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  • FIRST POST
    • Tropically
    • By Tropically 12th Sep 16, 9:56 PM
    • 129Posts
    • 371Thanks
    Tropically
    Getting rid of a London-sized Mortgage
    • #1
    • 12th Sep 16, 9:56 PM
    Getting rid of a London-sized Mortgage 12th Sep 16 at 9:56 PM
    Hello,

    I tried to look for other situations which were like mine but you all seem to have everything so under control. You are all very inspiring so I thought I would put up my story too.

    I bought a house in June with my partner for £425,000 (London) and our mortgage is £318,000. Our mortgage payments are about the same as we were paying in rent but we have over 3 times the space now. Yes this a huge mortgage, no, we don't make a lot but the time came for us to buy instead of rent.

    Plan:
    1. Call bank tomorrow and see if I can 'round up' our mortgage which will cut off 2 years from the term.
    2. Get £10,000 in savings again as an emergency fund before over paying mortgage - I don't have any money at all any more.
    3. Get in a tenant from November 1st and rent the second bedroom for hopefully £700/month and apply that as over payments.

    It would be amazing if we could pay off the mortgage 10 years early. I would be just over 40. I have a lovely spreadsheet which calculates all of this for me. If we were to only apply the extra rental money to the mortgage, we would be able to pay off 10 years early.
Page 6
    • michelle09
    • By michelle09 2nd Oct 17, 7:09 PM
    • 308 Posts
    • 1,020 Thanks
    michelle09
    I would put the 2k on, but that's because I have no control when it comes to hitting targets like that.

    Weddings are... eventful. In the end I got very little of what I wanted, but my parents paid for most of it. I figured even if I didn't take their money I wouldn't hear the end of what they wanted so at least we wouldn't be that much out of pocket. Although yours sound a little terrifying - would sitting down and having a conversation with them about it? Explain your concerns and see if they see sense?
    • Jessy103
    • By Jessy103 3rd Oct 17, 10:34 AM
    • 454 Posts
    • 1,896 Thanks
    Jessy103
    Oh tropically, what a dilemma with your parents and the wedding! At the end of the day you can't please everyone and just have to do what makes you and OH happy! Me and my DH had a small wedding which was at the registry office and then a nice meal at a local hotel/restaurant, I think there was 50 people there including us and that was enough for me! Good luck and I hope your parents are happy with whatever decision you make.
    Original Mortgage Amount 2007 - £87,310.50
    Mortgage Amount Oct 2017 - £61,990.00
    Overpayment Target for 2017 - £5,000 /£4,060.70
    Jan - £873.26 Feb - £185.38 March - £269.07 April - £193.66 May - £467.64 June - £407.79 July - £849.96 August - £255.11 September - £177.22 October - £381.61
    • Tropically
    • By Tropically 4th Oct 17, 8:54 AM
    • 129 Posts
    • 371 Thanks
    Tropically
    It is a dilemma. It is so strange because I have not had a fight or disagreement with my parents since I was a teenager, and I would normally say that they are incredible parents who have always treated me with love and respect. They have been a little bossy, but only as a minor flaw! I am so baffled by the way they are feeling about this wedding.

    I have other exciting news. I have discovered exactly why our bank recalculates our mortgage payments after each overpayment. An overpayment reduces the principal, and interest is charged on the principal. If our monthly payment remains the same, but the amount of interest due goes up, the rate that we pay our principal goes up.

    In math terms:

    MortgageRepayment = Interest + PaymentToPrincipal

    If interest due goes down, then payment to principal goes up, and next month the interest is down further, and the payment to principal goes up, and you get that snowball effect which is so wonderful.

    If they reduce the mortgage repayment, they reduce the snowball effect and keep the principal higher, and so more interest is due over time. This might be obvious to everyone but I have just had a major light bulb moment about how they calculate it.

    They want to make about £440 from me every month. They don't want me to snowball, they want me to pay off my principal slower, so they reduce my monthly payment so that less goes to the principal!

    I managed to update my spreadsheet so that after every overpayment, my monthly payments are recalculated based on my current remaining term, and that means that my calculations match the bank exactly. So much more motivation when I know precisely what is going on.

    Based on Michelle's advice, WE MADE A £2K OP!!! Based on my new mortgage calc spreadsheet our mortgage is now £299,500!!!!!

    NO LONGER in the THREE HUNDRED THOUSANDS!!
    Mortgage started at £318,000 in June 2016. Original MF - 2041
    Emergency Savings - £12,737.83/£10,000
    OPs: £3229/£7000
    Side goal: Save £4000 and get that mortgage below £300,000!!
    • Tropically
    • By Tropically 13th Oct 17, 4:24 PM
    • 129 Posts
    • 371 Thanks
    Tropically
    OMG WHAT. I cannot even believe it.

    I got a letter in the post from the bank.

    Saying balance £300,400.

    I think I must have my calculations a month behind? Devastating news!!! It will definitely be below £300,000 after our next payment but they sure like to confuse me.
    Mortgage started at £318,000 in June 2016. Original MF - 2041
    Emergency Savings - £12,737.83/£10,000
    OPs: £3229/£7000
    Side goal: Save £4000 and get that mortgage below £300,000!!
    • daisy 1571
    • By daisy 1571 13th Oct 17, 9:07 PM
    • 132 Posts
    • 1,642 Thanks
    daisy 1571
    OMG WHAT. I cannot even believe it.

    I got a letter in the post from the bank.

    Saying balance £300,400.

    I think I must have my calculations a month behind? Devastating news!!! It will definitely be below £300,000 after our next payment but they sure like to confuse me.
    Originally posted by Tropically
    That's sooooo annoying to see it back in the 3's. It may well be your calcs are a month behind but if you rationalise the spreadsheet back to the figure in the letter then you should be square going forward ?

    Yeah, they will be keeping the term the same so any overpayment will mean they have to recalculate the monthly amount so you still pay it off at the original end date.

    Re the wedding I have little to add other than: don't fall out with them over this - a wedding is half a day, the important thing is you both do the actual "I do" bit and then you have the rest of your lives for the marriage which is far more important in my view. (If poss, get them to scale it back tho as what a waste of so much money when you are desperately trying to reduce in other areas, it would be sooooo much better if they kept to your small wedding and gave you the rest of the money they were happy to spend so you could use it on something more long lasting than feeding loads of people it sounds like you guys barely know. No offence, just my thoughts on weddings, it's a huge market now but a fancy-shmancy-doves-out-the-wedding-cake-carpets-matching-the-bridesmaids-eyes-day doesn't give any guarantees of future happiness, maybe a couple of conversations will bring them more round to your pov ?)

    Well done on getting this far with your mortgage tropically
    "Never save something for a special occasion. Every day in your life is a special occasion" Take hold of every moment by anon

    The difference between what you were yesterday and what you will be tomorrow is what you do today
    • katiegizmo
    • By katiegizmo 18th Oct 17, 12:41 PM
    • 172 Posts
    • 1,457 Thanks
    katiegizmo
    I'm glad I found this post, we are edge of Greater London and I always feel my mortgage is huuuuuuge!!!
    You sound very much like me 10 years ago, we gave the mortgage a good bashing and got a nice bunch of equity when we moved a few months ago. Now things are very different - children and no longer having two people in full time jobs means our overpayments seem tiny compared to before but I am so glad we overpaid nicely when we could. Although our mortgage feels big we are in a great position compared to how it could be.
    you're doing great
    MFW 2015 so far..... £1808.70
    2014 - £1451 2013 - £1600 2012 - £4145 2011 - £5715 2010 - £3258
    Big new mortgage from 2017

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