Starting the mortgage free path

A question about : Starting the mortgage free path

Like many people I've been a lurker on these boards for a while now and after reading some other diaries I've decided to take plunge and start on the mortgage free path.

Me and my girlfriend bought our house in May 2009 with a 25 year mortgage of Ј155,590 on a 5 year Alliance & Leicester fix at 3.99%. Monthly payment of Ј832.

The house was a bit of a timewarp (one family had lived there for over 50 years) so needed completely new electrics, replastering, painting, carpets ripped up etc.

I'm now in the position to start overpaying the mortgage and in January made the first payment of Ј499 (maximum allowed each month). I can also make a 10% overpayment of the total outstanding amount each January so I'm saving Ј250 in an ISA account and will pay off Ј3k in January 2012 (and each subsequent year).

I'm now on my third overpayment and it feels great My outstanding balance has gone down more these last 3 months that the last 2 years!

The target is to pay off by December 2019.

Only 104 payments to go!

Best answers:

• Sounds like a good solid plan. Keep going!
  Cheers,
  Drew.
• Wow, time really does fly sometimes. It's now October and 10 months into mortgage free mindset. I've kept up the Ј499 a month overpayments and had some great news in July that meant I had a pay rise and can also up my monthly ISA saving to Ј500.
  My target is to pay Ј4750 as a lump sum in January and bring it down to Ј134k. I'm currently now at Ј141k. Each 2 January's after will be Ј6k after which I come off the 5 year fix and then look at increasing monthly payments.
  Target is now march 2019, 7 years and 5 months.
  As an iPad user I've found 'My Mortgage' quite useful in getting a view on the impact of overpayments.
• Wow, what a great job you're doing. I'm looking forward to hearing more, and congrats on the payrise!
• End of the year and balance now at Ј140k. Time for some before and after stats after 12 months overpaying:
  Jan 2011 - Ј153k
  Dec 2011 - Ј140k
  Overpayments Ј6k
  After calling A&L I've decided to have my term reduced from January so my minimum payment is increased by Ј500, this will allow me to overpay an additional Ј500 each month (rather than saving it and only being allowed to pay off in January).
  Net result is that my mortgage free date is now January 2019.
  Only 7 years to go!
• Hi Bownyboy, you must be delighted and will have a whole load of options available to you once you are either MF, or with a good LTV.
  Good luck to you both on your journey.
  Best wishes Tilly
• That is brilliant, well done!
  Just one thing - you're looking at being MF in quite a short space of time, which means that when that happens you'll have to find a home not only for the spare cash you're using to OP at the moment, but also for your mortgage payments.
  ISA allowances can only be used once, but if you build them up over a period of years they can provide a significant stream of tax free income later in life, which is never to be sneezed at! So you could think about filling your ISA allowance each year and OPing everything else...
  Sounds crazy when savings rates are so low compare to mortgage rates, but that tax free income stream could be very valuable in future.
  It might be a good idea to talk to an independent financial advisor now so you can build up a picture of what to do with all the cash when it starts streaming into your coffers
  
• WOW - you have done so well so quickly.
  About the reducing your term and increasing your minimum payment by Ј500. This is a lot of money you're now obliged to pay every month - was there no option just to increase your direct debit amount and leave the term as it was? If you're happy that you've got 2 incomes coming in and both jobs are secure then great work but I'd be little worried doing that myself. I've just been phoning my mortgage provider (Halifax) every little while and getting my direct debit increased (although they do tend to do random things and make up the amount on their own, rounding up to nearest X amount!)
  Good luck with the 7 or so years - and well done for the past year!
• Thanks for your feedback and support guys.
  Lvm - I can overpay up to Ј499 a month which is what I've done for the past 12 months. A&L don't allow any more than this. Changing the term means my minimum payment is Ј500 more and gives me the option to pay up to Ј499 more a month without penalty. Fingers crossed my job is secure (as anyone can be) and I can always change it back for Ј20 fee.
• Well done on your quest for financial freedom and escape from economic slavery.
• Happy new year all!
  Well I just paid off Ј3,751 today to take advantage of my mortgage which allows 10% overpayments each January. Current balance is now Ј136,352. After my usual monthly payment and overpayment comes out on the 15th it should mean January should finish on Ј134,498. Phew.
  I can't believe after 1 year of really putting my mind to this I've managed to clear just over Ј15k off the mortgage balance.
  My target for this year is to be at Ј119k by December 2012. I find before and after stats really help me along especially as each month things can seem to be moving really slowly.
• Regular monthly overpayment cleared yesterday so now at Ј135,848
• Hi Bownyboy,
  You have now been added to the MFW2012 challenge and you're No.125. Good luck.
  All the best,
  Spigs
• Decided to make a real go of my allotment this year. With all the work required on the house last year I neglected it somewhat - went down there last weekend and it was completely grown over.
  Started digging over and will make some raised beds this weekend and have planned out what I'm going to grow in each of the 4 beds (I have a quarter plot for Ј8 a year which is more than big enough) - hopefully it should contribute to the food budget.
  I'll post some pics up when I the beds are complete.
• Haven't got round to making the raised beds but got a quote form local timber merchant and after measuring up for wood cost came in at Ј100. Thats for three beds 3mx1.2m and one 4.8mx1.2m which will cover my quarter plot.
  Hopefully should last a good 5 years or so. Not sure what to treat them with though, don't want any nasty chemical preservatives on the wood.
• Got a letter yesterday from Alliance & Leicester thanking me for my overpayment in January (I'm allowed to make up to 10% in January) Annoyingly they have recalculated my monthly payments down to Ј764 from Ј822 even though I specifically told them at the outset to keep my payments the same (and they have done every month up to now).
  Guess I'll be on the phone to their great customer support line tomorrow...
• All sorted with A&L, surprisingly quick 30second call sorted out the monthly repayments back to 822.
  Monthly overpayment of 499 paid today so new balance Ј134,999 or thereabouts.
• Wow, another month gone by and down to Ј133,752 usual monthly payment and 499 overpayment.
  Ј1500 out of Ј6000 saved for 10% overpayment on Jan 1st. Now just under Ј15 a day interest at Ј14.98.