- Personal Finance
How We Paid off Our Mortgage in Ten Years
How we Paid off our Mortgage in Ten Years
Paying off our mortgage in ten years seems impossible to achieve at the time but with sheer determination, hard work and patience, we have done it. Paying it off early rather than paying it off until the term finishes like in 25 years time, saved us a lot of money in interest. We paid as much as we can at the beginning of our mortgage rather than paying only the minimum interest. It helped us tremendously.
We bought a newly refurbished studio flat which we knew we could afford at the time. After 8 months of renting, we moved into our new home. The amount we were paying the rent was like the same amount as our monthly mortgage payment. This was the reason why we opted for a mortgage rather than renting a place all the time and throwing money away.
At least with a mortgage, we know that after a few years we will have a home that we can call our own home and paid for. Renting was ok short term at the time but for long term accommodation, it was better to have a mortgage.
Another reason why we wanted our mortgage paid off early is that we are getting older and we don't want to be paying our mortgage when we are retired. We want to enjoy our home as well as retirement. We wanted to go on holidays and see the other places we haven't seen. But on the other hand, we made sure our mortgage have the priority to be paid first as it was our biggest commitment.
Ways or Methods we Took to Pay Off our First Mortgage in Ten Years
After we moved in to our own flat, we were really focused and made a decision to pay off our mortgage early. We were not waiting for 25 years before we pay it off as the term says in our contract. So we set ourselves some goals to pay the mortgage in ten years time.
Here are the ways or methods we took to pay off our first mortgage early.
- We did not go on holiday abroad for a while. We just went on a week′s holiday here and there in England when using our annual leave or holidays from work. Sometimes we just go out for a nice meal at our local restaurant for a treat. We have to reward ourselves for the hard work we do to pay our mortgage early.
- I did some extra cleaning jobs and overtime to earn extra money to save for the mortgage. I hate cleaning for other people but I had to do it, to earn extra cash for the mortgage. I was lucky because I can easily find a job to do. I was never out of work.
- My husband did some temping jobs for an agency to supplement his full time income too, to pay the mortgage early. He did not mind doing the odd jobs too just to pay for our mortgage.
- We opened a separate joint bank account just for our mortgage bills and every month we put money into it to pay the mortgage.
- We lived within our means and saved as much as we could to be able to pay off our mortgage early. We go to supermarket to buy reduced-priced vegetables, fruits, and other stuff to save money. We bought our clothes and other stuff from charity shops. We are not proud to do that and besides we are helping the charities.
- At some point, we had to change our jobs to get better income so we could pay off our mortgage early.
- After 10 years of working hard, we sold our flat and made a small profit to buy another place for us which has given us more rooms to move about. We did not have to finish the 25 years term of our mortgage on the flat. We were lucky to have sold our flat when the housing prices were going up.
It was important for us to be able to have our own home. From the sale of our studio flat, we bought another place which we knew we could afford a mortgage on. This time, it was a dilapidated two-bedroom detached bungalow which was the cheapest home we could find at the time.
Although it looks outdated, we knew we could make it nice for us. My husband is a very good DIY man. He is good at doing things up like painting and decorating our home and I am good at cleaning up the mess. We bought a freehold detached home this time instead of a leasehold home.
We learnt from our previous mortgage that the flat we bought was leasehold and that it was part of 22 flats in the building. When your property is leasehold, you will pay and share the maintenance cost for all 22 flats as well which was another reason why we sold it. The maintenance and ground rent were going up every year and it was costly.
That's why we opted for a freehold bungalow this time round because we want to be paying for our own maintenance instead of sharing with other people. We did not know at the time that if your property is a leasehold property, you pay maintenance with the other residents for the whole block of flats.
We owned a basement flat at the time and you can imagine when the roof of our flat went wrong, the maintenance cost everyone who live in the block of flats thousands of pounds including us. We learnt from this, so when we bought our second home, we had to buy a freehold one. We were so naïve when we first bought our first home. We learnt a lot from our first home though since then.
How We Paid Off our Second Mortgage in Ten Years
We learnt from our first mortgage that we could also pay off our second mortgage in ten years time, if we work harder like we did in the past. Our strategy this time was slightly different from last time. We thought we could do something different by working together as a couple. We resigned from our jobs and became self-employed.
1. Changed our jobs – we bought a newly opened newsagent shop(was opened 5 months by previous owner). God knows what we were thinking then. We wanted to try being self-employed and be our own boss for a change. We both run the newsagent shop for a year but we found out after one year that it only brings income for one person.
I decided to find myself another job, and was lucky enough to get a part time job as a supermarket checkout operator. The pay wasn't great but I enjoyed the job. I topped-up my wages in overtime because there were no full time positions. I also helped my husband in the shop when I was not working in the supermarket.
2. Sold the shop – After 5 years of running our own newsagent shop, the shop's takings started to go down as one of the Post Office near our shop was moved to another location and most of our customers come from the Post Office. We decided to sell the shop before we went bankcrupt. We haven't made a lot of profit but we made enough to keep us going for the time being while my husband had to find a job again which he did find in no time.
3. Cashed In our Endowment Policy – We had taken an endowment policy with our first mortgage which we carried over with our new mortgage but because they wrote to us and said that it will not be enough to pay off our mortgage when it matures, we cashed it in and used it to pay off some of the capital of our new mortgage.
We figured out that the endowment policy was not a good investment to pay off our mortgage. We were given the wrong advice at the time by an independent financial adviser recommended by our mortgage provider. In fact, we lost a lot of money to the endowment policy.
We did the right thing though cashing in our endowment policy early because there is no point in hanging on to something that won't pay off our mortgage anyway. We might as well do it ourselves rather than being dictated to get endowment policies which promises to pay the mortgage at the end of the term and then they write to us and say oh! I am sorry but your endowment policy is not going to pay off your mortgage.
We did not know much about endowment policies then but we learnt a lot after they wrote to us saying that our endowment policy is not going to pay off our mortgage.
4. Rented our spare room – We have two bedrooms in our home so we rented one of the rooms to get more income for our mortgage. I hated the idea of having strangers in our home but because we wanted to earn more money for our mortgage, I really had no choice. It was not ideal sharing our home with strangers but we made sure we get references for our tenants.
We were lucky to have had good tenants except for one who did not pay his rent for three months but these are risks we had to take when having tenants. Among our plans to pay off our mortgage early, this is the best method that worked for us brilliantly.
Mind you, one of our previous tenant is a personal friend of ours(still a friend) who needed a place at the time. It worked for us then. At least we know we can trust her as well.
5. Husband's Retirement Pension – we used some of my husband's retirement pension to pay off some of the mortgage capital when he cashed in his private pension. We used part of his lump sum amount towards the mortgage.
Mortgage paid off after ten years hard work again. I must say, it was not easy trying to be economical in everything like food, clothes, shoes, holidays but it is pure joy and relief when we paid off our mortgage early again and enjoy the home we got now. At least we got a roof above our heads now, a home we can call our own and we wont have to worry about the mortgage anymore.
How to pay off your mortgage early
What would you like to do?
How we paid off our Mortgage in Ten Years
- How to deal with debts
There are so many ways on how to manage debts. Some are easy to follow and some are difficult to do. But I know through personal experience that it is doable. It needs patience and determination.
© 2015 Linda Bryen