Mortgage free by 37

Written 14th November 2024

I paid off my mortgage in 2010.

Back in 2008 when the credit crisis happened, people were losing their jobs and businesses were folding left, right and centre.  At the time I was a single parent working full time with a 4 year old son.  I think I had about £100k mortgage at the time.  I know that's nothing these days but to me, who had moved to a bigger home with my husband when our son was born, it seemed like a huge number compared to my previous £52k mortgage.

So I was worried about losing my job.  I was worried about losing my home.  That's when I decided to try to pay off my mortgage as soon as possible so I didn't ever have to worry about being homeless.  In hindsight now, it was one of the best crazy ideas I've ever had.

I can't remember what the interest rate was back then (this was before my budget spreadsheet came into being) and I was probably paying around £1000pm to the mortgage.

How long did it take me to pay it off? About 3 years.

No, I didn't have an amazingly well paid job, probably around the £30k mark. And I obviously was claiming my Working Family Tax Credits and getting some child benefit and maintenance income from my ex husband.

So how did I do it?

Well, I did have a couple of small savings endowment policies that matured in that time, I doubt they were more than £5k each and also some share save schemes through my job.  That money all went to pay off the mortgage since that was my priority.  I overpaid as much as my mortgage policy allowed each year from my earnings / savings.  I did overtime when it was available (I worked in IT at the time and it probably wasn't even 20 hours a year).  Annual bonus, yep, that went into the mortgage too.  So how did I find the money?

It's nothing revolutionary, it's nothing exciting, it's simple.

I pretty much went without everything I could.  My son never went without.  Nor did I.  We had food, clothing, heating.  Even simple holidays in that time.  I lived within my means and prioritized my spending.  This was my challenge to myself.  I wasn't expecting nor did I get any financial help from anyone.  I just found ways to reduce my spending and found the best bank interest rates for any money I had to sit in.  Even if it was only 0.2%, it was better than nothing.

I did have a spare room and had a lovely lodger called Mario. I think in the 3 years he stayed that was nearly £10k extra income using the 'rent a room' scheme which allows you to earn income from renting a room in your home tax free up to about £7.5k (as of 2024). See the .gov website for full details.

I still went out for meals with friends (a very rare occurrence) but instead of splitting the bill, I would just pay for what I had. Yes, this was a source of contention amongst the group but I was going without a starter or pudding or a coffee, and just having a main and a soft drink (I was driving). I didn’t want to split the bill when the others had more than me.  My friends were understanding but I'm sure they thought it a bit weird and a bit rude.  But I didn’t care, I was on a mission.  And, more importantly, I still had a lovely evening out with my friends regardless of how little I had to eat and drink, catching up with them was the point of the exercise after all.

I used to get up early every day and do online surveys, which paid pennies for your time.  But the way I saw it was every penny helps.  It was getting me closer to paying off the mortgage. And there are still a multitude of ways to earn cash online, even more so than there were back then, if you are prepared to put in a little effort.

I bought childcare vouchers through the tax credits system to slightly reduce my childcare costs. 

I walked a lot more to the shops.  I found free parking bays when I did use the car to go shopping.  I used the Pound Shop to buy loads of things that the house needed to run (think stationery or shampoo) as it always saved a few pennies compared to the supermarket and the quality wasn't bad for the job it was needed for.

I bought Smart Price everything at the supermarket (I'm an Asda gal).  I bulk bought things to freeze so I didn't run out of core items and need to go to the local shop and pay more for the things.  I bulk cooked meals and froze them.  I went scrumping in autumn and froze stewed apple to have healthy fruit all winter rather than buying apples.  I bought UHT milk to have on standby.  I utilised the Asda receipt comparison cashback thing they used to do.  You would regularly see me rummaging around the car park looking for abandoned receipts (when I was there doing my own shopping).  One of my besties and I used to have a competition to see who could get the highest cashback.  It was normally no more than a quid or so, but every quid means more to throw at the mortgage repayment.  

I had loyalty cards for all the supermarkets and shops and would utilise their offers / vouchers and shop in all of them if things were cheaper in one shop compared to another.  It really is amazing the difference between them in some areas.  I also figured out that bubble bath and hand wash are made from the same ingredients (obviously not anti bacterial hand wash but that wasn't such a big thing before Covid), but bubble bath was half the price.  So I'd save the empty hand-wash bottle and fill it up with bubble bath.  Or olives - in the world food section they are way cheaper than in the spaghetti / pasta aisle.  That's supermarkets' marketing for you...  The list of hacks to save money on your shop is endless.  Always keep your shopping bags in your car or handbag. You think its only 10p, 30p a time you go?  But if you shop every week and buy another bag each time, that's £5-£15 a year.  Wouldn't you rather spend that money on a coffee or a pair of socks or Christmas cards or something you need / get pleasure from?  Plus the cost to the environment if you're just binning those bags after one use.

But mostly I didn't buy anything I didn't actually need. Read that again.  NEED.  As in, essential.  It had to be functional.  Food, bills or fixing something or clothes for my growing son, or keeping the car on the road.  I didn't buy stuff on a whim.  For the sake of it. For the thrill you get from spending.  To make me feel better.  Only needed things.  To this day I find it very hard to just buy things just because I like something.  I spent £23 last month on some daffodil bulbs and pansies for the garden over this winter.  I never buy plants for the garden usually and it still feels like an extravagance to me.  As I say, spending, or not spending, it's a mindset.

So to not spend so much money I did spend the majority of my free time just being a Mum, pottering in my garden, seeing friends at home, watching TV or going out for walks.  It's effectively almost free, doesn't require fuel, new clothes or any new equipment.  I'm lucky in that I've always been quite content with my own company and am easily pleased watching the box.  (Please remember, social media and smart phones weren't such a thing back then).  I did all my own chores like washing the windows, cleaning the gutter, painting and decorating, mowing the lawn etc.  When I needed extra plug sockets in my then new home, I was channelling out the walls and extending the wiring ring.  I got 2nd hand kitchen carcasses from Gumtree and bought cheap new cupboard door fronts and put in the kitchen with my Step Dads help and did all the tiling myself.  I also laid the patio, path and brickwork in the garden.  No, none of it is perfect, but it saved me £1000's in outgoings.

The point of telling you about my boring little life when I was saving to pay off my mortgage is this, no one did it for me.  No handouts.  Just a bit of self control as I'd set myself a challenge and I actually always thought this would be one thing I could do.  But I didn’t know for sure I would.  And certainly at the time of thinking about it and doing it, I had no concept of the difference it would make to my whole future not having that massive great cost to pay out every month.

The seed was planted years before when perusing the 'Money Saving Expert' website.  I doff my cap to the information on that site which is clear and easy to understand on any financial subject. And what I was reading about must have been mortgage costs etc. When you think about a mortgage, you think about the cost of the house to buy and the monthly repayments.  Everyone always says mortgages are a cheap way to borrow and they are compared to a car loan interest rate for example.  But what you tend to forget is you're paying that bill for 25 plus years and with most mortgages you actually pay back double what you borrow because of the number of years you are paying the interest for. So, jees, to me, reducing the years to be paying the money back over made absolute logical sense.  Doesn't it make sense to you?  

Give up 1 of the cheaper cups of costa a day is around £1000 over a year.... £1000...

If you took that £1000 and paid it off your mortgage at say 4.75% over 25years... that's £47.50 per year you would save in interest... that's £1187.50 that you would save in interest charges over the 25 year term. Plus you'd still have to pay back the £1000 don't forget.

So for every £1 you reduce your mortgage borrowing by, you are making massive savings to the money you need to pay back in interest over the term of the mortgage. Wouldn't you rather spend that £1000 on something more than a costa?

But one of the best things I did (for me at the time), was switch to an offset mortgage when I only had about £30k remaining on my mortgage.  I could put all my excess money in the linked current account and effectively get whatever interest rate my mortgage was charging for it, because it counted against my mortgage balance.  It also meant I had access to savings should I need it for anything.  I opted for fixed rate deals as I'm risk averse. Unfortunately if I'd have had a discounted mortgage at the time, the base rate came down to an unprecedentedly low amount, and I'd have been laughing as some of you will remember. But we all make informed decisions when considering which mortgage to take out and you play the hand you are dealt. I knew some people who were paying peanuts for their mortgage when the base rate was super low. One friend, who had one, her mortgage dropped from quite a lot down to next to nothing at the time. Instead of paying the same amount each month to reduce the term of the mortgage or the total borrowing, she reduced her monthly payments and spent the rest.  She already had a mortgage until she was 70 to be able to afford it.  I still don't understand why it's not a priority for some people to get rid of the biggest ball and chain most of us will ever have, as quickly as possible.  She had a beautiful home though, and lovely clothes, but she'll still be paying that mortgage now 15 years later (with another 15 to go). I guess I'm the one laughing now.

Or another friend who inherited £250k, and instead of paying off his mortgage with it, so he never needed to earn so much money again in his life to cover his bills, he used it to live on for about 5 years. He literally sat on his ass at home for that entire time and just used the money to pay all his bills and for having fun.  Until one day the money ran out and he had to get a job.  By then, his skills are outdated and he ends up having to take any job he can get out of desperation.  I know we're all different but I'm guessing you are reading this because you want to have some more money in your pocket, get off the daily drudgery of working roller coaster or maybe you'd like to find a way to retire a bit younger?

I hadn't considered that aspect of not having a mortgage at that time. It's just a blessing to me now. When I'd had enough of IT and resigned from my job in 2015 I didn’t have a clue what I was going to do next. But only having to find about £500pm to cover bills including allowing a bit for Christmas costs and keeping the car on the road, meant I didn't have to fret about it too much.

It really is, more than anything else, a mindset. Being able to live on very little without going without, means I don't feel like I am missing out.  I'm content with less.  You can't have a modest or even average income but extravagant lifestyle without either having a fairy godmother or making some sacrifices. When did we all decide that we didn't need to live within our means and needed so much stuff that we don't even actually appreciate much of it because we didn't have to save for it? With having everything we want at the drop of a credit card application or bank loan, are we more happy?  Nope!!! People are more stressed, depressed, anxious and have more mental health issues than ever before.  We want everything and we want it now!

But once you have understood this approach,  you wont feel like you are missing out. You aren't.  That's advertising and the media who are feeding that feeling.  It's actually easy to live on less.  Think about all the other people on the planet who are alive.  Still happy.  Still loved by their family and friends... they might not even have running water.  Not having everything you think you want is such a 1st world problem.