A young thrifty couple are celebrating being mortgage-free in their 30s—after paying off their 95,620 pound (approx. US$133,500) mortgage 28 years early.
Siobhan and Lee Bowen from Great Wyrley, Staffs, England, purchased their first home together in 2011, and despite having a relatively low income, the pair now own their three-bed semi-detached home outright.
The parents made careful overpayments, budgeted, and sacrificed the latest gadgets so they could say goodbye to their mortgage.
Mom of one Siobhan, 36, and her husband Lee, 38, set themselves a challenge to clear their mortgage before Siobhan would turn 40, but they’ve completed the already ambitious target four years earlier than they had planned.
The super-savvy savers have since been enjoying a mortgage-free lifestyle and say the freedom it has created for them is priceless.
“We struggled at university to earn enough to cover the bills and stay afloat. We realized how easy it was to get into financial difficulty,” Siobhan said.
However, once they got full-time jobs, they both became disciplined and saved regularly. The couple saved 35,000 pounds (approx. US$49,000) deposit in just six years, and after getting married in 2010, they bought their home in September 2011 for 112,500 pounds (approx. US$157,000).
They put down a 15 percent deposit of 16,880 pounds (approx. US$23,500) to secure a better mortgage rate and kept some back for renovation work to the property.
“It was good value as a typical home in our area was around £150k. We negotiated because it had been up for sale [for] a while,“ Siobhan said. “We could have borrowed up to £190,000 but we chose not to max ourselves out. We wanted to ensure our mortgage repayments and essential bills would be affordable on one wage.”
Siobhan further added: “It was very important to us to have a mortgage with unlimited overpayments.”
The couple were refused a 25-year mortgage, so they signed up for a 35-year term. The mortgage started at 394 pounds (approx. US$550) and they paid an additional 160 pounds (approx. US$220) per month.
The couple admit that they did not have high-paying jobs and their total household income was 40,000 pounds (approx. US$56,000) gross per annum.
“We achieved a good balance ... Lee drove a 12-year-old Volvo that had done 200,000 miles on a petrol engine, it never broke down,” Siobhan said. “We still had holidays and even ticked off a few bucket list places like New York, Croatia, and Lake Garda—always finding the best deal for our money.”
Additionally, instead of going out regularly, the couple would invite friends and family over for home-cooked meals.
“Rather than sacrifice a happy lifestyle, I feel the main thing we did was purposely make a string of wise choices along the way. We educated ourselves with the help of Martin Lewis and Pete Matthew from The Meaningful Money Podcast,” Siobhan said. “We never had a car on finance and I couldn’t justify spending £45 a month for a mobile phone.”
In 2012, the couple welcomed their son, Caelan, and Siobhan dropped to a basic maternity wage.
Two years after buying their house, the couple remortgaged. At that time, they owed 82,324 pounds (approx. US$115,000), but due to renovations, their home was valued at 145,000 pounds (approx. US$202,000), so the loan to value ratio was reduced to 60 percent, giving them access to the best deals.
The couple continued to make overpayments on their five-year fixed rate. However, in 2016, they asked for a recalculation. The standard payment was reduced further, and with Lee’s pay raise, the couple added more to their overpayments and were one step closer to their debt-free goal.
Their savings were building, and in 2017, they made a 20,000 pound (approx. US$28,000) lump sum overpayment, an additional 12,000 pounds (approx. US$16,800) in April 2018, and a further 10,000 pounds (approx. US$14,000) in May 2018.
By September 2018, they owed just 20,480 pounds (approx. US$28,600) with a term of 28 years remaining, and their standard repayment was just 89 pounds (approx. US$124) per month.
However, the next month, Siobhan lost her job and the couple were forced to stop their overpayments. But once they were back at work, they no longer overpaid, but set up a savings account and eventually had enough to pay off the remaining 18,838 pounds (approx. US$26,300) as a lump sum in March 2019, 7 1/2 years after buying their home.
“Over seven years we repaid a total of £112,924.57—saving us £57,288.71 over the expected lifetime of the mortgage,“ Siobhan said. ”We are proud, there was no inheritance or secret lottery win. It was done through hard work and saving.”
For all those who are in a similar situation, Siobhan has some top tips.
“Use an overpayment calculator, even small overpayments can make large savings over the mortgage term,” she said. “The more you can overpay in the early days the better it will be in the long run because interest is much higher at the start of the mortgage.
“Overpay consistently every month as lump sums may be harder to part with.”
She also stressed not to max out on the initial purchase, and that if you are allowed to borrow more, it doesn’t mean that you have to, make sure it’s affordable even if your circumstances would change.
“Balance is key, don’t deprive yourself too much or you won’t stick to it. Little and often is better," Siobhan said.
“Ask for a revaluation if you have carried out extensive renovations or the market has increased the value of your home, it will reduce your LTV ratio so you can get a better deal,” the self-made guru said. “Be warned, it can become addictive once you realize the savings that can be made but being debt-free has given us security, freedom, and peace of mind.”
Siobhan, who now works as a paraplanner for an independent financial advice company, said: “I think money saving is my calling.
“Our next challenge is to retire early.”
