each for spends and the rest goes into savings. OH has around 750 to save from his pay packet and that is going to go into a 'fun fund' to pay for our spending money for Thailand next month and also to pay for a trip to Japan at the end of the year, we've estimated we'll need about Ј5k as we want to do a fair bit of travelling while we're there.
    I aim for, but don't always reach, savings of 4k a month after bills which I put towards whatever we need to pay off. The money I've earned has only been that high for the last 18 months and for the whole of that time the 4k has been going to fund house renovations which is why we haven't made a dent in the mortgage yet.
    So now the house renovation is over, bar a couple of bits, we can focus on the bills. If I mange to save any money over the 4000 a month then I'm thinking of putting it towards the mortgage - we'll see, I've got to make the money first!
    I'm going to look into sorting out a signature so that I can keep track of my many, many targets!
    Thanks for reading
    SR
  • Had to update my sig again as the extra 0.02 on the end of the debt was annoying so cleared it off to a nice round figure!
  • A good MSE style weekend so far!
    Friday night we did the big shop for the month and managed to get pretty much all we need for Feb for Ј110 (we're vegan so that helps cut the cost of meat but means we spend a small fortune on veggies). Still need to pick up a few bits and pieces which weren't in stock in Sainsbos but not much.
    Saturday I was procrastinating because I had work to do so did a monster batch cooking session that took pretty much all day and cooked 80 dinners so the freezer is crammed but it does mean we have enough lunch and dinners to see us through most of Feb! No popping to the takeaway for us!
    Realise this is slightly bonkers and OH thinks I've gone mad. Didn't get me out of doing work so worked Sat night (rock n roll!).
    Gym already done and dusted today plus a bit more work and am just out to meet some friends for a catch up in the pub which won't be a crazy one seeing as we all have to work tomorrow.
    Got a good few things ticked off the to do list this weekend which is great and feel like we're slowly getting a bit of control back over our lives after being so out of control with the renovations last year where we were paying out hand over fist and couldn't get a routine in place.
    Hope everyone is having a nice weekend and thanks for reading
    SR
  • Just seen this MIB! Was bonkers - freezer is practically groaning! Hope you're MFWing is going well.
    I was a bit spendy last night as had a couple of drinks with a friend which weren't really planned in to the budget but that's ok - can't be too strict all the time.
    Nothing much to report - just working like a madwoman and looking forward to the end of the month when invoices are paid and I can clear off all the debt in my sig and put 1500 into the emergency fund. Still on track to do this.
    My girly mates and I have decided to go on a little trip over the May bank hols so have decided I'm going to do some more ebaying to cover the cost of flights and accommodation. I already have Ј120 in the ebay pot after all costs plus another Ј30 in quidco so think I'm going to put them both to the flights (Ј200ish) and then sell some more.
    I've done quite well on the ebay front this year, and have sold around Ј500 worth of stuff plus there's loads more to go.
    We're having a sit down tonight with the dreaded spreadsheets to look at finances. OH isn't as into MSEing as me (although he is v good) and kind of leaves it up to me but I know he has bills coming out of his acc rather than the joint one so I'd rather it was all in one place and I knew what was going on.
    Control freak much!
    Hope everyone is having a good day
  • So the sit down with the spreadsheets wasn't as bad as I thought and actually has been really good to work out just where we are in terms of money. We're actually much more in control than I thought which made me happy.
    However, the talk of finances and budgeting always makes me play around with the mortgage OP calculators and makes me impatient to start chipping away at the mortgage.
    Realistically it won't be until Jan 2016 until we can start chucking all spare money at the mortgage although depending on how much I can earn this year I'm going to try for some OPs. Don't want to put a target on it because we have so much to pay off but every little helps right!
    On the upside, an estate agent we're friendly with (who we bought our house from originally) has done a quick revaluation and it's probably worth about 750k now! We bought it for 400k and have spent 160k so we've made a fair bit of equity over the past 18 months through the renovations. This makes me feel much better about the fact we have 40k to pay back to my sister. At least the LTV is going down even if we haven't actually OP'd!
    Didn't mean for this to be such a long post - I always get carried away! Thanks for reading
    SR
  • So the weekend is here and I don't have to work! It's been a tough week with some long days but at least it means I can have a couple of days off. Really need to tidy the house and also want to relist some things on fleabay and put some new bits up. Going to try and persuade/nag OH to put some of his stuff up too as well as sell some CDs and DVDs.
    Has anyone used music magpie before? Is it any good? We've got loads of DVDs etc but everything is on Netfl!x these days so no point in having them if I can make a few pennies!
    Hoping it will be a spend-free weekend. Have managed to have a NSD today so want to carry on that momentum. Although I do need to get a bikini top for holiday - only got the bottoms for some reason!!
    Hope everyone is having a MSE Friday.
    SR
  • Oh it's good to see some one with a 200k + mortgage!!!!
    Good luck in your goals. They look good.
    I have set my end of year goal just
  • Thanks Sque! It's weird how I didn't think too much about the mortgage size at the time of buying but afterwards I just couldn't believe how much we've burdened ourselves with!
    I'll have a look for your diary, if you have one and subscribe - it's definitely nice to know you're not alone on the mammoth mortgage journey!
    I definitely need to decide on some more specific mortgage goals in a few months but need to get a few ticked off first!
  • So, I had a NSD yesterday and Friday which was great but Saturday was a different matter altogether.
    Ј16.99 on new gym leggings as mine had a hole in (I think I would have been arrested if I continued to wear them)
    Ј16 on bits and pieces in Tiger which was really bad as it was a bin for the study and a couple of mugs and, err..., I can't remember which makes me realise we probably didn't need the other things!!
    Also spent Ј20 on 2 bikini tops for holiday to go with the 2 bikini bottoms I have (no idea where the tops are!)
    It was a bit too spendy for my liking and made me realise that I need to change my habits and keep a better log of what I spend. I thought I was good at keeping it under control but I'm really not.
    I had a look through my spending for this month already and am ashamed to say I have been to Itsu three times (I'm addicted to their salads) spending Ј20 but not all on me, spent Ј10.70 on fancy coffee, spent Ј10.40 on snacks, Ј26.42 on books, Ј16.50 on a meal out, and Ј62.05 at the pub!
    That's pretty bad when you write it down and I didn't realise just how much I was frittering away. From now on I'm going to write down my spending each day, and tally up NSDs on here to motivate me. Feel free to tell me off for frittering so much money away - especially down the pub!
    Thanks for reading
    SR
  • Hello to anyone that's reading.
    I'm feeling quite stressed today and impatient for my money saving efforts to pay off. I know you shouldn't wish your life away but this month has already felt like a long one and we're only just over half way through.
    I'm desperate for payday to arrive and to pay off debt and start with a clean slate. I feel like I haven't got control of my money at the moment and I find that v stressful.
    I need to find the silver linings:
    Payday is 10 days away
    I currently have 30 things listed on fleabay that should do alright
    Music magpie is collecting tomorrow
    We're going on holiday in less than 2 weeks
    By the time we go on holiday all out debt will be paid and we will once again have some money in the emergency pot. I just need to keep telling myself that.
    Sorry for the moan. Anyone else ever feeling that the money saving doesn't pay off quick enough or am I just incredibly impatient!
    SR
  • Quick question for anyone who is reading and wants to share with me. I was wondering how much everyone gives themselves each month to spend on fun stuff?
    We have Ј400 each a month that we use for nights out, presents, fun things and also for not so fun things like the dentist.
    I try not to spend all of it - although need to get much better - and am aiming for a couple of NSDs each week but sometimes it's hard.
    What does everyone else give themselves each month?
    Thanks for reading
    SR
  • Hi, I too joined the forum with a huge mortgage. Nov 2011 it was around Ј300k and I completely understand what you mean about the weight of it.
    The forum is really supportive and has certainly given us the motivation to work our socks off, to clear it.
    I have multiple pots, as I have an offset mortgage. Just a few: dental, car maintenance, fuel, Christmas, holidays, entertainment.
    Money moves automatically each month into each pot and it stops me worrying.
    As you are going to clear your sister's loan first, maybe do some Tilly Tidies this year. I move any pennies, and sometimes Ј into a separate pot to offset against the mortgage. They really do build up and I would say I've averaged Ј40 a month OP by this alone, which in the dry periods between pay days is motivating.
    Re the meals, that's fab and definitely saves time/Ј
    Good luck with your plans.
    Tilly x x
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