Feeling Inspired! - PsychoPrincess MFW Progress

PsychoPrincess

Hello

I started looking on this site about a month ago and have become mildly obsessed with finding the best savings accounts, and hoping to pay my mortgage off early.

I have opened some good savings accounts, and am thrilled by the idea that money I already have in savings, just by transferring it from one account to another (Halifax £500pcm 10%) I think I will get about £300 'free money' at the end of the 12 months - Hooray!

I got my mortgage (on my own) when I was 20. It was 100% plus legal fees, etc. The property was £62K and my initial mortgage was £66K. After a couple of years I remortgaged and got an additioanl £5K equity, although £2.5K was lost due to not realising that my first mortgage had a penalty charge to get out of it - you live and learn.

I am currently gathering information about my mortgage before starting overpayments, so all my spare money is in good savings accounts, and my ISA is up to the max for this year. I have worked really hard over the last 10 years, and finally have no other loans or debts. (This still amazes even me!)

Current situation (including things I need to investigate):
-My flat is probably worth at least £120K, quite likely more.
-My outstanding mortgage on 31 December 2007 was £59,526.01
-I have a fixed deal of 5.19% but this expires on 3 November 2008
-While in the fixed deal I can overpay by 10% this year (£5,952.60)
-However, I guess that after 3 November this restriction might be lifted?
-As it stands my mortgage will finish in September 2028
-I don't know when the interest is calculated on the mortgage
-I don't know what the monthly payments will go up to after 3 November
-As I am self employed as a sole trader I don't think that many companies will want to offer me a mortgage, so I may be stuck with my current lender's variable rate, or whatever they can offer me
-As a vague aim, without having done full research, I like the idea of being mortgage free by age 40, which is January 2019. Although earlier would be even better!!!

I think that is enough waffling for today, thank you if you made it this far!

Jonesy_Bonesy

Let me be the first to say welcome.

There is so much info on here you can easily make and save money - and it totally inspirational. Have a look at stoozing for another way to make free cash.

Bonesy

EssexHebridean

I'll be the second then - welcome in!

I'm quite a new convert to all this myself - but I understand exactly where you're coming from regarding it being an obsession. You start looking into the possibility of overpaying a bit, and before you know it you're making sure you do 4p & 2p clicks on Quidco daily because "Every little helps!"

Set yourself small, regular attainable targets and then aim to exceed them. Stoozing IS a good way of making extra cash but you do need to have a good level of control over your finances to avoid missing deadlines for moving money around etc. I know I would be too likely to miss the crucial dates, and so it's not for me. It works well for others though, that I do know. The easiest way by miles is to carry on as you have been but with small changes.....use Quidco where ever you can - then pay for goods on a cashback card.....without even doing anything out of the ordinary you've earnt yourself somewhere between 5 - 10% cash back at least. hen there is Pigsback and the various surveys sites to earn either vouchers or cash......

Enjoy!

PsychoPrincess

Bit of research finally done:

The interest on my mortgage is calculated daily
This makes me think that it might be best to pay in any overpayments as soon as the money becomes available, rather than lwaving it to build up in another account first then transferring a lump sum.

The maximum 10% overpayment per year restriction ends in November 2008, along with my fixed deal
So, after that date I can overpay as much as I like / can afford!

When the fixed deal expires and I transfer to the standard variable rate the monthly payment will change from £391 to £457
Obviously I could look at what new deals are availble, but in the short term the increase is bearable.

Current Thoughts
- Before the fixed rate expires in November I can overpay by 10% which is about £5,960
- I do currently have that amount in the Kaupthing Edge 6.5% savings account
- As the mortgage interest is calculated daily it would be an idea to make the £5,960 overpayment ASAP, then after the restriction ends in November pay more if I have it
- HOWEVER, I have the money in Kaupthing Edge earmarked for the £500pcm payments to get the most out of the Halifax 10% regular savings account
- Therefore, I don't think I can make the overpayment until that matures
- I guess that as the interest is calculated daily, even small overpayments will start making small inroads

Hmmmmmm, I have also applied for a 10 month interest free credit card, and am about to try the simple spend and stooze (or whatever it is called) which I need to ensure I control properly.

Oh, and I have earnt £32 from GreasyPlam in a week, which is something I hadn't even heard of before - very impressed!

I think that's about it for now. If you have any thoughts I am very eager to hear them

StuartGMC

PsychoPrincess wrote: »

Bit of research finally done:

The interest on my mortgage is calculated daily
This makes me think that it might be best to pay in any overpayments as soon as the money becomes available, rather than lwaving it to build up in another account first then transferring a lump sum.

The maximum 10% overpayment per year restriction ends in November 2008, along with my fixed deal
So, after that date I can overpay as much as I like / can afford!

When the fixed deal expires and I transfer to the standard variable rate the monthly payment will change from £391 to £457
Obviously I could look at what new deals are availble, but in the short term the increase is bearable.

Current Thoughts
- Before the fixed rate expires in November I can overpay by 10% which is about £5,960
- I do currently have that amount in the Kaupthing Edge 6.5% savings account
- As the mortgage interest is calculated daily it would be an idea to make the £5,960 overpayment ASAP, then after the restriction ends in November pay more if I have it
- HOWEVER, I have the money in Kaupthing Edge earmarked for the £500pcm payments to get the most out of the Halifax 10% regular savings account
- Therefore, I don't think I can make the overpayment until that matures
- I guess that as the interest is calculated daily, even small overpayments will start making small inroads

Hmmmmmm, I have also applied for a 10 month interest free credit card, and am about to try the simple spend and stooze (or whatever it is called) which I need to ensure I control properly.

Oh, and I have earnt £32 from GreasyPlam in a week, which is something I hadn't even heard of before - very impressed!

I think that's about it for now. If you have any thoughts I am very eager to hear them

Psycho (or would you prefer Princess ?) yes, where you can put money in early it will give maximum benefit (our early mortgage days of overpayments in the mid-1990s were impacted by restrictions and annual interest calcs!)

To gauge benefit of saving vs OP, you simply need to do the sums thus:
Interest gained on savings less tax i.e. 0.8 or 0.6 of interst earned if 20% or 40% tax rate
Interest saved by OP into mortgage.
(In general, OP wins over savings as you'll see detailed in a number of threads here)

Regarding changing mortgage beware the fees now, these have jumped a lot and need to be accounted for in your review.

You note the £5.9k in savings you are considering OP into the mortgage; is this your only savings fund or do you have a separate "emergency" fund of 6-9months income?

If you don't have an additional fund, then consider keeping the savings now, and move to an offset mortgage when you change. Thus you keep the savings if you should need to call upon them, but they work by avoiding interest costs whilst offsetting. Also offsets are usually quite flexible too and no limits on OP or ERC (generally).

If you are moving to "stoozing" then you could think about an offset which includes your current account. In effect we do this by putting all spend on cc each month and setting payment 5days before due in full. So we can have a card of our choice, gain points (NatWest in our case) and all that money offsets while we are using the card.

You have time to run some calcs on the Egg calculator to see if this would work for you or not, particularly as the offset won't offer the "best headline" interest rate, but you need to work on the "equivalent rate" - see my thread for discussions on this.

You are already in the right mind-set to achieve your gaols so do keep us updated.
Best wishes

EssexHebridean

From the look of your calculations you should be able to comfortably beat that 2019 end-date. You're certainly right about small overpayments now means reductions down the line - the regular motto on here tends to be "every little helps" and indeed it does!

Good luck with it. :beer:

setmefree2

Welcome & Good Luck:j:j:T:T

jamesd

You write that you're a sole trader. Does this mean that you normally have tens of thousands of Pounds going into and out of your current account each month? If yes, you might benefit from a current account mortgage, where the current account balance is subtracted from the mortgage balance and you pay interest only on the difference.

Halifax also has an offshore regular saver account that pays 10% on up to 2,000 a month of deposits for a year.

moominyak

Welcome Psycho, from a fellow newbie here

PsychoPrincess

jamesd wrote: »

You write that you're a sole trader. Does this mean that you normally have tens of thousands of Pounds going into and out of your current account each month? If yes, you might benefit from a current account mortgage, where the current account balance is subtracted from the mortgage balance and you pay interest only on the difference.

Halifax also has an offshore regular saver account that pays 10% on up to 2,000 a month of deposits for a year.

Sadly I do not have that amount of money passing through the books! I am a driving instructor and a mobile DJ (not at the same time!!!), so it's nothing like that sort of scale - shame!

poppyoscar_3

Hi Psycho

Welcome!!

Don't forget a mortgage pig! As EssexHebridean says - every little helps!

PO xx