A friend of mine I used to live with years ago and now only see occasionally as she’s very highflying and busy, got in touch. It was nice to hear from her, and the usual small talk ensued over email about work, family and troublesome other halves, etc. when amid the chitter-chatter she just happened to slip in that she and her fiancé had just paid their mortgage off….!!!
My delight in hearing from her quickly turned to abject envy in realising that from now on never again will she and her chap be burdened by mammoth payments to the mortgage man – our single biggest expense each month. That is – assuming they doesn’t buy another, bigger property at some point of course. Aaagghh!!! Just imagine the freedom of being completely mortgage or rent-free! Maybe some of you are lucky enough to be so, I don’t know. If so, maybe you could let me know how you achieved it! My friend’s fiancé is older than her and fairly well off, and they both earn a good wage, so that would have helped. But I also know that they both worked their socks off to raise the extra cash to pay the mortgage off. Yet, when I think of the money they will be saving each month it still turns me a shade close to olive.
We would be almost £1,000 a month better off if we were mortgage free. For years I’ve dreamed of writing a best seller that would set me up for life, or winning the lottery but these are just pipe dreams of course. And it doesn’t help that I don’t actually do the lottery!
On a more practical level, DJ and I have been considering paying a little extra a month towards the mortgage. Although it would be an added expense immediately, each paying £50 extra we would shave about four years off the mortgage and save nearly £20,000, according to an overpayment calculator. Our current mortgage allows us to make overpayments up to a certain amount a year, beyond which you are charged for. So it’s worth bearing in mind. So far I’ve been squirreling away any money I save into a savings account for a rainy day, but maybe I should be putting it to better use on the mortgage. The question is how long term your frugal game plan is. In the long run your mortgage is probably one of the biggest areas where you could save money by paying some of it off earlier. But many people struggle just to keep up with existing mortgage payments.
Apparently an offset mortgage would better suit me as self-employed worker too because the cash you put away to go towards the yearly tax bill can build up interest which can help pay the mortgage. And it might also be something worth doing to build up equity in the house in the current mortgage crisis.
Unfortunately I’ve just looked through our paperwork and realised our discounted mortgage runs out this year. Now is not exactly the best time to renew, is it? Not exactly a frugal success! Oh dear…