Mortgage free forever before I turn 30?

[Newname10000]

Me and my bf have been together 4 years - I am currently 23 he is 26. We are planning on buying our own home in the next year. We have a very substantial deposit between us and the plan is then to aggressively pay down the remaining mortgage, then save for a (potential) future move so we don't have a mortgage again.

Has anyone done this/had experience of this I can't think of any cons but then again it was my idea...

By the date we plan to start looking we will have £120k deposit and should be in the position to be paying £20k per year off the mortgage (including the standard payments.)

My word @Newname10000 there’s not a lot you’ll get or take from this thread unless your intention is continued congratulation on your financial decisions.

As a previous poster said though...

Property is not always the smartest financial decision for investment especially considering how young you both are.

However here you are proclaiming that you’re going to do it.

So my question is, would you listen to alternative advice?

Or have you gone for the millions of others who say “you can’t go wrong with bricks and mortar”...

Overpaying on your property will set you up with more disposable after you’ve paid it off.

However unless you’re in a fast rising area of prices and intent to immediately sell to realise capital gains, then it’s not the most effective decision in low interest rate environment, as another poster intimated

Like I said - please shout if you are interested in hearing an alternative view, but I always frown at these kind of posts because you’ve already decided what you’re doing, and seem to just be enjoying the “property is the best, always” echo chamber.

Gin - what other investments are you suggesting ?
Stocks & shares go up/down, but sometimes good long term
I saw Facebook are proposing their own currency
Peer to peer ?

Everyone needs somewhere to live & costs usually increase over time

I would save up money for school fees for the number of children you intend to have first. Shit happens. Housing bubbles burst, people get sick, the economy tanks. You may one day find yourself in a position where you don’t have the same income. Having money set aside for fees is much more important than having a larger chunk of your mortgage paid off (especially if you property devalues and you have little or no equity to borrow against).

Agree savings first for emergencies. House prices may crash after Brexit - just for context I've paid about 30k off the mortgage on my flat but it's worth 30k less than I paid in 2007 so completely pointless now. Saying that obviously having no mortgage is better than having one! We pay 26k a year on ours but we've still got twenty years to go 😫

School fees? Only a small proportion of kids go to private schools, why assume they wouldn't send their hypothetical kids to a state school?

Hypothetical kids are categorically going to state school - and I'm definitely not allocating money for people who may or may not exist.

I almost replied to this based on personal experience but realised that the result was more stealth boast-y than insightful... Though as such it'd probably fit well on the thread?

I would save up money for school fees for the number of children you intend to have first. Shit happens. Housing bubbles burst, people get sick, the economy tanks. You may one day find yourself in a position where you don’t have the same income. Having money set aside for fees is much more important than having a larger chunk of your mortgage paid off (especially if you property devalues and you have little or no equity to borrow against).

Most kids do go to state school!

I too thought getting rid of mortgage was a good thing. We paid off our mortgage. And then moved to a better house and now have a mortgage again until we are 68. I've changed my mind now and my outlook is enjoy life whilst making the standard payments and be mortgage free when we are 68. Is the cheapest form of borrowing and better to enjoy life rather than putting all spare money into paying mortgage off. Not really bothered if mortgage lasts til we are 68 as we won't be retiring before then, if at all. I plan to keep on working until my body tells me different.

So at 24/26 you have done Europe, Nee Zealand and Australia ... you have saved £120k and work in finance.
Wow.
You are incredibly lucky. To the PP who said they have worked hard - I have worked hard all my life and never saved £120k - even by 50!
Have you had help? university fees? Lived at home?

Fake story ?

To me your plan is a bit near sighted. There are other, more financially beneficial long term options.

If you take out a separate self invested pension - check out AJ Bell’s platform eg which is cheap and easy to set up you will get 20% tax relief (40% for higher tax payers) and you can access the pension from age 55 without affecting your work place pension. Those rates are unbeatable and the money in the pension should also grow subject to the performance of the investments plus You could also use the tax refunds to overpay your mortgage thereby achieving both. If you put £10k from your deposit into your pension you would get £2 k back - but it’s a long term strategy.

If you are comfortably off I think you’d be better to keep a mortgage andtrade up the housing market ( mortgage interest is relatively cheap). Then you’ll increase your equity and you can sell later, down size and fund an earlier retirement.

As PPs have said though you should make sure you live a lot. Congratulations on being financially savvy.

Speaking as a older person, it all sounds great on paper, but life does have a terrible habit of throwing you a curved ball from time to time, and in some cases, quite frequently. I think I would have a few back up plans in case the original one doesn't work. There are both advantages and disadvantages to being very single minded. Stay flexible, then hopefully you won't be disappointed.

@Daffodildainty agree completely. Another platform to consider is Vanguards own S+S ISA. They’re opening a SIPP later this year (and until then I’m with AJ Bell for that!)

Someone earlier said “stocks go up and down but are sometimes good”. Unless you need to pull funds in the short term, mutual funds are a sensible investment decision. The market grows, it’s what it does. Short term there can be crashes but those who came out best from the last crash are those who kept hold of their stocks and bought more still. It’s stock picking that’s risky. In fact, if you have a pension you’re already investing in the stock market.

Housing prices can also crash leaving you underwater and unable to sell and move. There are also situations where renting is cheaper than buying if you actually look at maintenance costs + upgrades + interest paid + tax (stamp duty/capital gains where applicable). Being able to hop around for a higher paid job and not being tied down can also be of value.

All of the above said and done, we will be mortgage free on this place by 32 if we don’t sell it before then, but that’s part of a strategy which includes traditional pension savings (I don’t believe your 18% is adequate if you want to retire early - and you’d be wise to check your fund fees) and saving into ISAs in the hope we can retire before 55. I don’t think it’s a bad idea to overpay your mortgage but it’s not the most effective strategy.

If you’re interested see Bogleheads/The Simple Path to Wealth by JL Collins/Reddit’s UK personal finance.

If being mortgage free is a primary objective, then it's a perfectly good plan. But if you want to maximise long term wealth then you need to consider making better use of mortgage debt. And that's not just about the potential difference between mortgage rate and investment returns. Capital gain leverage is probably more significant (i.e. buy a more expensive property now and it will appreciate faster) providing you plan to be in the property market for long enough to ride out the troughs.

Op do it, it's great to be mortgage free. If life does throw you a curve ball then you just deal with it.

Get on the property ladder now as you are young. I did at 24. I think that too many don't do so when young, as they think that they should be doing something else but paying a mortgage instead of rent does not stop you travelling or clubbing or going out.

It's a stupid mindset that says buying a property means settling down. It just means that you pay your own mortgage instead of your landlords mortgage.

You do have a very privileged position op as buying and overpaying will still leave you with good disposable income and the money for holidays.
Definitely go ahead with your plan, it sounds great : )

It's a stupid mindset that says buying a property means settling down. It just means that you pay your own mortgage instead of your landlords mortgage

We were living in various different countries for 6 months at a time, so for us it would have meant ‘settling down’ to a degree.
Also DH’s work paid our rent so we weren’t paying anyone’s mortgage . We put our money into other investments.

It's great but ensure you buy a property that you can stay in at least for a few years, moving is expensive. We ensured we could pay the mortgage on one salary, any over payments are a bonus

It’s as I thought - OP wasn’t interested in hearing about anything other than property.

@What8Surpr1se8

Stocks and shares do indeed go up and down - but if you invested in the FTSE thirty years ago, a tracker, you’d see better returns than property (taking into account property taxes, maintenance, etc).

But bricks and mortar have that emotional pull for people. It’s simple and seemingly transparent. There’s no fund manager or anything else. You can appear to drive performance (do up a property, list at a time when the market is buoyant) and can even give yourself a title of property developer should you wish.

Check with the mortgage company as a lot will only let you overpay 10% a year without a penalty

That will be great OP, soon as you can get your mortgage paid in full the better. We went without nice holidays, cars for years to get the mortgage paid up. Well worth it.

@Pieceofpurplesky To answer - I am 23 but started working full time at 18 and always sort of figured I can live off £80 a week (covering food etc plus fun) and this pretty much worked, majorly helped by the fact all my friends had no money and were students.

I had some help but not the stuff you hear like 'My dad gave me £40k' but my Grandparents bought me a car so I could commute to work - and I lived with my parents rent free for two and then me and my bf in my bf parents flat (they live on an old farm and its a flat that was for farm workers back in the day) for £180pp per month - where we live now.

So basically fixed/big costs have always been super low. In my first year of working I saved £7k on £17k a year, and have increased this as times gone by. My bf has adopted some of my money logic and has inherited £15k and is obviously a few years older.

I'm really fortunate I kind of 'landed on my feet' in the job I am in, and always pushed for promotions/payrises.

I don't really know if this answers the question but regardless I just like a spreadsheet and a plan and money STRESSES me out.

@Daffodildainty and @PooWillyBumBum Thank you I will have a look at investment options - I currently distribute into different accounts, an ISA and premium bonds and I know it's not the most sensible growth plan.

I'd get the security of a house to be honest. You can make more money via other avenues, but if you aren't paying rent on somewhere (as it's paid for) the that's a huge amount of stress reduced if your circumstances change.

And you can save money anyway if you don't have a mortgage etc coming out of your wages every month.