ICP079 - Mortgage freedom day & cost of living

In this episode of the Informed Choice Podcast, Martin talks about mortgage freedom day and the cost of living.

There is also a roundup of the latest personal finance news and an update from the world of Informed Choice.

Mortgage freedom day & cost of living

The UK’s Mortgage Freedom Day is calculated as the date when the average new mortgage borrower – covering both first-time buyers and home movers taking out a mortgage in the final quarter of last year – will have paid off their annual mortgage payments.

It is calculated on the basis that all their earnings from the 1st January are devoted to mortgage payments until these annual payments have been paid in full.

This year, mortgage freedom day was earlier this week on 19th April.

The date is calculated by mortgage lender Halifax.

It’s based on the average annual mortgage repayment cost of £7,584 and the average net annual income of £26,023.

Halifax calculated that homeowners with a mortgage will have by 19th April earned enough on average to cover their mortgage payments for the rest of 2016.

Mortgage Freedom Day this year occurs just a day later than in 2015, when it fell on 18th April as a result of average annual mortgage repayment edging up by £17 during the year.

They also calculated Rental Freedom Day, which is calculated using annual rental payments as a percentage of average disposable earnings.

This doesn’t come around until 5th May, 16 days later than Mortgage Freedom Day, greater burden of renting rather than buying a property. Rental Freedom Day is also a day later than it was in 2015.

Martin talked about regional variations in these mortgage and rental freedom days, as well as some financial rules of thumb designed to allocate your net monthly income to different costs such as housing, necessities, luxuries and the future.

After recording this episode, he calculated his own mortgage freedom day this year as 19th April, the same as the national average!

Do you know when your mortgage or rental freedom day is? We would love to hear from you.

Drop Martin a line at martin@icfp.co.uk or say hello on Twitter @martinbamford.

You can also leave a voicemail message for the show, which we will play in a future episode. Visiticfp.co.uk/podcast and scroll to the bottom of that page to use the Speakpipe plugin, which allows you to record a voice message for the show using the microphone in your computer.

Personal finance news update 

-Young women are at risk of pension poverty in retirement, because they are cutting back on their savings to pay for childcare.

-The over-40s might be best suited to working a three day week, according to new research.

-The price of crude oil rose to $46 a barrel following an announcement by the International Energy Agency about supply expectations.

-Offshore companies buying UK property could be forced to reveal their ultimate owners, as a result of a new crackdown on tax evasion and money laundering.

-Pensioners will be able to cash in their annuities from April 2017, as part of ongoing reforms to the pension system.

Martin and Informed Choice

Martin Bamford is a Chartered Financial Planner, Chartered Wealth Manager and SOLLA Accredited Later Life Adviser. As Managing Director of Informed Choice, the award-winning firm of Chartered Financial Planners in Surrey, he is responsible for nearly £200m of client assets.

Martin is the author of several bestselling personal finance books and produced his first feature-length documentary in 2014, about the post-war Baby Boomer generation in retirement.

“Bamford excels at making even the dullest topics interesting” – Pensions Management

Visit www.icfp.co.uk to find out more about Informed Choice, or follow us on Twitter atwww.twitter.com/informedchoice.