I want to reduce my mortgage - help !

densol_2

I don't think I could become mortgage free for some time but I want to be mortgage less !!!

How does this work ? Do I post details and a committment or just post my declaration?

Due to a recent inheritance, I will be able to pay off numerous credit cards (£88k) ( costing £1176 per month to pay ) and a little towards my mortgage (about £20k ) Leaving a mortgage balance of £315,000.

Do overpayments really work ? I was planning to pay off some of the money we would have paid to credit cards as a overpayement each month - maybe an extra £500 ?

Any tips greatly appreciated. :j

Gillybean

As the famous supermarket ad says- 'Every little helps'

I'm only managing to pay a small amount off each month- £50 usually, but every £50 is a tiny step closer to a smaller mortgage.

Go for it, but be warned, it does become addictive!

densol_2

Gillybean wrote: »

Go for it, but be warned, it does become addictive!

In a good way !!! Yes that is what I want to become obsessed so I can concentrate on paying lots off. I am with Northern Rock at the moment - we are planning to have a slush fund for yearly essesntials (paying £300 per month ) and holiday fund paying in £600 per month - which I am thinking of paying off the mortgage in the meantime till we need the money.

Does anyone know how hard it is to get overpayments back from Northern Rock ? I am thinking that everytime I have money sitting as an overpayments saves me interest - plus of course the additional monthly payment! :j

JonnyBravo

Do you think doing a COMPREHENSIVE budget might be a good idea first?

You're "bandying" round lots of figures about saving this, borrowing back that etc.
Your priority has to be working out how much you have coming in each month and how much you have going out.
You ran up £88k of debt by overspending. To change that is going to require a large change in lifestyle. This needs to be done before you can think about £x amount on this and £x amount on that.

iieee

densol wrote: »

Do overpayments really work ?

Yesssssss... definitely!

We've only been overpaying for about 18 months, but we've cut 3 years off our mortgage in that time without really cutting back. I wish I'd started a lot sooner!

You don't state your mortgage rate or term, but I just plugged £315,000 into the egg mortgage calculator URL="http://new.egg.com/visitor/0,2388,3_54988--View_1028,00.html"]link[/URL with a 20 year term and 5.5% APR. Putting your previous credit card payment onto the mortgage instead would save you 10 years off this mortgage and over £100k in interest. £500 a month would save you nearly 6 years and £65k. Definitely worth it!

StuartGMC

JonnyBravo wrote: »

Do you think doing a COMPREHENSIVE budget might be a good idea first?

This is very much key to understand what you can afford and of course not to run up any debt again. Get a spreadsheet in place for your spends (annual, monthly - necessary eg insurance; discretionary eg health club etc) and saving aspirations.

Have you got your "rainy" day fund set aside yet (your figures indicate you may not have this) - get this to 3-6X monthly income in ready access funds. Then start working forward from there.

I'll PM you to send the household budgeting spreadsheet I use and have sent to a few others, it may help you get your initial data in place.

Once you have this, come back, post your plan and we'll all be happy to encourage you (and likewise get support from you). Check out the various "diary" postings to get an idea of what we post - me included!
http://forums.moneysavingexpert.com/showthread.html?t=944413

Good luck

dimbo61

densol you have been there done that ! 3rd marriage, lots of houses and had your bank crads cut up in the bank.
You need to sit down with your OH and take a long hard look at your lifestyle.

dimbo61

To get a mortgage of £335k you have to be earning a very good income
£60/70k a year ?
But you ran up debts of £88,000 pounds on credit cards !!!
If you had not inherited the £108,000 you would be in a very poor position.
Does the £1176 a month just cover the minmum payments each month ?
You want to put £600 a month away for holidays ! 12x 600 = £7200 on holidays ? each year
You have the chance to clear your debts and just have a very large mortgage which you can clear very quickly if you use the money that was
needed to repay the credit cards each month as overpayments but you have to live within
your means.
If you dont change your spending habits you will never pay off your mortgage and if you run up debts like that again you might lose the house.
Take action and GOOD LUCK