Very surprised at the amount of people who are mortgage free or close to finishing, my wife explained it with the statement that most on STW are sad loners who live with their parents and by default it's their parents who paid the mortgage off
To save for my deposit I lived with my parents till 27 and had a very frugal life, putting nearly all my take home into a savings account.
mtbmaff - Member
my wife explained it with the statement that most on STW are sad loners who live with their parents and by default it's their parents who paid the mortgage off
does she taste of lemon when you kiss her?
I should be clear at 58, I'm only 2 years into a 25 year loan for £157k. However, since the original loan agreement I've had a couple of pay bumps, maybe it is time to stop enjoying those and making some over payments.
As to why did I buy, I watched my parents rent for too long, then decide to buy right at the peak of the market, it was a disaster. I decided to buy earlier than they did and to buy a house I don't need to upgrade from for a long time. It may not have been the decision that everyone would have made, but I am free to make my own choices.
"Why do people buy houses?"
1. CGT free investment
2. substantial gearing from a 20-25% deposit
3. You can live in (plus keep secure & improve the investment property).
Have I missed any?
I am not so confident buying is the way to go these days, unstable housing market and especially the lack of job security make it a risk.
I am not so confident buying is the way to go these days, unstable housing market and especially the lack of job security make it a risk.
But renting for life will be very expensive, especially on a pension (as the days of generous pensions are well gone).
About 3 years ago, and at 35 quite happy about that. In a reasonable 3 bedroom detached house with decent value.
I'd like to say it was as a result of my careful financial planning and hard work, but it wasn't. Somehow the girlfriend managed to pull it off, and i'll ever ever complain. No mortgage, no car finance, no debts at all, beautiful.
Not sure, perhaps never. If we downsized we could buy a house outright but I am positive on property values which are still increasing in/around London.
Even if I do pay off my mortgage I intend to take out another in later life as there is no point owning a property valued over £350k (or what ever the inheritance tax threashold is) without a mortgage as the tax man will take his cut. This is based upon me living in the UK which I may well not do, the best IHT planning is probably to live elsewhere.
crotchrocket - Member
"Why do people buy houses?"
1. CGT free investment
2. substantial gearing from a 20-25% deposit
3. You can live in (plus keep secure & improve the investment property).
Have I missed any?
Security - A land lord cannot just hand you your notice and ask you to move out.
Freedom to modify the house. Yes you can paint and decorate a rented house but you can't knock down walls, build extensions and do other serious mods.
Able to look after the house yourself - no need to wait for someone else to fix something. Can do it how you want rather than the cheapest possible bodge.
Basically control of your own space - there are some big downfalls too. It was nice to phone up the landlord a few winters ago and tell hime "you should send someone round to have alook at the gutters, the snows bought them all down." Less fun when it was my own house and responsibiity.
11 years time - at 49. But my tenants pay it anyway... 8)
2 years, 53
So, over-payers, how much extra (in percentage terms) do/did you pay and what does/did that do to the term of the loan?
@Jambalya, as you paid your debt off I presume you are single... but are you a british national (Domiciled in the UK)?
I only ask as british domiciles pay IHT on world wide assets (as far as i know) so an offshore home would be part of the IHTable estate.
It has been my number 1 obsession for the past three years, what with having essentially given two previous houses away 😈 and almost started again. If I hadn't done that I would be living the life of Riley now. I dream every day of getting rid of the mortgage. Technically currently it is the 1st August 2018, but I have an ambition to rid myself of its evil shackles sooner than that.
I suspect that a number of the ones above who were mortgage-free at a young age don't live in the south.....!
ourmaninthenorth - it's a function of interest rate, outstanding and amount / time that overpayments are made. One of my greatest pleasures is adding an overpayment to my chart and watching the date come in closer......hmmm, I'm sou nding scarily obsessive now.....
Over payments? why do this when mortgage rate at 2.5% when cash ISA rates at 4%, which are "safe as houses"
Save separately and when the investment value grows to the reduced level of mortgage pay it off
A question for the STWers with investment properties if you have 100%, or there about, mortgage and you bought fairly recently and your charging £500/600 mth is it covering your costs bearing in mind house prices still appear to be falling!
I suspect that a number of the ones above who were mortgage-free at a young age don't live in the south.....!
Must be at least one lottery winner on STW......
Changing mortgage at the moment to offset. On basic terms it will be 25yr repayment which will take me through to late 50's. Wife and I currently thrashing out a plan to cut down outgoings and really hammer the overpayments, looks like it can be cleared in about 6 years.
Offset is definately the way to go.
Smarty> because not everyone pays 2.5% on their loan?
& even cash isa isn't totally "risk-free".
smartay - the depositor insurance scheme has an upper limit. And ISAs are limited to an increase of £5,600(ish) a year.
what loan rate do you pay on your offset Franksinatra?
Who with?
Still £5600 /year at 4% ( I agree at the moment) x 2 gives £11648ish off the sum per year, not bad
I suspect that a number of the ones above who were mortgage-free at a young age don't live in the south.....!
North east Scotland, the particular bit I live in is nowhere near as cheap as someone taking out a mortgage would like. The big advantage is that there are places not too far away that can provide awesome properties for the same cost.
As per smartay, all my capital is paid off through shares (mainly maturing employee share schemes) and ISAs
I am offset, but there are also other things you can do like take out 0% purchase credit cards and max them out for the period. All helps keep money in the offset pot.
I do take money out of the offset pot to put into cash ISAs as the interest rate is higher.
With offset, you pay everything you earn less costs into the offset, its highly motivating to keep it all there and watch the interest payments drop.
RBS, variable rate, currently 4%. 80% LTV, £500 set up fees.
Wife is tecnically self employed so saves her tax, using this and kids savings for the offset. Overpayments can be made at any time and interest is calcualted daily so instant saving for any overpayments. (I don't work for RBS, just think it seems a great deal and the only offset I could find for 80% LTV)
why do this when mortgage rate at 2.5% when cash ISA rates at 4%, which are "safe as houses"
Because current mortgage rates are not that low - my recent lending was at around 3.5% - and if you use an offset mortgage you're avoiding interest on taxed income. As a higher rate tax payer you'd need to be getting 5.83% on your ISA.
My household wont go without to do it but im about 6 months in a 25 year term and paying in 250 extra a month seems to save me such a crazy amount(several 10s of thousands) in interest over the term and 8 years early that it seems like a better prospect than sticking money into my savings. - interest rate on my mortgage is about twice that of my best savings rate ( still have a couple of isas open with emergency money but ive stopped paying into them.
8 years early would see me 42.
But Best laid plans of mice and men, nothing can be relied on in this life !
61I think, no pension either. Meh, got more important things to worry about 🙂
paying in 250 extra a month seems to save me such a crazy amount(several 10s of thousands) in interest over the term and 8 years early
Saves us £87k over term of mortgage if we can actually pay off as quickly as we think we can. Not going to earn that in interest anywhere else! It is a no brainer.
Only disadvantage I can think of owning, is that round these parts mid priced houses just arent selling.. So I'm trapped in a property that I've lived in for 20+ years, thats way too big for our needs now the kids have all flown the nest.
Completed the re-mortgage on our house yesterday -
If we stick with the current arrangement (30-year loan!) for the lifetime of the mortgage i'll be a month short of my 70th birthday when I pay it off!
However, this crazy situation is a tactical move to raise funds to extend (and add lots of value) to our scabby 2-bad bungalow.
When the 2 year fixed rate is up we'll re-mortgage and shorten the terms, then start over-paying when my youngest daughter starts school.
Longer term we hope to be Mortgage free in our mid 50's, however as others have said, I won't be slave to it, if it stops us doing other things.
It is all subjective anyway - we could move somewhere not quite as nice tomorrow and massively cut our loan, but I'm prepared to pay a premium to live where we live.
I'd rather be paying out a few hundred quid a month right up until I retire if it means I get more holidays/good life experiences etc..
Currently i will be 51. Im 35 now. I keep toying with the idea of increasing the term to make life easier now, any views on this? I know it will increase the overall interest but the up side is i wont be struggling as much now. Its not that we would rush out to buy new things but not having an overdraft would be nice.
Ive a modest house in a nice area, 2 cars paid for and 2 kids were constantly paying for! Smallish overdraft and No cards.
Interested to know if Inheritance helped any of you. I have been told i will inherit money from an uncle, he told me himself and often jokes about how he keeps his house tidy for me so it will sell well when he has gone. 😥
Interested to know if Inheritance helped any of you.
Yes - from parents 🙁
hmm 🙁
Sorry.
But renting for life will be very expensive, especially on a pension (as the days of generous pensions are well gone).
The UK has been pushed into home ownership, but jobs are no longer secure, ownership is starting to hit a lot of people hard, and IMO its going to get worse. It may still only effect a minority, but its not a small minority.
We're in the process of buying a bigger place so our term is being extended for to 20 years meaning I'll be 56. I'm OK with that but of course I'll be paying it off quicker if I can.
Paying off quicker is a good idea (I had been to get the term down to 16) but remember the interest savings are in today's money, in 15 years time that £30k interest saving wont be worth so much.
For those who decide* to rent for life I hope you are putting any savings from your descision aside for yor retirement / going into care. *As opposed to being forced.
@croctchroket - married with grown up kids, I have a mortgage but could buy a smaller place mortgage free, we don't need a big family house any longer so it's an option.
I am a UK citizen. Yes if resident in the UK I would pay IHT on my assets, but not if I were resident abroad. That was my point, it's a very real option for me to reside abroad and IHT is a factor.
For those who decide* to rent for life I hope you are putting any savings from your descision aside for yor retirement / going into care. *As opposed to being forced.
What are you doing to plan for when you are 50 and jobless and lose your lifes investment?
And what savings, renting isn't cheaper, its just more flexible.
nosemineb - Member
hmmSorry.
Don't be - it happens to us all. At least they had something to give us.
I bought an iPad, had 'Mum and dad' engraved on the back then put the rest in the offset mortgage account.
i'll be a month short of my 70th birthday when I pay it off!
My Parents in law were in a similar situation until FIL hit 65 upon which the bank demanded he repay the mortgage instantly! After a lot of arguing he now has 6 months grace.....
On target to have it settles in 5 years, when I will be 48 but it may be a bit sooner.
Originally, when it was set up, it was on target to end when I was 55 but we got one of those offset mortgages that means you dont pay interest upon part of the loan equalling the amount of money in your account. (eg 100k mortgage, 5k in the bank, pay interest on 95k)
We paid the same amount every month regardless so the amount of money necessary from not paying interest has slowly chiselled away at the actual amount thereby reducing the term
Just by having a few grand in the bank (and I mean only a few) the term has reduced nicely by 8 years.
I keep toying with the idea of increasing the term to make life easier now, any views on this? I know it will increase the overall interest but the up side is i wont be struggling as much now.
A good friend of mine who is also a financial adviser tells me he talks to lots of people who aspire to pay off their mortgage early hoping for the holy grail of a worry free retirement and ridding themselves of the stress of losing their job and being out on the streets etc.
He tells me it rarely happens however and that many of his customers make a great deal of sacrifice today in terms of missing holidays and working extremely hard while their children are young to be in a position later on where they are financially secure but lack the health/energy/motivation to do the things that they deprived themselves of earlier in life.
The trick is to find a balance because you are a long time dead!
To answer the question I am 48 now I expect to be mortgage free in around 8-10 years.
The trick is to find a balance because you are a long time dead!
That's what i'm thinking!
Then there is the thought that a lump some of inheritance 1 day could go along way to paying my remaining mortgage off.
Dont hate me bringing the Inheritance in to it, it's ta hard one to talk about before you get it. For reasons i dont understand My Gran and my Uncle wanted us to know what to expect when the inevitable happens. Like i said above my Uncle enjoys telling us, i presume he likes me to know we will be ok financially in the future.. anyway.
Ive been doing the online calculators and i can certainly save 200/month keeping the term the same so i think its worth doing that now. That figure is on a current 5year fixed rate. Cheaper again if i do 2year fixed deal. Experts seem to think the interest rate will stay low for a few years yet so it may be worth the gamble to do 2year now then look at a longer deal next time.. any thoughts?
I wouldn't let the 'paying off your mortgage' dominate your monetary thoughts too much......after all you might be dead next year!
Don't forget to smell the flowers along the way!
[i]I bought an iPad, had 'Mum and dad' engraved on the back then put the rest in the offset mortgage account.[/i]
makes a change from a bracelet I suppose!
What are you doing to plan for when you are 50 and jobless and lose your lifes investment?And what savings, renting isn't cheaper, its just more flexible.
So what will a renter do when they are jobless age 50? They still have to pay rent so they will eat into their savings. If it happens to a house owner it is actually not in the banks best interest to take the property back and they will help by letting you cut payments, eat into equity (the equivilent to a renters savings) etc.
I think the houseing situation on the country is crazy but it's not going to change anytime soon so putting your head in the sand isn't going to help.
If like many at the moment you don't have a choice and simply cannot afford to buy that's one thing, but other than having freedom to travel around I've never seen a convincing argument for renting over buying in this country.
makes a change from a bracelet I suppose!
Was going to buy a fancy watch but I am too tight. 😀
The trick is to find a balance because you are a long time dead!
That's true of pretty much everything in life. No-one ever died wishing they'd spent more time in the office
+1 Surfer's advice, it's a balance. Either extreme is painful.
Obviously trying to get rid of mortgage early as possible. but like most people on here hope to down size pocket the cash and enjoy life.
However with the number of people in temporary positions there could be a severe knock on as the housing markets shrinks as less people can buy but only rent.
Not my ideas one of these think tanks
3 more years - at 46 - unless she persuades me we actually do need a conservatory. And another 10 years of debt. When we clearly need more bikes and no debt!
no inherritance here thankfully.
I did a heap of working abroad to raise the deposit - 2x 6 month stints in west africa and in europe.
I am almost 40 and I work hard 45-60 hrs a weeks random hrs at my job. I get 6.60 hr. I don't get a full time contract even after working here for 5 years. I am one of the majority of workers that do unskilled labour for massive corporations. I will never be able to afford a mortgage, never mind how hard I work.this is life for many ,many hard workers. and what you lot are describing above is anathema to me.
I like riding a bike cos it's what I can afford to have fun on.
Currently i will be 51. Im 35 now. I keep toying with the idea of increasing the term to make life easier now, any views on this? I know it will increase the overall interest but the up side is i wont be struggling as much now. Its not that we would rush out to buy new things but not having an overdraft would be nice.
Ive a modest house in a nice area, 2 cars paid for and 2 kids were constantly paying for! Smallish overdraft and No cards
Mine should have been sorted at 50, now more likely to be 62/65. It would be nice to be able to say I'm mortgage free, but I got over that. I pay way under £200 per month now, so no need for an overdraft or cards ( I have a £500 card though) no pressure to earn, in fact I've stepped back. If I need something I buy it. So since extending the term my finances have been far healthier.
I've never been a big earner, probably what you call average.
Wife gave up work when we had kids.
No inheritance, son of a 60s single mum.
Oldgit mode on. What really helped was early saving and cutting back or not buying luxuries i.e drove an old banger and didn't buy lots of new stuff for the first place. Young guys I work with can't afford a deposit, but buy BMWs Audis and have three overseas holidays a year as well as spaffing £££££ in the pub each week. Off.
Edit; I meant to say I've been divorced as well, I can't tell you how much that hurts finacially at the time. So paying it off early might help if that happens to you or your job goes tits up or your health fails. Otherwise pay as little as possible, I could survive selling on Ebay.
"Young guys I work with can't afford a deposit, but buy BMWs Audis and have three overseas holidays a year as well as spaffing £££££ in the pub each week. Off. "
My mates and my boss are the same .......my boss actually commented the other week "i dont know how you can afford that house(although he has no idea what i paid) on your salary" ..... urm cause i dont smoke , drink much , drive a flash car , have kids ,go on holiday to 5 star resorts in exotic places , drive to work.
another of my collegues aspires to buy a house but spends 100 pounds each friday/saturday night at the weekend as a minimum he says. My mind boggles at that thought. spends monday and tuesday like a half shut knife.
My plan was not to get trapped in the Cant sell for a loss must rent out flat problem that quite alot of friends and colleagues are trapped in at the moment , far to many flats on the market in my area.
Anyone any good at maths? I'd like a formula that shows me:
Monthly payment, interest rate, repayment term, <enter monthly overpayment here> =effect on repayment term.
Or the reverse, basically so I can work out how much to overpay to end my mortgage 5 and 10 years earlier respectively.
Kryton I am rubbish at maths and even worse at modelling but I put a piss-poor hamfisted attempt at a spreadsheet together which I will email you now. It's a bit inaccurate but does allow you to play around with it. Usual warnings apply about using at your own risk etc.
A genuine question because I'm open to different opinions - Why do people buy houses
youve got a clear and deliberate benefit from renting ie living in a place you couldnt afford to rent that enhances qualityof life. Renting in the UK is expensive and usually not cost effective. When I first bought 10yrs ago the mortgage repayments were the same as the rent I'd been paying for a similar property, and my repayments have gone down since (with interest rates and reduction in amount owed) rather than up to match inflation/landlord demands. After 25yrs (actually will be far less due to overpayments) I own my house and could live 'rent free', you will own nothing and have to continue paying that expense for as long as you need a roof over your head.
Horses for courses but for many in the UK renting does not make economic sense, I understand othe European countries have a far more affordable rental market. My house choice isnt about quality of life (location, views etc) it is somewhere to sleep and store my kit when I'm not working or doing something interesting.
Always been mortgage free, never had, never will 🙂
Same as kevevs really, just another world, that we know is there but is not part of ours!
i too get pleasure in the cycle, no cares in the world when i'm on my bike 🙂
Have the money to pay them (more than 1 house) off now, but interest rate is so low, base +0.5 that the money is better off where it is.
At current run rate, about 8 years time so 51 or 52. Depends of course how investments go - I have an interest only mortgage and then a number of investments that I started before I even had a house that will go to pay it off. they don't look great currently of course (although they do cover ca half of the lump sum) but maybe in a few years time we'll be back to boom and they'll be worth a lot more.
Unknowns of course are whether I'll stay in this job (doubtful; hate it with a vengeance currently); whether we move (or extend in some way); and ultimately when my folks peg out, how much will their place be worth and will much have been spent on residential care or the like.
There's too many unknowns in there to worry about. My wife's best friend had breast cancer 2 years ago and after a series of dizzy spells, went to see the docs last week, ending up with a trip under blue lights to St Georges in Tooting last night. She's going to be operated on tomorrow to remove a brain tumour. That might be any of us in a year's time, so I intend to spend what i feel worthwhile to enjoy life, and put the rest into the mortgage / savings, and if that means it takes a few years more to pay it off, so be it.
On the pessimistic side, my wife works in a pension section, it is amazing how many best laid plans come apart due to ill health.
On the basis of this life about getting the right mix
My mates and my boss are the same .......my boss actually commented the other week "i dont know how you can afford that house(although he has no idea what i paid) on your salary" ..... urm cause i dont smoke , drink much , drive a flash car , have kids ,go on holiday to 5 star resorts in exotic places , drive to work.
nothing wrong with either choice if it makes [b]you[/b] happy. I have loads of mates/colleagues (on similar salary) with bigger houses and much bigger mortgages who often ask "I dont know how you can afford 3 or 4 foreign holidays a year!". We choose to live in a pokey 2 bed but in the last 12 months have dived and trekked in Thailand, biked in India, biked in Switzerland and dived in Egypt. I am happy with my choice and hope they are happy with theirs.
ononeorange - Member
Kryton I am rubbish at maths and even worse at modelling but I put a piss-poor hamfisted attempt at a spreadsheet together which I will email you now. It's a bit inaccurate but does allow you to play around with it. Usual warnings apply about using at your own risk etc.
Cheers OOO. Now done (approx). So, I need and extra £200pm to reduce it by 5 years which is my aim, and £400 to reduce it by 10 years which would see me mortgage free by 55.
Off I go then, slightly hampered by the fact Mrs K wants our last forseeable holiday in Barbados in 2013 as its the year before Jnr no 1 goes to school.
crashtestmonkey
I understand its a personal choice- as i said above we aint going without to appease the mortgage - rode in les arc last year and all going well california next year !
Currently it's looking like 59.
Wish I'd not checked now 🙁
39 and mortgage free as of Sept this year, I have never remortgaged or moved. 2yrs ago I took out a 2nd mortgage on a 2nd property buy to let as a retirement nest egg, that's planned to be paid off in 18 years but i'll shift most of that down to 10.
The other thing is to consider the capital in your property if you have a mortgage as well. So although I have a small mortgage that will last until I'm 65 I'm sitting on over 200k in capital. I could sell and buy outright, but I'm happy with things as they are.
see i think its a fallacy to think about the "capital" in your house .... the market could crash tomorrow.
the only capital you have in this life is what you have in your hand , not an arbitrary figure made up by estate agents to squeeze more money out of you.
@trail_rat over the last few 100 years that view in the UK would have seen you lose out massively over any medium or long term period.
yes maybe but tomorrow is the start of the next 100 years ....
then again ive never been good as selling stuff on.
As soon as I get one, I'll let y'all know...
Not read the whole thread but...
Has anyone considered not paying it off early?
Or even releasing capital when it gets close?
Has anyone considered not paying it off early?
My mortgage still has 32 years to go. I put what I should/could overpay into sharesaves. Currently sitting on a 110% return, the "profit" I will take off the mortgage in a lump sum (or offset)
ononeorange - Member
Kryton I am rubbish at maths and even worse at modelling but I put a piss-poor hamfisted attempt at a spreadsheet together
I'm good at this stuff, have mailed this to many on here before:
https://docs.google.com/spreadsheet/ccc?key=0Al-Bq4gR-Hn7dHFmcjN6LVk2MmR3UlRMdWxsa1o2dUE
Hopefully in 4 years time, when we're both 60, which isn't that bad seeing as we both had to re-start our lives after divorces!
In a reasonable position now though, 3 houses & 3 mortgages, all being steadily paid off. (unless it all goes PROPER tits up)
We just got our first mortgage this year.
I am 25 and my fiance is 24. Currently have £119k left to pay over 29.5 years!!
I think that may change substantially in years to come but its a start!
I only have had repayment mortgages, as advised by solicitor (an uncle) and I've never fretted that I was mis-advised..
Had been lucky in parts certainly; but also by having a two-bed flat from the start, and letting the spare room/s, was able to sit tight through ups and downs, and then to move to a house - but only after marriage and having been in the flat for about 11/12 years.
But yes, approaching 50 this year and have been mortgage free for about 7/8 years - aided by use of redundancy cash. But that is in part by starting earlier than many, possibly.
I think it's very hard to access the capital in a house's value as you need somewhere to live. Downsizing will probably only let you access a fraction as the house price differences in an area aren't that big (compared to the total capital).
mudshark - Member
ononeorange - Member
Kryton I am rubbish at maths and even worse at modelling but I put a piss-poor hamfisted attempt at a spreadsheet together
I'm good at this stuff, have mailed this to many on here before:https://docs.google.com/spreadsheet/ccc?key=0Al-Bq4gR-Hn7dHFmcjN6LVk2MmR3UlRMdWxsa1o2dUE
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Cheers Mudshark - yours and OOO's numbers aren't far apart - I appreciate the help! However, how does the model change if I pay the overpayment as a lump sum at the end of the year?
ie, rather than a £200 overpayment per month, what if its a £2400 over payment at the end of each year - on the 12th month?