If you are mortgage free, where does your income go?

[Presentxx]

We will be in this position soon and I’m intrigued as to how others spend/utilise their income when the biggest debt has been cleared? Hope this isn’t too invasive, but its not something I find myself comfortable asking those closest to me.

I'm 39 and we are mortgage free as of July this year. Part of it was getting lucky when I left University - I bought a run down house and did it up with my Dad teaching me. It sold for far, far more than I paid for it and meant I was able to put down a huge deposit on my next home, where I did the same.

Without my Dad helping me there's no question I'd still have a mortgage, simply because it was his expertise that taught me how to renovate and rebuild a home and his time and energy that went into it.

Money goes on travel (pre-Covid), savings for the DC, my pension and on pets and horses.

I'm due to be mortgage free in 8 years and will be 41. I did it by buying the cheapest flat that no one else wanted. Even now people turn their noses up at it. But it's the same people who say they can't afford to buy at all. I plan to either sell the flat and move to a house around here (south east), or rent out the flat and move to be near family up North.

@Doyouthinktheysaurus

We are boring and just save what we would have spent on our mortgage.

It's a lovely position to be in and I feel really fortunate to not have to worry about housing costs anymore.

Pretty much what we did. Overpaid on first property which was sold when prices shot up in early 2000s to use as a sizeable deposit on house. Continued to overpay, even only a tiny bit with DTs. Got lucky with job promotions for both of us and increased overpayments to the maximum and used DH's redundancy payment to help clear it all off.

@fellrunner85

I worked incredibly hard so I don’t have to worry about financial hardship

Do you have any concept as to how that sounds?
Lots of people work incredibly hard but still have to worry about financial hardship.

My mum, for example, worked in a very demanding - yet very low paid - job while bringing up three children alone, after my dad left her with 3 children under the age of 5.
She worked every hour she could but was still so skint I remember having to go without school shoes. No holidays, no car, no eating out, only new clothes were for birthdays. And that situation was, and is, hardly out of the ordinary.

Working harder does not always equal more money. Or vice versa.

^ This.

We're not mortage free yet, but all our extra money goes into investments. Stocks, cryptocurrency, gold and silver etc.

@Fallsballs

Me too You only have the one though!

'I have servants and drive a Lamborgini'

Most into savings, but we eat out (nothing fancy) a lot and have excessive holidays (well, pre Covid we did)

We have a mortgage with a silly low interest rate. We have been in the position to pay it off for several years now but it doesn't make sense.

The people I know who have paid off their mortgage, fall into one or more of five categories:

Child free
Inheritance
Very high paying job / bonuses
Cheaper area relative to their salary, so mortgage was less and overpayments more feasible
Older (paid the standard amount for the full 25 years)

A point that I've not seen here is the cost of housing depending on location!

I have family in another part of the UK where a house can be had for as little as £40K. A 4-bedroom detached can be had for just over £200K on a pleasant estate.

In my area, a starter flat- 1 bedroom- cannot be found for under £200K.

A 4-bed family house on a pretty ordinary estate will set you back £650-700K.

Where we have always lived house prices are astronomical and most families around here need a combined income of over £100K to even buy the smallest home.

Not working so I can be a stay at home mum.

@GrumpyMiddleAgedWoman

I'd be interested in knowing how people are mortgage-free. Kept an eye open for cheap mortgage deals and switched when possible, shortening the term rather than decreasing the repayments. Piled every spare penny into paying the bugger off, so if we had any savings not urgently needed for something else, off-loaded them to pay down the mortgage. Lived fairly frugally, drove cheap cars into the ground, had some pretty basic holidays - we were fortunate in that DH earned well, but we chose to live below our means to get shot of the mortgage.

It's interest that's the killer on a mortgage so pays dividends to keep it small and pay it off asap.
Yep.

And now:
Pensions/savings
Helping DC at uni
Holidays (well, last year...)

We were very lucky to be able to do what we did, in terms of income and health. It helped that we both grew up in skint families so have a shared paranoia about debt, and are both of us able and willing to live within a budget.

If you actually looked out for cheap deals and switched where possible the interest rate on your mortgage would have been lower than your savings so not really worth the effort of piling every spare penny and paying it off.

@Bwlch

We have a mortgage with a silly low interest rate. We have been in the position to pay it off for several years now but it doesn't make sense.

Same here.

Been mortgage free a while. Extra income goes into savings, investments and holidays

Holidays! Never having to check to see if we can have days out, weekends away, treats for the DC.

The upkeep of a musical child was greater than the mortgage but then we bought in the 1990s when property was still affordable.

school fees. We paid off our mortgage when just before our oldest started year 3.

We don't have many treats at all as anything left over we are funnelling into savings as I am hoping to buy a buy-to-let in my home country, as eventually I want to go home. We will need a mortgage for that though.

On our case we are mortgage free as DH lost his parents close together.

I divorced and downsized so bought a small home mortgage free. It hasn’t made a noticeable difference to me financially as the children stayed with me and ex pays no child maintenance (unemployed) so I have a lot of outgoings.

It enables us to work part time and not need childcare/ take kids to school.
School fees.

@Lemons1571

The people I know who have paid off their mortgage, fall into one or more of five categories:

Child free
Inheritance
Very high paying job / bonuses
Cheaper area relative to their salary, so mortgage was less and overpayments more feasible
Older (paid the standard amount for the full 25 years)

Well we have two DCs. No inheritances. No very high paying jobs ... in fact I was a SAHM for 15 years. Not a cheap area. Perhaps I count as older although I didn’t feel it....

Mortgage finished when I was 44.

However we bought a wreck and did it up slowly as and when we could afford bits and pieces. Didn’t even have running hot water to the bathrooms for a year and no central heating for several years! It was worth it though. We love our home now!

Ours was very nearly paid off but we are moving to a bigger house in a much better location. We would have been 40 with no mortgage and we were going to save the money we paid on our mortgage for retirement. My parents no longer have a mortgage and they spend all their money on luxury holidays. I assume they also have some savings for retirement.

School fees
University contribution

That's it, really. I don't do anything else other than eat cheaply and pay the utility bills.

No pension!

My parents were also mortggage free by the time they were in their mid 30s- but this was a different time. They then bought a rental property with a similar mortgage to the one they had had as they said the could not miss the money as they never had it. That was paid off by the time they retired and they have a lovely lifestyle now.

If you actually looked out for cheap deals and switched where possible the interest rate on your mortgage would have been lower than your savings so not really worth the effort of piling every spare penny and paying it off

I know this wasn't aimed at me but I think it comes down to your view of money. It's very easy to dip into savings but by throwing them into the mortgage you are locking them away and your goal may be having no debt.

I used to get 'why don't you invest in the stock market as the return is much better than reducing mortgage interest and you can just pay the mortgage off with the increase in investments'. But look at what has happened. My pension still hasn't fully recovered and neither has my stocks and shares from covid. That's fine as they are for the long game but imagine if I am made redundant and I need to cover my bills and my investments have tanked. By taking a low risk strategy and overpaying my mortgage a redundancy is something we can easily weather.