My house lost £100K today!

Mozette

LillyJ wrote: »

My Dad is a chartered accountant and therefore takes great pleasure in having his money in a million and one places, with it all accounted for on multiple clever spreadsheets. Even his bank statements automatically download in to excel. He is such a finance geek it's unreal. It's served him well in life though!

Ooh! I think I love your Dad!

fimonkey

Dithering_Dad wrote: »

I love my spreadsheets too, but I never record the 'value' of my house. I simply compare what my mortgage was when I got the house and what it is now. The supposed value of the house is pretty irrelevent, the amount of debt attached to it isn't.

I'd advise anyone to keep an eye on the debt rather than the value because then you won't be lulled into a false sense of financial security. The best 'feel good factor' for me is to know that with the mortgage overpayments I've made so far I've saved £58046 in interest payments (over the term of the mortgage) and have reduced the mortgage term by 7.5 years.

DD I love the idea of spreadsheets to caluclate what you've saved in interest payments by overpaying. Are they freely available on t'web? IF so could you post a link pls?

Ta

tomstickland

mewbie wrote: »

Whew! Someone else is as nerdy as me. I stopped reviewing it upwards once they'd passed insanity level.

I actually did a proper analysis of a month's spending the other day, splitting into about 10 categories. It was a useful exercise. I know now how much it costs just to exist and can see where the money goes. I'm going to do it for every month from now on.

neverdespairgirl

!!!!!!? wrote: »

If it was a long term, low interest fix on a mortgage (I heard tell of 10-15 year fixes at 4-4.5%, not sure if anyone got them)

My parents have a 10 year fixed rate of about 4.5%.

wisbech_lad

Heh, glad to see I am not the only geek who runs a spreadsheet on cash flow, personal balance sheets etc.

Of course, I ignore all this new stuff about revaluations going through the P&L. Nuh uh, equity changes only.

As an aside, I do even have "balance sheet" of what the TV etc are worth. Of course I don't see it as our wealth, but it is extremely useful for insurance or moving purposes.

As we rent, & don't have a car, the most valuable thing is a rather nice antique chinese dining table & chairs. Which was a wedding present.

Dithering_Dad

fimonkey wrote: »

DD I love the idea of spreadsheets to caluclate what you've saved in interest payments by overpaying. Are they freely available on t'web? IF so could you post a link pls?

Ta

No probs. Here is a link that shows how a lump sum over payment onto your mortgage can affect the interest you pay:

http://www.quote-engine.com/mortgage-payments-calculator.html

Here is a link that shows you how regular monthly over payments affects your mortgage:

http://www.moneyextra.com/mortgages/calculators/overpaying-your-mortgage.php#calculate

There are plenty of others. Just google 'mortgage overpayment calculator'.

Dithering_Dad

mewbie wrote: »

One small voice of caution though. My feeling with credit crunch, etc. at the beginning of this year was that now wasn't necessarily such a good time to be clearing a relatively cheap debt, in case it became harder to raise a loan if subsequently required.

We had this discussion at the start of the challenge and most of the MFi3 have 3 to 6 months of emergency savings in place (and pension plans). To be honest, people don't often need as much money as they think because a lot of their emergencies are covered by insurance such as mortgage protection insurance, critical illness, etc. Plus if you're out of work, many luxuries will go out of the window and people make their money go further. I personally have 6 month's worth of emegency savings, but then I'm a contractor and so don't have permanent employment.

!!!!!!? wrote: »

Not much good if you have overpaid 4 years worth of the mortgage, lose your job and then get repossessed for missing payments before you can get a new job.

Many mortages these days are flexible on the way in with overpayments and on the way out with repayments, allowing you to get back the overpayments without penalties. You can also have payment holidays (especially if you're 4 years ahead of your repayments!) or go to interest only for a while (up to 4 years in your example before you start falling behind on your repayments).

You'll also find that mortgage protection insurance is relatively cheap and covers you for upto a year. Some have qualification periods (say 4 weeks of unemployment before you can claim) so you just need to make sure you're covered for that.

Finally, it's very unlikely that if you were 4 years ahead of your mortgage repayments that the bank would repo your house. :rolleyes:

!!!!!!? wrote: »

After that, all depends on the debt. If it was a long term, low interest fix on a mortgage (I heard tell of 10-15 year fixes at 4-4.5%, not sure if anyone got them) you'd be as well putting your overpayments in something like one of the tax-free NS&I cert schemes or a 7% savings bond if you were a lower rate taxpayer.

True, but there are not many mortgage deals around at the moment that are cheaper than ISA rates. People often forget that even though their mortgage interest rates are 5.75%, they had to pay an arrangement fee of £1k to get it, thus pushing up the APR to the point where the 'real' mortgage rate is higher than your savings rate.

!!!!!!? wrote: »

Personally, my goal is to buy mortgage free.

Good luck, though mortgages are 25 years long for a reason. Even with my overpayments I reckon I'll still have a mortgage in 5 years time and at one point I was over paying 3k a month. I guess if you're buying a 1 bed apartment of 2 bed terrace then this could be achievable over a few years, but if you have a family you'd be renting for a decade.

sdooley

Dithering_Dad wrote: »

The supposed value of the house is pretty irrelevent, the amount of debt attached to it isn't.

Are you Mervyn King in disguise?:money:

lostinrates

Max_Headroom wrote: »

Appreciate that this is probably a "tongue in cheek" post maybe, but why would someone consider their house value when considering family finances (unless considering selling of couse)?

It makes not one jot of difference to my finances whether my house is worth £100K more or £100K less tomorrow than it is today, all the bills are just the same.
.

Our IFA would be doing this (if we had a house) asked too ..not sure why, I imagine its not least to do with planning for 'the end' he seems big on planning for retirement and 'the end'.

I'm sure a few other organisations have asked too. CAn't remember who or why though.