Meet the Other Phone. A phone that grows with your child.

Meet the Other Phone.
A phone that grows with your child.

Buy now

Please or to access all these features

Money matters

Find financial and money-saving discussions including debt and pension chat on our Money forum. If you're looking for ways to make your money to go further, sign up to our Moneysaver emails here.

How to be mortgage free!?

89 replies

Whydoireadthis · 05/01/2021 19:48

Hiya, I was wondering if there’s anybody out there who is mortgage free from overlying their mortgage, who’s done so with children/part time work and a household income of about £40k? I keep reading about it and it interests me but the only stories I come across are of household incomes of about £100k+!! My mortgage is around £700 per month and suppose I’d like some real life experiences and some bigger money saving tips then just ‘cancel unused direct debits’ and ‘taking packed lunches’ because I think I live frugally on most things anyway.
Any tips appreciated 😊
X

OP posts:
BiddyPop · 06/01/2021 11:22

We have a higher salary level, but we didn't have when we were going through it (but I had returned to FT work with DD in paid childcare after mat leave - we love her dearly but I needed the sanity of the adult world too).

Her creche fees took almost all of my salary.

DH paid the mortgage.

And we split the other bills.

We had a very quiet life for a number of years (which suited us anyway, we were working hard and DD took our time at weekends) - limited visits to cinema/theatre, only the odd night out for pints etc.

We always had a lot of clothes for DD to make life easier to manage - and not be under pressure that the only spare outfit was now dirty and needed to be washed overnight for creche tomorrow...but mostly it was clothes from places like H&M/Penneys etc, and very wash and wear types. I usually stocked up in the Next and other sales for the next 6 months, and would grab things for the following year if I saw useful things at good prices.

For our own clothes, we have always tended towards classics rather than high fashion, and I will mend things to make them last longer. And I tend to dress in layers, so have things like vests and thermal leggings to allow clothes be more useful for longer in the year. We also get solid shoes, which get heeled and soled as needed and last years and years, not a season or 2. And I also will buy in sales/clearance, and in charity shops too.

Use loyalty schemes in supermarkets, and coupons and special offers on things we would buy anyway. We have always tended to cook from scratch a lot, rather than convenience food, and I often buy ingredients from ethnic stores (Asian supermarket, Italian deli etc) and local stores (butcher, fishmonger, veg shop etc) for good deals. I bulk cook at times, getting offers on meat etc and then making a few weeks worth of Shepherd's pies or Spag bol sauce or Chicken curries, and freezing those in single or double portions for midweek dinners. And most of those meals have a LOT of extra veg in them. And if I see yellow sticker items that are still ok to eat, and that we would eat, I buy those and put them in the freezer (or change the meal plan for that evening). And yes, I tend to plan meals at least roughly for food shopping and planning purposes. Including "MN Rubber Chicken" weeks - roast on a Sunday and various leftover meals for a few more days.

We shop around for insurances etc. We pay off credit cards every month so don't have interest to pay on those. We have tended to buy cars with cash not loans, and buy as small as we can manage with and generally older rather than newer - once they take what we need and will run reliably, then that's the important thing. We keep on top of maintenance, so regular cleaning and painting and servicing of the house/cars/appliances etc rather than major repairs or replacement costs. And we would do a lot of those jobs ourselves where we could (even things like tiling our first house, and making a lot of the soft furnishings on the sewing machine ourselves).

We both have savings which come directly out of our salary before hitting our bank accounts. And others set up to happen every month. Which we had done from as soon as we started working. I have a habit that, whenever I get a promotion or payrise, I give myself a treat with the first paycheck after that, and then increase my savings amount as I was managing on what I was getting before - before I get used to having more money to spend.

I have now developed a takeaway coffee habit, but I was a long time just using the kettle at work. And I still bring my lunch with me most days, only going to get a sandwich or something once a week or so as that is so much more expensive.

We only got sky a few years back when we changed broadband providers. Before that, we had terrestrial tv and the freesat channels - but there was plenty of choice with those. We've had Netflix since it started in this country, but that was a lot less than Sky per month.

Our holidays have tended to be a lot cheaper than many others - self catering, often in this country or getting the ferry to the UK rather than flying to the sun, and not tending to be major party animals but more relax with books and walking and nice meals types of breaks.

And when we were less well off financially but had more physical time to do it, I had an allotment where I grew a LOT of our own veg and soft fruit. That did cost me some money, but I more than saved overall when the harvests came in.

Part of what really helped was that, as interest rates started falling in the last recession, while DH's job was uncertain he still had it and we kept the mortgage repayments at the original levels (the plan being to drop to the required new levels if we had to) so the extra money went straight off the capital every month. And we would put any bonuses DH got, and occasional lump sums as my savings built up, into that as well - once we still had enough savings for emergencies in our accounts.

So lots of general frugalness and watching where our money went and trying to keep all costs low, savings before luxury, and some luck.

The past few years, we weren't as focussed on it as salaries improved, time decreased, and life has been too hectic. But interest rates had never really risen again so the extra money was still going in all along to pay off capital and we had made such a good start (which really reduced the interest to be paid on that part of the capital repaid early!) that we finished paying it off at the beginning of last year without pushing ourselves hard - 7 years early - but we could have paid it back about 2-3 years earlier if we had pushed but there is no real interest to be earned anywhere else so we decided to just enjoy life a bit more.

ememem84 · 06/01/2021 11:41

We were overpaying our mortgage but then sold our apartment and bought our current house. our mortgage now is very cheap (in comparison to the old one as we got it on a good rate). I think we managed to pay off £140k in total as additional payments. we did it all in lump sum though as this meant we paid less interest overall.

We're planning on overpaying the current mortgage once we have finished paying nursery fees and the mortgage comes up for renewal.

i've seen things on pinterest re paying off mortgages in 3 years or whatever. these couples seem to always have a load of kids and they suggest selling everything you can do without, putting lives on hold for a while, and saving one salary and using the other to over pay.

with our mortgage we can only over pay by 10% a month though, so need to be careful on this.

Sn0wplayday · 06/01/2021 12:07

Being mortgage free is great

What are your plans after that ?
There is always something else to pay for in the future. Sometimes unexpected things happen too

Lexilooo · 06/01/2021 13:35

Please make sure overpaying your mortgage is the right thing for you.

I see you don't know how much/what pension you have. I would strongly suggest that you look into your pension and make sure you have adequate provision before you over pay your mortgage. It will make a much bigger difference if you start paying in early and will make a massive difference to your future quality of life.

Being mortgage free at 50 might sound attractive but it will not be much comfort if you can't afford to retire. By then you will have to make much bigger contributions than you would now.

harknesswitch · 06/01/2021 13:41

I was overpaying my mortgage by £400 per month. I decided a few years later to sort my pension out. With the tax incentives and gov incentives it worked out far better to pay that £400 into a pension. This way I get the benefit of the pension when I retire, but I will also be able to get a lump sum when I'm 55, which will pay off my mortgage anyway. So it's a win win for me. I just don't get the satisfaction of seeing my mortgage reduce.

The biggest thing for me was to pay some money each month into a savings account and use this to pay for things I'd normally pay for each month. Such as house insurance, car insurance etc. So when they came round for renewal I could buy them outright. It was painful for the first year, but now I'm not in a doom loop of paying for everything on a monthly basis. I'm now saving around £150 a month.

ivykaty44 · 06/01/2021 13:44

I watched the Sarah Beeny show on Netflix during the first lockdown

it was how to be mortgage free but in a refreshing changed way - not being frugal but buying or building

one couple took a punt on buying an end terrace with a large side garden and then building a house at the side - detached - and then selling the original house to pay for the building work of the second house. This meant that the land was free and the sale covered the costs - so no mortgage. they then sold the second home and moved somewhere else in the countryside and it was cheaper so no mortgage still,.

one girl was renting and bought a boat to live on in London on the canal, there were plenty of other ideas, its worth looking at

I stumbled over a way of making extra money when bring up my dc by taking in foreign students, it was really enjoyable and it was like having three children instead of 2 so for me not that onerous and brought in great cultural differences to my world and that of my children. The money was rather well paid for the amount of actual work and this I used all to pay extra onto the mortgage. When you start playing with calculators and seeing how much interest you can save and knock time off your mortgage it was an incentive to pay chunks off at regular intervals - I think though banks and lenders got wise to this and put more and more restrictions on this type of behaviour - I was lucky as the mortgage I had even though it was around 4% it was flexible in paying off parts any time without penalties (4% was a good deal back then)

With the mortgage rate so low at present it will not make such great savings, I paid my mortgage off 9 years early, remember though I started at 15% interest rate and with it coming down drastically in the first 2 years I was always used to higher payments historically.

I would now though be looking at putting extra money into a pension, especially now and building up a pension pot rather than the security of a mortgage free life - Id wouldn't have savings as such but pay extra into pension if a works pension and a little of the mortgage each month to reduce the term

ivykaty44 · 06/01/2021 13:55

I think what was a real eye opener for me was when I looked at pensions how much HMRC/government in effect give you for putting into a pension

If you put extra into a work pension then the money you save in tax is good.

I sat with an income tax calculator "listen to the tax man" and worked out if I put x in how much would my tax be - it reduces! so although you might be putting an extra £100 into your pension each money you're only losing £70 in income due to tax relief

FinallyFluid · 06/01/2021 14:16

We increased our mortgage by the value of the dodgy endowment, then when it paid out, we put it all against the mortgage bar a few hundred, but continued to overpay.

DH was head hunted twice in five years about twenty five years ago and had small little pensions that would have paid for a cup of tea and a scone at an NT property once a year. Grin so we cashed those in and put them against the mortgage, like a PP I used to sweep pence in just to keep the figures round and myself amused.

First Direct are great for mortgages IMO as you can overpay as much as you like, when you like, they do have large penalties for paying the mortgage off early, so we reduced ours to comedy levels and just limped it over the line.

We lived on fresh air and the clippings of tin for a few years but it was IMO worth it, but the one thing I will say is always have the price of a monthly takeaway in the budget and then you don't feel quite so poor, or sometimes we would forgo a takeaway one month and eat out (cheaply) the following month.

Are you likely to inherit at any point ?

Good luck.

HowOnerous · 06/01/2021 14:21

The sums are pretty simple, and the trick is probably not to mortgage yourself up to the eyeballs! We earn 60k between us, i have a young daughter from a previous relationship fir whom I receive no maintenance, and we'll be mortgage free in a 3bed house in yorkshire with parking for 3 cars and a small garden in 9yrs max. There's room to extend the kitchen and do a loft conversion so we end up with 3 double beds with the master en suite in future, too.

There's been no fancy income streams or tricks, just not spending on crap and prioritising the mortgage because we want the freedom. I don't honestly feel like I 'go without' though.

Whydoireadthis · 06/01/2021 14:53

@Sn0wplayday

Being mortgage free is great

What are your plans after that ?
There is always something else to pay for in the future. Sometimes unexpected things happen too

I thought after that we’d think about retirement savings/pensions but obviously will be looking at that sooner rather than later now I’ve read all of this. We live comfortably but don’t have new clothes and ‘things’ very often, pre-covid I was very big on memories and experiences so we spend most of our money on eating out or the theatre/comedy shows- but nothing mad, maybe once a month or so? I eBay every so often and use second hand sites, charity shops for some of the baby stuff, most stuff is gifted. I don’t think we’ll have another baby so the house is practical for us at the moment, I suppose I’ve fallen into the trap of looking at social media at everybody on the next rung, extending houses and suchlike, or maybe I’m getting bored of my house as it is? I’m in a good area school wise so houses are priced high. If it wasn’t for baby, I’d buy cheap and flip to make money (making it sound so simple!) but we want to be in this area so we have to put up with it. It’d be nice to have a newer car I suppose but it really doesn’t bother me, we don’t use it to commute so with lockdown it’s barely even used!
OP posts:
ememem84 · 06/01/2021 14:58

our situation is that we have a mortgage of £409k and earn approx £80k between us. nursery fees of £1800 a month for 2 dc. which is eye watering. but short term pain. . . .

this is for an end terrace three bed 1970's house with garden and parking in a naice area.

we are in Jersey so average three bed property here is around £600k now.

HowOnerous · 06/01/2021 16:26

The nursery is eyewatering, but work it in: in X number of years, you will end up with 1800 in the budget going begging. You'd be able to earmark, say, £1k/mo now to overpay on the mortgage, and keep a further 800 for spends if necessary, otherwise bang the lot on the mortgage!

ememem84 · 06/01/2021 16:34

@HowOnerous

The nursery is eyewatering, but work it in: in X number of years, you will end up with 1800 in the budget going begging. You'd be able to earmark, say, £1k/mo now to overpay on the mortgage, and keep a further 800 for spends if necessary, otherwise bang the lot on the mortgage!
Tell me about it!

that's sending them 3 full days a week. one in baby room (where costs are higher because needs are higher) and one in pre-school. this is also with a sibling discount on the pre-schooler. i think in September this year we should be eligible for him to have free hours (because he'll be 4 - that's how it works here at present. our gov keep saying they are going to start means testing it though).

but yep. once we are done with nursery we will have so much left over! Hoorah! :)

ThatWindowNeedsAClean · 06/01/2021 17:19

We only moved for a secondary school but we moved early so Ds1 was in year 3. We edged our bets, outstanding secondary catchment and if that tanked before he got there then he could still attend his feeder secondary from the outstanding primary, it was rated good.

We moved into a much cheaper area as the primary school here was in "requires improvement" but we knew we were keeping the DC at their original primary. That RI primary is now "outstanding" so house prices have rocketed. But it paid off for us. We are not influenced by what other people have, I will always shop for a bargain alternative of something we have seen. We have put a lot of money into this house to make it one that we can stay in until we downsize. So now with 2 teenagers and Dh all working from home the double garage conversion is where the 2 teens work and Dh has an office upstairs, always did.

We saved money every month but not to overpay the mortgage. We did use it for other things, house stuff, pension, holidays, cars and savings. We don't buy brand new cars either, again the bargain hunter in me finds good deals. We have no debt except the mortgage and use a rewards credit card which is paid off in full every month.

I know your child is only a baby but do consider on your household income that if your child goes to uni the government expects you as parents to contribute to the living costs of your child. There is a maximum loan they can take out which is reduced by your expected contribution. On £40k you are looking at £2k per child per year, so £6k for you for 1 child on a 3 year course at today's rates. For us the contribution is just under £5k per year so £15k per child so we have £30k in separate savings for this.

Dh's parents overpaid their mortgage after it came down from 17% rate, they still put that money toward the mortgage but scrimped on holidays, well, everything. They shared a car which meant one of them had to take the bus even though they could easily afford 2 cars. By the time their mortgage was paid off Dh was at uni and his sister working and not wanting to go on a family holiday but instead go with her mates. We have ensured that we have had lots of little holidays, days out etc with the children as Dh feels he missed out on this. I have been a SAHM for over 15 years and I have my own car.

hannabull · 06/01/2021 19:21

We got a flexible mortgage that allowed us to overpay anytime without penalties, and basically any month we had any savings leftover we overpaid, even if it was only £100. Each time we had a pay rise we paid the extra onto the mortgage before we had chance to miss it.

Whydoireadthis · 06/01/2021 20:46

@harknesswitch how did you go about sorting your pension? Did you speak to someone and what did you need? I’ve had a few jobs since school so I have a few pensions with each job and don’t even know who they’re with!!?

OP posts:
harknesswitch · 06/01/2021 20:57

@Whydoireadthis I looked for a recommended financial advisor who specialises in pensions, we sat down and he took all my details about employers and any pensions I had, he did all the donkey work finding all the details. He mapped out what I might expect to receive at pensionable age and worked out my finances to plug any gaps. The government contribute £100 a month towards my contributions, plus the tax breaks means my £400 a month actually turns into £600 a month into my pension.

CarolinaWeeper · 06/01/2021 21:13

The pensions advisory service can be very useful, they have a website and a really friendly call centre.

I also echo a pp that putting some different figures regarding your pension into the listen to taxman website is enlightening when you see how much goes into your pension vs how much your salary would actually reduce....it was after doing that I decided to put additional payments into my pension.

Regarding the mortgage, we have a separate savings account specifically for mortgage overpayments. We have a standing order of £100 a month that goes into it on payday and also any extra bits of money saved at the end of the month. When that reaches £1k we pay it off the mortgage but the money is there in an absolute emergency (we do have a 6 month emergency fund set aside in other savings.)

ememem84 · 07/01/2021 16:11

i've just watched pay off your mortgage in 2 years on you tube.

did they seriously eat cat food? i hope not

AldiAisleofCrap · 07/01/2021 16:18

@Whydoireadthis every evening round the balance of your current account down by up to £10. So if it’s £606.80 you pay £6.80 into your mortgage. Or if it’s £532.98 you pay £2.98 etc The extra advantage is your balance always looks neat at the end of the day.

Whydoireadthis · 07/01/2021 18:15

[quote AldiAisleofCrap]@Whydoireadthis every evening round the balance of your current account down by up to £10. So if it’s £606.80 you pay £6.80 into your mortgage. Or if it’s £532.98 you pay £2.98 etc The extra advantage is your balance always looks neat at the end of the day.[/quote]
Haha! I do this anyway, it goes into an assortment of Monzo pots which I’ve set up including one for hairdressers (no, I’m not giving that up just yet!) and car stuff ie tax/insurance/MOT. I find this really useful and my actual current account is where my day to day spending is, although I’m currently on a ‘no spend month’. I think I’m doing the right things, I need to get a grip with the fact I need more income 🤣

OP posts:
Whydoireadthis · 07/01/2021 18:17

@ememem84

i've just watched pay off your mortgage in 2 years on you tube.

did they seriously eat cat food? i hope not

Spoiler alert!!? 😂 I’m really not that desperate!
OP posts:
AldiAisleofCrap · 08/01/2021 13:17

@Whydoireadthis I keep meaning to set up a Monzo account have heard really good things. In normal times I would suggest match betting, maybe read up on it now so you can start when things get back to normal.

billybagpuss · 08/01/2021 13:30

@ememem84

i've just watched pay off your mortgage in 2 years on you tube.

did they seriously eat cat food? i hope not

Oh god I’d forgotten that bit 😂
Asgoodasarest · 10/01/2021 12:13

Thank you for starting this thread and all the contributions. I thought I had a bit of a plan, but actually reading this has made me think I should be doing things quite differently. V interesting x

Swipe left for the next trending thread