Last month I told you all about our debt free journey – from how we built up our debt to how we finally paid it all off. Today, I want to tell you a little about our plan to pay off our mortgage 11 years ahead of schedule so we’re not only debt free ut mortgage free too.
When we bought our current house, we were still in our not-very-sensible with money stage so we chose to pay less each month over a longer term. I know, worst decision ever!
We could have afforded the extra payment each month as we’d deliberately chosen a smaller house than we could have had because we wanted to be able to have money left over in our budget each month to do lots with the kids and not have to struggle too much.
And yes, I know we didn’t make the best financial decisions back then but buying a smaller house than you can afford may go against everything they tell you but it’s one decision I have no regrets over at all. Taking out a smaller mortgage has meant that we’ve had a happier family life in my opinion as we’ve had that bit of extra money each month to do things together as a family that we might have struggled with otherwise.
Even so, we still could have easily afforded the extra payment each month that would have left us with a 25-year mortgage and not a 30-year one. Especially as I’m sure the difference wasn’t all that much at all – in my head I had the amount of £50 a month extra but it was a while ago now so I could be totally making that up.
But anyway, it is what it is and we currently have 21 years left on our mortgage.
We’ve made a few half-hearted attempts to overpay our mortgage but our priority was always getting the last of our debts paid off so the Standing Order I set up for £20 a month extra which was recently upped to £50 would have only had us repaying our mortgage 2 years and 4 months early according to the mortgage overpayment calculator that we were using.
Obviously, even repaying your mortgage 2 years early is a big thing and it shows that whatever you can afford will make a difference but I knew that as soon as the debt was gone that this was something I wanted to make much bigger inroads into.
So, the day I logged into my online banking to make the last payment to clear my last debt, I also set up a Standing Order for the exact amount I needed (based on the current figures) to repay our mortgage in 10 years.
That would be amazing, wouldn’t it?
I’d like to think that we’ll pay more off even more each month when we can but now this Standing Order is set up, I want to focus on our Emergency Fund for a little while as that’s the next grown-up thing we need to do properly.
I’m also very aware that we need to remortgage to get a better rate but we were leaving it until we had cleared all of our debts so we would look like a lower risk and therefore get a better rate. I’m not sure when the best time to remortgage is going to be for us as we’ve been told that the better our LTV (Loan to Value) is, the better the rate of interest we’ll get so we’re considering leaving it for a little while.
PS If you want to have a play with the figures for your house, this is the mortgage overpayment calculator I always recommend as it’s on the MSE wesbite and not affiliated with any lender.
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