How It All Started

How It All Started Part IV: Paying Down the New Mortgage

Our New Mortgage

We bought our new house for €382.000 and took out a mortgage for €380.500. We could transfer our old mortgage over to our new mortgage provider and take out another mortgage for the difference.

We started out with the following mortgage:

Interest Only Mortgage €98.788 From previous house, paid down from €170.500 in 2008
Savings Mortgage* €80.000 From previous house, no extra payments yet
Annuity Mortgage €110.000 New
Linear Mortgage €91.712 New
Total Mortgage €380.500
Savings Balance attached to Savings Mortgage* €13.076,38 This amount was also transferred from old mortgage provider to our new one
Total Mortgage including Savings in Savings Mortgage €367.423,62

* The €80.000 mortgage remains outstanding until the end of the 30-year loan. Attached to this mortgage is a blocked savings account where you save for 30 years and receive the same interest as the interest rate that you’re paying on the mortgage. After 30 years there is €80.000 in the account and you pay the mortgage off.

Our new mortgage provider also gives us the possibility to pay off 10% of the original loan balance per year without a prepayment penalty. Also, in addition to the 10% they also allow us to pay the amount in equity from our previous house as long as we pay the 10% first and then the equity. Paying down €38.050 (10%) per year on this new mortgage is quite a stretch for us, but this year it will be doable because we already had some savings left over from last year.

The Plan

Our plan is to pay off the linear mortgage first because that will help us the most in cash flow making it easier to get to the 10% in the next years. After that we would like to pay down the interest only mortgage because that loan will not pay itself off automatically like the others.

In our next post I will discuss how this plan to pay off the mortgage is linked with our goal to be financially independent.


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