Repaying our mortgage- luck, or judgement?

Repaying our mortgage- luck, or judgement?

It took us 5 years and 3 months to pay off our £103,000 mortgage. It’s not the quickest anyone has ever managed it, but by the vast majority of people’s standards, it’s pretty darn quick. (I still feel pretty staggered by it)

It wasn’t super easy and there are lots of things we went without in order to make our dream a reality. That being said, we also had a fair amount of luck on our side too.

I wanted to share with you some of the things that meant we could pay off our mortgage so quickly, and how much was luck, how much was down to our judgement and how much was a combination of the two.

We had a deposit of over 20%

Step one was getting together a deposit. A big chunk of savings came from pocket money, Christmas and Birthday money, Saturday job wages and early job wages that I’d saved rather than spent. My family always encouraged me to save rather than spend, so my bank balance grew nicely and rarely dipped. I also lived at home until I was 23, allowing me to save a reasonable proportion of my wages, even whilst I was earning an apprentice’s salary of £80 per week.

Being encouraged to save, able to live at home extremely low cost, and receiving pocket money were all things I was lucky to have. I just had to exercise judgement to not waste it all.

We bought within our means

We bought a house that was much cheaper than we could afford, meaning we’d have more money to make over payments on the mortgage. We were lucky to be able to do this, as housing in our area is below average for the UK. Of course, more expensive houses were available, so we also used our judgement to avoid borrowing to our limits.

We got pay rises

We both worked hard and were lucky enough to maintain our jobs and earn pay rises over the 5 years, as well as bonuses during three of the five years. Whenever our income rose or we got a bonus- you guessed it- we sent more cash to the mortgage. (You may be spotting a theme here.) Whilst we used our judgement to decide to overpay on our mortgage, we were lucky to be in careers that were rewarding our hard work.

We had a number of redundancy threats

Redundancy threats are not all that nice. In fact, they can be really, really horrible.

Do you know what they’re great for? Focusing the mind. We were both lucky to avoid redundancy for the whole 5 years whilst people around us both were losing their jobs. But these threats gave us a renewed determination and we used them to remain committed to our goal and not to grow complacent. Once again, we made the best of our luck.

We controlled our costs tightly

In spite of buying a house that was within our means and seeing our pay increase, the amount of money we spent on luxuries didn’t really go up. In fact, we regularly reviewed our spending and cut some luxuries as time went on and we became accustomed to being more frugal. I even reduced my wine purchasing from a bottle each week to one once per month (would rather have nice wine than lots of it) and cut chocolate biscuits from our grocery shopping.

This wasn’t always fun and it wasn’t always easy. There were alterations- permanent and temporary- that we had to make for various health conditions that meant we had to spend more. Your health can have a huge, huge, HUGE impact on your finances and quite often, it’s not something you can control. We were lucky not to have significant health problems, and not just from the perspective of our finances!

I know that we are lucky that we are able to tightly control costs- as I’ve mentioned, we don’t have health issues that have significantly impacted this over a long time period, or parents that rely on us, etc- but I have to admit that we take a lot of credit for controlling our costs so tightly so this is an area where our judgement helped hugely.

We were amazing budgeters

There are very, very few expenses that came up over that 5 year period that weren’t budgeted for. We had budget lines for car expenses, household expenses, contingency lines for ‘out of the blue’ expenses, Christmas and gifts, charity, and travel. We split the shopping around for renewals between us, and researched purchases extensively. We deliberately ‘over budgeted’ if we weren’t sure, increasing our emergency fund and periodically making extra payments to the mortgage. We didn’t use the heating on some days where we really could have done with it, just to keep within our budget.

Our budget spreadsheet was judgement through and through… but gosh were we lucky that some of our expenses never came to fruition, there were no significant costs that we hadn’t foreseen and our cars survived as long (and longer) than we’d planned for them to survive.

I got made redundant

Five years and two months after buying our house, I finally got made redundant. After 9 years with my company, I got a reasonable payout. Not enough to repay our mortgage, but enough to pay around two fifths of our remaining balance. When I added up my severance plus our savings plus our investments, we had enough to clear our mortgage, keep a bit of a buffer in savings and free up our monthly mortgage payment amount to rebuild our savings.

It took me a month to be brave enough to commit that amount of cash to our mortgage, but I finally did it in July 2016. It was the perfect time to get made redundant, and we were incredibly lucky that our numbers stacked up.

In conclusion

I posed the question at the start of this post as to whether repaying our mortgage so quickly was a matter of luck or judgement. Your perception on how much luck versus how much judgement it took will be influenced by your own experiences; some people will have had a lot more luck, but others will have had a lot less.

Whilst we worked hard, were disciplined and went without some lovely things we might have enjoyed, we also know that we were very lucky and worked hard not to squander our fortunate position.

Why on earth did I write this post?

Was it to make you realise you can’t pay your mortgage off without being very lucky?

I feel I’ve underplayed the effort it took for us to pull off this amazing feat, but genuinely we had a lot of good fortune on our side. The thing is, we could still have 20+ years remaining on our mortgage if we hadn’t set ourselves up for success, and hadn’t worked to put ourselves in the best position to take advantage of good fortune. Small changes can make a huge difference over the years.

So if your aim is to repay your mortgage early, you definitely need to make strong plans and stick with them. Make the most of good fortune that comes your way, set yourself up to be able to take advantage of opportunities and weather any storms as best you can.

How are you achieving your goals? Are you setting yourself up to really benefit from good fortune that comes your way?

4 thoughts on “Repaying our mortgage- luck, or judgement?

  1. I would say the majority of your luck was self made. Plenty of people live in parts of the UK where housing is fairly reasonable but they don’t pay off their mortgage in 5 years.
    Your luck was in having parents that encouraged you to save and supported you whilst an apprentice. Everything is down to you – own it!

    1. It’s true that lots of people don’t make their own luck or let opportunities slip out of their hands. But I also know people who work incredibly hard and don’t come by the same opportunities. My parents are amazing- they set me up so well and it has made a huge difference to what I am able to, and what I believe I can achieve. 🙂

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