Paying off the mortgage: Jan 2019

As part of our journey towards financial independence we are going to focus on paying off the mortgage. It is currently a medium sized expenditure but it adds a strain. This is because it increases the amount of money we require once we reach FI.

paying down the mortgage quote

If i’m honest, we lost track last year of how many mortgage over payments we made. We made them as and when we had some spare cash and also used some savings. We were definitely motivated in paying off the mortgage even after some negativity around doing so in the media.

Whilst paying off the mortgage is in the forefront of our minds, we are also juggling a fair bit at the moment such as this new site (thank you siteground) , Mr Fire’s change in job role and some top secret projects as well all the normal things life throws at us.

This why its more more realistic (and possibly more interesting) if I provide quarterly updates opposed to last years monthly ones. I’ll be tracking any over payments this time (pinky promise!)

I will be starting off at ground zero since which may look rather scary.

Here’s our mortgage starting point:

paying down the mortgage graph of outstanding amount and paid off amount
Green is good, Red not so good!

It is pretty clear the amount we owe is red and the amount paid off is the green! We naturally pay off some of our mortgage with each months payments but there is that naughty interest in there too!

Paying off the mortgage with over payments

paying off the mortgage amount paid with over payments.

Yep looks rather dire but it is only January and we haven’t started paying off the mortgage with over payments yet.

paying off the mortgage over payments tracker

There is always some debate around paying off the mortgage or just saving the money instead. Mr Fire has detailed our reasons for paying off the mortgage. What are your thoughts? Do you have a mortgage?

13 comments

  1. Hi – I am enjoying your blog; I’ve been FI for a number of years now, but still love reading British FI-related blogs.

    I prioritised paying off the mortgage, even though I fully realised that there were sound financial reasons to prioritise investing instead. I’m glad I did it my way.

    I repaid the mortgage 8 years into its 15 year term, and the psychological boost this gave me was immense. I know how my mind works, and I am absolutely sure that I could not have gone on to save and invest as much as I did if I had still had the mental millstone of the mortgage hanging around my neck.

    Everyone is different, and I think it’s a mistake to assume that the same strategy will work equally well for all. Everyone has their personal ‘hot button’, and for me destroying the mortgage debt seemed to super-charge my motivation to save!

    Good luck with your FI journey.

      • FI is great, thanks! I woke up and smelled the coffee at around age 40, having read Your Money Or Your Life – I realised that I really wanted financial security and the option of not having to work until state retirement age (or longer!).

        I started with no debt apart from that mortgage, and had a modest emergency fund. For me, killing the mortgage first was a no-brainer so that’s what I did.

        Once I’d got rid of it, I went all out to save, invest and feed my pension pot (I had a defined contribution pension from my employer, with a generous employer match).

        I’ve only ever invested in low-cost index funds for my ISAs and my pension, as I didn’t want the bother of active investments and don’t really trust financial advisers…

        What really made the difference for me, once I’d begun my FI journey, was deciding to get a second degree and professional qualifications. This was a real slog as I was working full time as well, but totally worth it as it enabled me to progress rapidly in my career.

        This in turn ramped up my income to way more than I had ever expected to earn. As I did not alter my modest spending, I was able to sock away loads every month!

        I became FI at 54, so not exactly young. I kept working from choice for a few years after that (part time, working from home) until I decided that it was time to become entirely work-free.

        It’s interesting how everyone’s FI story is different, and it shows that there are lots of different paths to get you there!

        Jane

        • WOW Jane that’s really inspirational! Thank you for sharing your journey with me. We are hoping to kill the mortgage ASAP but if you’ve been following along we are rather short at the end of each month!

          I’m really glad your enjoying FI. Do keep checking in so I can follow your journey x

  2. We are definitely in the camp of trying to pay off our mortgage as early as possible. We made really good progress this year but will likely have to slow down when our son starts FT daycare. Oof, it’s expensive.

  3. My partner and I have been paying off the mortgage since we bought our current house three years ago. We are fortunate enough not to have any other debt and at our current rate we should have paid it off in eight years. I think that there is a psychological security knowing that no one can take your home away from you. As you say, it is a major expense and without it FI seems much more likely.

    • Hi Sam!

      WOW 8 years is impressive! Do you have kids? We are hoping to pay our mortgage off in five years from now so fingers crossed.

      We don’t have any real debt other than his student loan from times passed. We are looking at creating extra income from side hustles since we usually spend all our income each month with very little left.

  4. Have just cleared the mortgage after 5 years into 25 year mortgage, at age 35. Did this by overpaying double every month, then a lump sum at the end of fixed term deal to avoid ERCs. Great feeling!

    However, it’s not the only thing the MM household has done. Wouldn’t overpay at the expense of an emergency fund. Wouldn’t overpay at the expense of other investments, and I wouldn’t overpay at the expense of utilizing tax-efficient pension contributions, especially matched employer contributions. Anything I put into pension is immediate 40% growth as no tax.

    Also had piece of mind that the overpayments built a reserve so if for some reason – like work – meant we had to pause, we could.

    Good luck on the journey !

    • Hi MM,

      Wow thats amazing! 5 years in awesome. Some really great advice around still keeping up the emergency fund. We are currently guilty of not having an emergency fund but we are definitely going to this year – probably should have been one of our goals.

      Are you in the UK or US? I’d love to hear how you generated enough income to overpay double each month.

      • Thanks LMF!

        UK, Scotland.

        Fortunate that my hell-work pays well. In software and in a leadership position on a decent salary. The-other-MM is also in a stable but below average income. This means our combined dual income is good, and outgoings are low but still comfortable living. Wasn’t always like this, 12 years ago I didn’t work, and we were in the in-law’s council house on <£12k/year. So things change!

        We make the most of the good times. We never know when life is going to punch you in the puss. Work – health – life, etc. So we save and invest heavily. Our savings rates are very high – 70%+ of income goes to saving, investing, paying down the mortgage, and pensions. Will post about how we've done this from 2004 over coming weeks 🙂

        Venturing out into some side hustles or maybe freelance this year to supplement primary income so hell-work becomes less of a dependency, but see how it goes!

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