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  • FIRST POST
    • SuperSecretSquirrel
    • By SuperSecretSquirrel 8th Sep 12, 12:07 PM
    • 623Posts
    • 2,772Thanks
    SuperSecretSquirrel
    Onwards to freedom!
    • #1
    • 8th Sep 12, 12:07 PM
    Onwards to freedom! 8th Sep 12 at 12:07 PM
    Hello and welcome to my MFW diary. Not sure how often I'll update as I'm going down the boring 'increase monthly mortgage direct debit' route, not the more interesting to read 'random repayment as and when a bit of extra money is made' route. Still, no harm in starting a diary here, even if it's just for me to look back on in a few years time!

    It seems like a good idea to start with a bit of background, so here goes...

    We bought our house in July 2010 with an 87k repayment mortgage, fixed for 10 years at 5.29%. Nearly two years of £525pm standard repayments allowed us to rebuild our savings, but after 20 monthly payments (over 10k paid out) the mortgage balance had only dropped around 2.5k thanks to all the interest being paid...

    We decided to make a small start on overpaying - small overpayments early on have quite an impact over the long term so why not start small and ramp up later? March 2012 we made our first regular overpayment, £50pm. Amazingly, if we were to keep up with this £50pm over the life of the mortgage we'd be mortgage free nearly four years early (Nov 2031) and save ourselves a tidy bit of interest. Not bad rewards for just £50 a month!

    A few days ago I decided to step things up a notch. From next month the regular overpayments will increase to £250pm, £200 less will find its way into my long term savings (paying 2.8%, minus basic rate tax), £200 more will find its way to the mortgage provider. Makes a lot of sense looking at the interest rates! I'll keep on saving in a normal savings account though and won't be putting every penny into the mortgage - I'm used to seeing my savings grow monthly, and like to try to be prepared for any eventuality, so I'll keep on squirelling away a chunk of my income in savings each month. I know this isn't the most efficient option in terms of reducing interest payments, but it's a balance that keeps me sane, if there's any major disasters the savings are there to fall back on, that kind of peace of mind is well worth a few pounds! Anyway, here's where the numbers get really interesting - by overpaying £250pm for the life of the mortgage we'd be mortgage free nearly eleven years early (Oct 2024). Wow!

    Seeing the massive savings I started looking into this stuff in more detail. We're allowed to overpay up to 10% of the mortgage balance each year without penalty. I don't want to increase overpayments over £250pm right now, but maybe after another year or so of growing my savings I'll step up the overpayments to £500pm. Two years later the overpayment would need to drop to £450pm (to avoid penalty), year after that drop to £400, and the following year drop to £350, and the years after that drop to £250 at which level the op's would have to remain until the end of the fixed period (August 2020). If we were to follow this plan, at the end of the fixed period our mortgage balance would be around about 20k which we could pay off with a lump sum from savings. Mortgage free fifteen years early, at age 36, sounds awesome, and what's incredible is that it also sounds very realistic.

    At the moment overpaying is my project. OH and I have our own accounts that our wages are paid into, and a joint account that we feed monthly to pay the bills. As I earn a little more I also do the grocery shopping, pay a few extra bills, and overpay the mortgage. Beyond feeding the joint account OH's income is none of my business, it can be spent on whatever OH likes, same goes for my income. This works well for us - if I want to splash out on a new computer game or a night out or whatever I can do so without needing to consult OH, and if OH wants to splash out on a night out or clothes or whatever no need to consult me. We're both debt averse and savers by nature, so as long as we spend less than what's coming in and all the bills get paid all is well. I'm hoping that seeing the mortgage balance reduce might convince OH to get involved in overpaying the mortgage (or at least split savings into two pots, one 'spendable' short term pot for holidays and home improvements etc, and a long term one earmarked for paying down a lump sum on the mortagage), but there'll be no pressure, if OH joins in that would be excellent, but if not that's ok.

    Finally, I know life doesn't always go smoothly - anything could happen in the next 8 years, babies, redundancy, armageddon, "the best made plans of mice and men, often go awry"... But if things don't go to plan, nevermind, we'll have made a great start on the mortgage regardless, any overpayments we make early on will benefit us later on, so we may as well give it a shot while circumstances allow It's nice to remember that circumstances can go up as well as down too - maybe there will be payrises and good fortune along the way that make achieveing the target easier, who knows!
    __________

    January 2014 Update:

    Things have changed quite a lot since I first started this diary... The new aim is to hit the MFiT3 target of a 40k mortgage balance by end 2015, and to have 40k in savings by that time too, making us mortgage neutral 20 years early! Anything can happen, but I think it's time to aim high!
    __________

    March 2015 Update:

    We did it! We are mortgage neutral (savings balance higher than outstanding mortgage) and are locked in to achieve the MFiT3 stretch goal of mortgage below 40k by the end of the year I'm going to keep this diary going, the aim is total financial independence now!
    __________

    January 2018 Update:

    Paid the mortgage off in full today (12/01/2018)
    Last edited by SuperSecretSquirrel; 12-01-2018 at 9:42 PM. Reason: We did it! :D

    Mtg [2013 £64k|2014 £51k|2015 £38k|2016 £26k|2017 14k] Zero! :)
    MN [2013-£25k|2014-£2k|2015+£16k|2016+£34k|2017+£52k] +£51,530.12 (MFiT4:+60k)
    NW [2013 £126k|2014 £156k|2015 £190k|2016 £228k|2017 £269k] £269,388.83 (2020:300k)
    FI [2013 -1.2%|2014 2.8%|2015 6.9%|2016 13%|2017 18%] 18.0%
Page 1
  • Domino9
    • #2
    • 8th Sep 12, 12:12 PM
    • #2
    • 8th Sep 12, 12:12 PM
    That sounds like a sensible well thought out plan - all the best in achieving your goals,

    Good luck,

    D9
    A Mortgage wannabe! 😄
    • Secret Saving Squirrel
    • By Secret Saving Squirrel 8th Sep 12, 1:27 PM
    • 3,874 Posts
    • 36,657 Thanks
    Secret Saving Squirrel
    • #3
    • 8th Sep 12, 1:27 PM
    • #3
    • 8th Sep 12, 1:27 PM
    Hello and welcome to another squirrel! Good luck in your mf journey.
    Paid off mortgage nine years early in 2013. Now picking and choosing our work to fit in with the rest of our lives!
    Still thrifty though, after all these years
    • andysdad
    • By andysdad 8th Sep 12, 2:25 PM
    • 143 Posts
    • 145 Thanks
    andysdad
    • #4
    • 8th Sep 12, 2:25 PM
    • #4
    • 8th Sep 12, 2:25 PM
    A long way off yet but to inspire you more what if you change the length of the mortgage term (as many on here do) to maintain the £250 per month
    • aliwali
    • By aliwali 8th Sep 12, 3:43 PM
    • 397 Posts
    • 1,761 Thanks
    aliwali
    • #5
    • 8th Sep 12, 3:43 PM
    • #5
    • 8th Sep 12, 3:43 PM
    Hi, and welcome. We have a similar balance to you on our mortgage so will be interesting to keep up to date with your progress. Good luck.
    Declutter 2018 in 2018 = 7
    Save £2018 in 2018 = £0
    • chocoholic_chick
    • By chocoholic_chick 8th Sep 12, 4:22 PM
    • 621 Posts
    • 3,091 Thanks
    chocoholic_chick
    • #6
    • 8th Sep 12, 4:22 PM
    • #6
    • 8th Sep 12, 4:22 PM
    Good luck! I've just started my journey to be a MFW as well with the aim of paying off our mortgage by the time I'm 40 ( so 13 years to go ) I'd love to be able to pay it off in 10 but I thought I'd give myself a little leeway as we're hoping to start a family soon

    Looking forward to following you on your journey
    New House... New Mortgage! February 2017: £144,000
    Current Mortgage Balance: £131,917.65
    2017 OP's:£5,935 2018 OP's: £995 January Grocery Challenge: £ /300
    Total Debt £29,209 £0 Debt free 6/8/16
    • SuperSecretSquirrel
    • By SuperSecretSquirrel 9th Sep 12, 1:46 PM
    • 623 Posts
    • 2,772 Thanks
    SuperSecretSquirrel
    • #7
    • 9th Sep 12, 1:46 PM
    • #7
    • 9th Sep 12, 1:46 PM
    Thank you all for popping by

    I've received a confirmation letter from our lender detailing the direct debit amendment, but they've somehow managed to get the amount wrong... Monthly payments set to £723.33, not the requested £773.33. I'll have to call them tomorrow to correct this. I've been playing around with the figures and think I might increase the monthly payment to a nice round £800 while I'm at it. That'll serve em right for messing up lol!

    I don't plan to have the lender officially recalculate the term of our mortgage. My understanding is that there could be an admin charge to pay, and once the term has been recalculated we are effectively locked in to the new monthly payment. I like the idea of overpaying now, but should circumstances change for the worse have the option to reduce monthly payments back down to the minimum (£523.33) without any hassle. Since we're paying a set amount per month, and the overpayments are repaying the capital at a faster rate, we are effectively reducing the term anyway I think? Am I missing some benefit to recalculating the term? This is all quite new to me so it's entirely possible that is the case!
    Last edited by SuperSecretSquirrel; 09-09-2012 at 1:54 PM.
    • SuperSecretSquirrel
    • By SuperSecretSquirrel 10th Sep 12, 7:16 PM
    • 623 Posts
    • 2,772 Thanks
    SuperSecretSquirrel
    • #8
    • 10th Sep 12, 7:16 PM
    • #8
    • 10th Sep 12, 7:16 PM
    I'm quite glad there was a mistake with the overpayment amount in the end, gave me a reason to call back - and a chance to ask a few questions that hadn't crossed my mind last week!
    • Although statements are only posted out once annually, an online service will be introduced at some point in the future to let us check the balance whenever we like. In the meantime we can call to check the current balance if needed.

    • Ad hoc payments can be made if we choose to, either by cheque, at bank branch, or via online banking. Currently planning on just increasing the monthly direct debit and letting all this take care of itself, but if I get obsessive I could shift in the extra few pounds now and then nice and easily through online banking (could maybe sweep in remaining balance from current account on payday, or try selling some stuff on ebay and paying the proceeds in, etc). This might help me get OH involved, the option of paying in a few pounds now and then but not committing to paying in each and every month might suit nicely.

    • Confirmed that anything over the standard repayment each month is paying off the capital, meaning every month the amount of interest charged is less and less (far more so than if we were just making the standard repayments). Since we pay a set amount per month, and the amount owed keeps shrinking, each passing month a higher proportion of what we put in is paying off the capital. As we reduce the loan at a greater rate the term gets shorter and shorter. I was advised that a formal recalculating of term is more for customers in the opposite position where they may wish to extend the term to allow smaller payments over a greater period of time, in our case there is no benefit to formally recalculating the loan.
    It was nice to get that information, and now we'll be overpaying by £276.67pm from October onwards - a nice round £800pm payment to the mortgage company.

    It was also nice getting an up to date mortgage balance figure... Doesn't quite match my spreadsheet, which leaves me scratching my head a bit, but happily the mismatch is in our favour, we owe less than the spreadsheet reckoned!

    Today's balance: £82,354.10

    Looking forward to putting a major dent in that over the next few years
    • chocoholic_chick
    • By chocoholic_chick 10th Sep 12, 7:22 PM
    • 621 Posts
    • 3,091 Thanks
    chocoholic_chick
    • #9
    • 10th Sep 12, 7:22 PM
    • #9
    • 10th Sep 12, 7:22 PM
    Sounds like that little mistake turned out to be a blessing, and woo hoo for owing less than you thought!!
    New House... New Mortgage! February 2017: £144,000
    Current Mortgage Balance: £131,917.65
    2017 OP's:£5,935 2018 OP's: £995 January Grocery Challenge: £ /300
    Total Debt £29,209 £0 Debt free 6/8/16
    • SuperSecretSquirrel
    • By SuperSecretSquirrel 12th Sep 12, 8:44 AM
    • 623 Posts
    • 2,772 Thanks
    SuperSecretSquirrel
    I've been trying to come up with ways to make a little extra cash. Overtime is not an option, so needs to be something outside of my regular job.

    I'm not sure swagbucks etc are for me, looks like a lot of time needs to be spent on it to earn anything worthwhile. I already use quidco whenever possible, and will keep doing that. I have matched betting, adsense from blogs/youtube, and people per hour, on my 'I should investigate a little further' list.

    Does anyone have any other worthwhile suggestions?

    Am pleased to have made a very easy first step this morning - just applied for a 3% cashback credit card. It's capped at £100 cashback per year, and has a low £250 credit limit (so no good for booking holidays etc), but I figure if I use it to pay for petrol and weekly shop, and maybe christmas and birthday gifts, I should easily get the maximum of £100 a year cashback. When that's received it can be used as a bonus overpayment £100 a year may not seem like much, but I'd be spending that money on petrol and weekly shop anyway, so getting a bonus £100 a year for no effort at all (other than applying and paying off balance in full each month) seems like a brilliant idea!

    If anyone else wants to give it a go, google aqua+cashback. Make sure you pay off in full each month though, massive interest rates mean you have to be disciplined to make any money from it.
    • Suarez
    • By Suarez 12th Sep 12, 10:55 AM
    • 937 Posts
    • 610 Thanks
    Suarez
    Am pleased to have made a very easy first step this morning - just applied for a 3% cashback credit card. It's capped at £100 cashback per year, and has a low £250 credit limit (so no good for booking holidays etc), but I figure if I use it to pay for petrol and weekly shop, and maybe christmas and birthday gifts, I should easily get the maximum of £100 a year cashback.
    Originally posted by SuperSecretSquirrel
    You would need to spend £3333 per year to get the full cashback so that would be impossible with £250 limit. Are you able to increase the credit limit after a few months?
    • chocoholic_chick
    • By chocoholic_chick 12th Sep 12, 11:22 AM
    • 621 Posts
    • 3,091 Thanks
    chocoholic_chick
    To be honest, I have been looking into all these survey sites and think it's going to be difficult for me to get anywhere with them. Swagbucks seems like alot of hard work with little gain, valuedopinions I get half way through a survey now before it says sorry this survey is now full ( or something to that effect ) so unless you're on those sites all day refreshing to get onto the surveys as soon as they appear I can't see you actually getting anything out of them!!
    New House... New Mortgage! February 2017: £144,000
    Current Mortgage Balance: £131,917.65
    2017 OP's:£5,935 2018 OP's: £995 January Grocery Challenge: £ /300
    Total Debt £29,209 £0 Debt free 6/8/16
    • SuperSecretSquirrel
    • By SuperSecretSquirrel 12th Sep 12, 12:59 PM
    • 623 Posts
    • 2,772 Thanks
    SuperSecretSquirrel
    You would need to spend £3333 per year to get the full cashback so that would be impossible with £250 limit. Are you able to increase the credit limit after a few months?
    Originally posted by Suarez
    It's a £250 credit limit. I could spend £250 on it today, pay off the balance, and spend £250 on it again in a couple of days time. So long as I don't do all my monthly spending on the one day (I don't), it won't be a problem

    Credit limit can be increased up to £500 later on I think, but I doubt I'd need that.
    • Suarez
    • By Suarez 12th Sep 12, 1:41 PM
    • 937 Posts
    • 610 Thanks
    Suarez
    It's a £250 credit limit. I could spend £250 on it today, pay off the balance, and spend £250 on it again in a couple of days time. So long as I don't do all my monthly spending on the one day (I don't), it won't be a problem

    Credit limit can be increased up to £500 later on I think, but I doubt I'd need that.
    Originally posted by SuperSecretSquirrel
    Ahh you're one step ahead of me
    • SuperSecretSquirrel
    • By SuperSecretSquirrel 12th Sep 12, 6:48 PM
    • 623 Posts
    • 2,772 Thanks
    SuperSecretSquirrel
    To be honest, I have been looking into all these survey sites and think it's going to be difficult for me to get anywhere with them. Swagbucks seems like alot of hard work with little gain, valuedopinions I get half way through a survey now before it says sorry this survey is now full ( or something to that effect ) so unless you're on those sites all day refreshing to get onto the surveys as soon as they appear I can't see you actually getting anything out of them!!
    Originally posted by chocoholic_chick
    That sounds really frustrating chocoholic_chick!

    It's a shame really as we're quite often happy messing about on our laptops in the evenings with tv on in the background, would be nice to make some extra cash in that time instead of just messing about on facebook etc. It's hard to get excited about 5p an hour or whatever you get for swagbucking... I know every little helps, but that's a bit extreme for me! Think I might spend a little time reading up on matched betting instead, the only problem is that it looks more like 'work' than 'fun'! Then again, if it were easy to get paid to have fun we'd all be rich already

    Maybe entering competitions could be fun... Might have a look on that board too
    • SuperSecretSquirrel
    • By SuperSecretSquirrel 24th Sep 12, 8:50 AM
    • 623 Posts
    • 2,772 Thanks
    SuperSecretSquirrel
    Reading through this board, it's clear that mfw is not just about diverting money destined for a savings account to the mortgage account - it's also about making a little extra where possible, and reducing outgoings - more money on hand could allow for bigger overpayments.

    The "all the small things" thread helped me realise that these changes don't have to be drastic. We're not going to cut down on the number of holidays we have etc, mfw is a marathon and I'm not prepared to scrimp over the next eight years just to pay it down, we're going to strike a balance that suits us. Paying down the mortgage quickly will be satisfying, but there's so much more to life too - we intend to enjoy it! Thing is, the small economies and micro earnings all add up, so it is possible to introduce a little mse into life without becoming a miserly hermit

    Last week was pretty good...
    • I took a packed lunch to work four days out of five, this is getting to be pretty standard by now.
    • I used the confused motormate app to earn myself £25, cheque is in the post (sadly a one time only offer).
    • After posting that I wouldn't bother with swagbucks, I decided I had nothing to lose so gave it a go in the end. Have just cashed in my first £5 amazon voucher, not bad for 7 days worth of idle time clicking... I'd estimate that it works out at something ridiculous like 30p an hour which sounds like it's not worth the bother, but we tend to web surf aimlessly in the evenings while watching tv anyway, so it's pretty much five pounds for nothing really, it's not "work"!
    • Tesco clubcard emailed me to warn that some of my unspent vouchers were due to expire, converted £15 worth into a £45 gift voucher that I then spent on some excellent birthday gifts for family. Order value of £46.97 for £1.97 cash and some vouchers that needed using up - very pleased
    • Done some research into earning from the web, not gone ahead with anything yet, but am slowly formulating a plan. This will be a very slow burn, especially as what I have in mind will take quite a lot of effort (but as it involves a hobby of mine the extra effort involved won't put me off, earning a few pence/pounds from having fun sounds awesome).
    • An unexpected £1.57 appeared in my bank account courtesy of quidco, which was nice.
    • Posted the signed confirmation letter to cashback credit card company, so as soon as that arrives I can use it to pay for food and petrol, and make a start on earning my £100 a year cashback.
    • Convinced OH that transferring ISA and savings to better paying accounts was worth the bother (a few hundred pounds for very little effort is DEFINITELY worth the bother!!)

    On the to do list for this week...
    • See about opening a lloyds vantage account, 4% interest on up to 6k sounds great. I already have a halifax reward account for the free £5 each month, I could move the same 1k used to keep the halifax account active in and out of the lloyds account to keep it active too... Seems like a good idea.
    • Try to put a little more effort into getting started with matched betting.
    • Try to find the motivation to list a few things on ebay or gumtree or whatever, I have a couple of bulky items that I don't want or need anymore, I should sell them to make a little money and free up some space!
    • Enter some competitions.
    • Keep an eye out for mse weekly tips email to see if there's anything of use to us in there.
    • Read the diaries on here (and maybe a couple of the other boards) to see if I stumble upon any more valuable nuggets of wisdom

    Happy MFWing everyone!
    • SuperSecretSquirrel
    • By SuperSecretSquirrel 25th Sep 12, 8:23 AM
    • 623 Posts
    • 2,772 Thanks
    SuperSecretSquirrel
    Thank you for the PM ScotlandM (regards the benefit of reducing mortgage term). I have tried to reply, but I don't think it's sending - probably down to me being a new user. Thought I'd better post my reply here instead (hope you don't mind!):

    Thanks for getting in touch. Our terms and conditions are worded in such a way that in a calendar year we can overpay by up to 10% of what the balance was on 31st Dec the previous year. I don't think increasing standard monthly payment / reducing term would help in this case?

    If we were allowed to overpay each monthly payment by 10% I can see that what you're suggesting would work, but I don't think it will work for us... Of course it could just be that I'm being particularly dense this morning!

    Thank you for trying to help though End of the day, we can't afford to overpay 10% at the moment never mind more than that so it's not an issue right now, but will be when the balance is lower and we can afford to repay more than 10%. Would love to find out that I'm wrong and that it is actually possible to pay more off sooner!
    • SuperSecretSquirrel
    • By SuperSecretSquirrel 25th Sep 12, 11:16 PM
    • 623 Posts
    • 2,772 Thanks
    SuperSecretSquirrel
    I'm a little embarrassed to admit how dense I was being, but another helpful PM from ScotlandM has clarified the benefits of reducing the mortgage term. It boils down to the fact that you can *overpay* 10% of the previous end of year balance in a year. The clue is in the name really - "over" + "pay" - payments over and above your repayments...

    Keep the term at 25 years, monthly repayments £602. That year you can overpay 10% of previous year end balance, so say it was a closing balance of 100k, you can overpay 10k. Maximum paid that year £17224.

    Reduce the term to 10 years, monthly repayments increase to £1025. You can still overpay 10% of previous year end balance, so sticking with the closing balance of 100k example, you can still overpay 10k. However, you are paying in a lot more that year than you would have been had you not reduced the term. Maximum paid in this case £22300.

    It's so obvious, I can't believe it took this long to sink in! I had been thinking of the higher monthly repayment as an overpayment (which I guess it kinda is, but strictly speaking isn't...) that eats into the 10% allowance for the year (which it doesn't). Glad I've got that straight in my head now!

    This is all academic right now as we can't even hit the 10% limit yet, and don't want to commit to overpayments by reducing the term yet either. A little further along though we might be confident enough to reduce the term. If we manage to get the mortgage down to 60k in the next three years (that's my target for the MFiT-T3 challenge), recalulating the term to end when the fixed period comes to an end would mean repayments at £1140 per month for the remaining five years. I wouldn't be comfortable committing to that amount right now, but we'll see what the confidence levels and circumstances are like in three years time I'm pretty sure this would save us a good sum of interest over my original plan, and it would be nice not to have to draw down 20k of savings to pay off the balance in year 10!

    A big thanks to the very helpful and patient ScotlandM who was kind enough to spell all this out for me
    • SuperSecretSquirrel
    • By SuperSecretSquirrel 12th Oct 12, 8:42 AM
    • 623 Posts
    • 2,772 Thanks
    SuperSecretSquirrel
    First £800 monthly payment went out this week, as of today our balance stands at £81,934.73

    We owe £11.11 less than my spreadsheet reckoned, I'm going to have to perfect the spreadsheet at some point...

    Should definitely be under 81.5k by the 12th December (start of my MFiT-part3 challenge).
    • SuperSecretSquirrel
    • By SuperSecretSquirrel 14th Nov 12, 9:35 PM
    • 623 Posts
    • 2,772 Thanks
    SuperSecretSquirrel
    Not a whole lot to say, but it's monthly update time...

    Balance as of yesterday morning: £81,513.26

    Slowly but surely, it's shrinking
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