Life begins at 35?

[The Green Triangle]

Wasn’t sure where to post this as it touches on a few aspects… but hopefully this is the right place. Been meaning to post for a while but only got around to it now. Long-time PH member, who for the sake of anonymity have setup a new user name…

Well here goes…This summer I’m going to hopefully finish my mortgage. That’s been the target for quite a few years. Bit of background… married, 2 young kids, youngish professional, moved houses already so no plans to move again. Over the last 10 years, we have pretty much bunged everything we had into the house. Yes I have a bit of savings but most of this will get burned into the remaining mortgage balance when our product comes up for renewal this summer… It’s quite a scary feeling as I feel like we’ve been working towards this for so long now and have made some pretty big sacrifices and life choices over the years – feels like we’ve been putting life on hold for the last decade+, scrimping on most things to be mortgage free. House value is around 550K…I’m mid 30’s.

So I have a couple of life questions. What on earth should I do come summer? I have always paid into a pension and the current one is final salary, but I recognise that I will have neglected savings over the years in favour for mortgage payments…so I need to top this up to get some rainy day money again. With interest rates being so poor at the moment, I’m open to consider alternatives for future savings…e.g.stocks, bonds, a car to enjoy and also an investment. Start living my/our lives again?!

Anyone else been in this fortunate position before? What did you do re savings and how’s that working out? I think I should have around 2.5-3K per month free to invest/save after bills etc.

Other things that have been playing on me over the years are that I’m not really that happy in my current job. I work in finance (cima qualified) and 3 years ago got made redundant from a really good private company (due to global restructure we all got it) and took a new job in the public sector, which to all intents and purposes has been frustrating and isolated. But it’s close to home, pays the bills and is relatively secure and mostly stress free even if we seem to be under constant restructure here…I just don’t feel like I’m making a difference anymore and am not prepared to spend the next 30 years in this kind of stifling organisation which doesn’t work collaboratively, is pretty unfriendly and paranoid. It’s too stiff/pedantic /inefficient if you know what I mean.

So I’ve been thinking about getting into contracting potentially. Given that the mortgage will be cleared in a few months, I figured this could be a good time to consider this as starting out I should be able afford to be between roles for a bit until I find my feet…How on earth do you get into it? Is it just a case of speaking to a specialist recruitment consultancy? Set myself up as a plc? Anyone got any good advice?

So that’s it really. Sorry for the long post. Feels good to get that off my chest and would be interested to hear any views from people who’ve been in this situation and what you’ve done and any other bright ideas.

[The Green Triangle]

Thanks for the views, there’s some really good ideas here and some obvious stuff I hadn’t really considered, like “Do nothing” and take a couple of months off! And even Therapy? sessions – I do love that band :-) .…That’s never occurred to me…

I’ll definitely take a look into unit trusts/ISA feeder and possibly shares, so thanks for that. Buy to let is another good one with the current rate of borrowing being so good. I’m well aware of the benefits of taking advantage of leverage – owning the home outright and giving the family security was always the priority, but now I’m ready to start taking a few more calculated risks..…With B2L, I might be able to help a family member out at the same time as I know they’re struggling to get a foot on the property ladder.

Restoring a bit of balance is definitely going to be on the cards and a holiday is planned don’t worry. Just glad that the kids will hopefully have a much more comfortable upbringing compared to what we had…

[The Green Triangle]

NickCQ said:

I am by no means an expert on this, but when I looked into whether BtL would work with a family member / partner as a tenant, getting a mortgage looked challenging if it were to be all declared properly.

Thanks I'll take a look at this if I go down this route.

[The Green Triangle]

Beetnik said:

His kids could have had great memories of all those wonderful holidays they'd had as well as the very nice house they'd lived in. I doubt they'll have fond memories of the security of mum and dad being mortgage free.

I see where you're coming from, but my kids are 1 1/2 and the other just turned 5, so they haven't missed out on much and are still a bit young for those holidays of a lifetime.

[The Green Triangle]

mug81 said:

First things first, well done! You're in a very fortunate position and you should feel good about it.

I think the most important thing for you to do at the moment is to take a step back and do nothing for a little while after the mortgage is cleared. There are so many options out there, you'd be foolish to jump straight into something else- enjoy a couple of months feeling flush, you've earnt it!

Thanks. Yes I think a bit of time out to soak it in is on the cards and few indulgences too. Definitely considering something in the garage over the next year...not sure I'd spend as much as 80k like someone advises above, but a quarter of that should secure something interesting with the bonus of being a bit of an investment too....

Just didn't want cash after the mortgage doing little or nothing for me. I have isa's and will start to top those up in the short term I think and look at some share linked ones too.

Right... Off to the classifieds...

[The Green Triangle]

Sorry I didn't mean you, I meant someone else above...

Yes some large steaks are In mind, nom nom...

I checked out buy to let, and it looks like to get mortgages now you need some pretty hefty deposits. Not sure I want to be so single minded in saving up after being just that for the last decade.

Definitely coming round to the chilling out for a bit, taking some time to figure out what to do next, and most importantly treating myself and those around me. Life is for living after all, I just need to remember how to do that and I'm sure something in the classifieds will help here

Edited by The Green Triangle on Saturday 25th February 16:09

[The Green Triangle]

Croutons said:

I'm guessing you're pretty debt averse OP (which is fine Btw).

If you have no other debts (cc's, loans etc) Then don't actually clear the mortgage, get it to the smallest you can without actually paying it off.

That keeps your credit score high, as you will have continual evidence of borrowing and paying. Mine cost £2.12 this month, for this reason.

I have a few bits and pieces on 0%finance, sofas, garden furniture etc, so unless having a tiny balance on mortgage offers any benefits over this or a credit card re: Credit score, It'll just go.

[The Green Triangle]

Firstly I didn't pay 500-550k for the house. Thats its value today.

Secondly yes I have a good paying job. But not always. I've just been very careful with money and not pished it up the wall. No iphone, no fags, no designer clothes, no expensive cars.... No head start in life. Just determination.

[The Green Triangle]

benjijames28 said:

Hard work mixed with a bit of good timing and luck then.

I'm roughly ten years younger than you, did managed to get on ladder but relationship ended shortly after. We did make on the house but the wife got most of the equity.

Now with my own income I can only get a mortgage up to 90k, buys you fk all even up north.

The property boom has passed I think, new buyers are struggling for a deposit and wages are not going up much at all. So house prices can't increase forever.

Yes absolutely a good slug of timing and luck, mixed with hard work and sacrifices. Having a target and literally ticking off the months. And yes the Mrs also contributed a good chunk until the kids start coming along... But luckily she's more shrewd than me!

I have a family member around mid 20's and see how he's struggling to get a foot on the ladder so I feel your pain. He's self employed so even more obstacles trying to get a mortgage.

[The Green Triangle]

Steelnads said:

Congratulations OP and I admire your grit and ability to stay focused. My situation is similar to yours accept I'm 50... last year I finished paying off my personal and business debt after 20 years of miserly behaviour, much to the frustration/amusement of my mates over this time. My choice has now been to semi retire, earning less but gaining free time. I have bought a motor home, my wife has given up work too and we have lots of short trips planned. I also invest my spare in stocks and shares isa's. My children have not suffered from their modest holidays over the years... My mates now understand.

Thanks, and good luck in your plans to semi retire. I reckon mid 50s would be just right for retirement. Just need to make some savvy decisions now to plan for the future.

[The Green Triangle]

Olivera said:

Mostly the former I'm guessing, but that's fine.

Anyway, you're lucky enough to have the life's major purchase done and dusted, so from 35 on I'd ditch the miserly spending on other things and indulge your hobbies, passions and pursuits.

Without going too detailed on the numbers: On average over the last 10-12 years (First 2 years for saving up for initial deposit on first house), we’ve put away 2.5K-3K a month into mortgage (includes overpayments). That’s 360K-£430K over the full period. We gained a bit on the sale of the first house, about 30K. When I got made redundant, I put all the money from that into the new house (around 20K). Based on similar property sales and zoopla estimates, current house has increased in value by around 100K -150K since we purchased which is academic as we ain't moving.

I’ve always taken 4 year fixed mortgage deals (apart from the first which was 2 years fixed) as I am generally risk averse and always believed (wrongly) that interest rates had to start increasing at some point. I recognise now that I would have been better off going onto tracker deals or shorter deals, but hindsight’s great and I always wanted to make sure I knew what I was going to be paying and the amount the loan was going to be paid down for as long as possible, betting that rates would increase when they didn’t.

With low interest rates, I guess some people see this as a great time to borrow and that’s fine and their choice. But I looked at it as a great time to reduce my debt as the service of this was low and allowed me to pay back bigger chunks of capital then I would have been able to if the rates were higher, benefitting from the compounding effect of this (a pound paid back today is going to save you interest on that pound every month/year to the end of the product life). Nothing’s right or wrong there, I guess it’s a bit like the analogy of glass half full or empty and personal preferences/life style choices and an addiction to spread sheet trackers.

It certainly has felt like hard work and has required a lot of strict budgeting. But sure luck plays a part in everything we do, and we have been lucky to be able to do this taking advantage of low rates etc.

Edited by The Green Triangle on Monday 27th February 10:42

Edited by The Green Triangle on Monday 27th February 10:50

[The Green Triangle]

NorthDave said:

Well done OP. I dont get the references to this being down to luck.

I would take the extra money you have been paying every month and half it - half in to savings like a shares ISA and half for fun. The extra could be pimping your holidays or just day to day living - whichever you prefer. I'd then come back to the question in 12 months time, you will of had some fun and still have a pot of cash to play with.

Long term I would probably think about putting the majority of spare cash in to share (or fund) ISAs - they should be worth a bit by retirement age and you can draw down on them before that if required. I can't get the figures to add up with BTL personally.

Cheers, taking time out and enjoying things, and topping up share isa's seem to be the most attractive short term options allowing quick access to funds of needs be.

[The Green Triangle]

Chicken Chaser said:

OP, thanks for giving a bit of insight, obviously what you put into the mortgage is entirely relative to what you and your missus is earning, but regardless, if you've suddenly got £3k a month, then I think you need to enjoy a bit of that. How is your pension taken care of? I pay 15% on mine so its a big chunk of my income gone, but hopefully that'll mean that I'll be set up once I do retire. Whilst our generation has been pretty unlucky with house prices being high, we have enjoyed fairly low rates. Mine is currently tracking at 2% above BR whereas when we first got onto the ladder, rates were up around 7%. Much rather take the lower rate to get the mortgage down quicker!

No problems. Pension wise, in my current one I contribute 6% and my employer puts in 22%, which to me seems crazy. I don't know much about pensions, but have always had one in all the company's I've worked in. This one seems the best on paper, but with the pension scandals in the past, I'm not going to count on it...just in case.

[The Green Triangle]

Mezger said:

OP congratulations, it's a great achievement and as others have said something you should be proud of and reward yourself and family with a decent holiday and more importantly a fun motor. :-)

I'm in kind of a similar situation (same age), in the sense that we have saved aggressively whilst working overseas which has meant we have a decent deposit/savings. Currently, we own a property in UK which on a good day is worth 160k with 70k remaining on the mortgage. We're fortunate that due to us working overseas and saving hard we have around 550k saved up.

My conundrum is whether to buy a house around 600-650 with a small mortgage and plough the rest of our monthly income into index trackers, or given rates are so low, push for something in the 8-900 range with a view that over the long long term (20yrs+) property should rise to some degree (perhaps not as fast or far as the last 15 years).

Risk averse part of me says, go for the lower mortgage, but, other part says, it would be stupid not to take on more mortgage given rates are historically at a low point borrowing 500k at 1.8% would be quite manageable.
UK mentality seems to be go for the property, "englishmans home is his castle" etc. Reading an interesting book at the moment, called Millionaire next Door (quite US focussed) which espouses a different view, smaller house, focus more on investments and multiple sources of income.

Decisions, Decisions...

No right or wrong answer...everything has an 'opportunity cost' and some of these are intangible, so it comes down to the individual.

However, If it was me, I'd be tempted to go for the more expensive property in your shoes. In the right location, you could do very well while taking advantage of these unprecedented low rates, which surely can't last forever. And prices in bricks and mortar are only going one way in certain areas. So treat it as a nest egg, enjoy it with a view to potentially downsize in the future to free up capital. Risk, if chosen right, is minimised.

When we moved, we went for pretty much the top end of our budget. We wouldn't move again by choice only because current place does everything and having a young family, it would be quite difficult + hassles of selling and buying - chains etc.

[The Green Triangle]

Mezger said:

no connection, but Mr Mustache is an interesting guy, some good concepts can be learned from his approach. He recently did an interview on Tim Ferris (4h work week guy) podcast, well worth a listen. Essentially the guy built up his investments, paid for his house and lives off investment proceeds, funds his whole lifestyle on $27k USD a year.

Thanks, I'll check out that podcast.

[The Green Triangle]

KTF said:

In all seriousness, what do you do when the mortgage has gone and you have run out of high interest current accounts, etc to stash the cash that keeps coming in each month?

Move it to ISA wrapped investments, throw it at your pension, upgrade your PH mansion, go on a long holiday, put it all on black?

I'm not sure and its a good question. Been reading and listening to the MMM material and its good and puts a different perspective on things but I'm not sure I want to live life to that extreme. So I'm thinking a balance will work for me. So investments in index tracker Isa for safe cash, appreciating and enjoyable car, a couple of nice holidays a year. Maybe in a while, ill get so pissed off with work that I decide to go more extreme to retire earlier... 25 x annual expenditure seems like a big ask, but I reckon achievable in around 5-6 years....hmmm