My Mortgage free journey

Hell1

Hello everyone!:j

I hope you don't mind me joining! I was on DFW board, but now I am almost debt free, am aiming to be mortgage free!
A bit about me. I have a HUGE mortgage, £152,000:eek: for 22 years and am currently paying £1,100pcm. I am aiming to overpay by £200pcm to start with, and then to up it to £500pcm, when I have paid off my last loan... Have just been on the phone to my mortgage company, and they say I can't overpay, but can re-arrange deal and bring down the term. Do you think this is a good idea, or should I save the money and pay it off in chunks?

Also, am a single parent with three kids, so really have to get a grip of the finance! Have had lots of ideas for frugal living from DFW and MOS boards, so am hoping for mortgage advice from you lovely folks!

Thanks for reading,

hell

getmore4less

The problem with reducing the term is that you are commited to the higher payments and it can be difficult to set it back to a longer term if needed.

I would build up an emergency/disaster fund first 6-12 months expences depending on how secure the income is. Even if built up over a few years in ISA with the extra going to the mortgage this will not cost much more than putting the lot on the mortgage.(get a good mortgage/ISA deals and it could be better, also ISA are long term tax free)


Check the mortgage again might be a good idea to look at switch now or when the deal that has penalties runs out. Full details will help people comment on the options available for you to think about and time to understand your various options(better than waiting to renewal time to do the thinking) so you don't get stuck with a deal that is not flexable enough.

Hell1

Thanks for your comments getmore,

My mortgage is a bit of a strange one, it's in two parts as I "staircased" on a housing association house, from 50% ownership to 100%. Therefore, the amounts are

mortgage 1 £20,190.67 over 10 years 5.95%

Mortgage 2 £134,316.25 0ver 22 years, 6.99%

Even though there are 2 mortgages, they are sort of counted as one, so if I overpay by 10%, it comes off the total.

I am not very good with money (but am getting better!) So it appeals that the money disappears from my wages before I see it, I'm not sure how disciplined I would be with saving. However, I do take on board your emergancy fund idea.

Thnks
Hell

DawnW

You could always standing order a regular amount into your ISA each month. That way, it disappears before you 'see' it just like your mortgage payments. I tend to treat savings like this, just like another bill really. If you are worried about your will power, you can just get a notice account instead of an instant access one. If you have to wait 30 or 60 days to get at the money you will find that whatever it was you wanted to buy with the money seems less important with the wait!

Welshlassie

Well done on getting your Debts sorted, just continue to treat your mortgage like one of your debts and you'll be surprised how quickly the term can come down.

I'd look to see if it is possible to pay off your overpayment off the 6.99% mortgage as this will save you moer interest over the course of teh whole mortgage. Is that a fixed rate for a set period or the SVR?

If they have offered you the chance to rearrange the deal then you may well be out on any fixed tie in period and therefore be in a position to get a better deal which you can OP as much as you like on with another lender.

setmefree2

Good Luck:T:T:T

StuartGMC

Good luck in getting confirmation on the options from your lender, then on the Op/planning of finances; you've done well to clear the debts and you are therefore well placed to use the same approach on the mortgage which is just another (very large!) debt.

Did you check if you can OP by a smaller amount each month without penalty or is it a flat "no"?

As noted by the others, get your savings away at the start of the month; I think you'll save abour 20% more than if you waited and saved "what's left" at the end of the month. Best wishes

Hell1

Hello everyone and thanks for your replies!:j

Dawn, you really understand what [EMAIL="i@m"]i'm[/EMAIL] like! - If it's in my account I (or my kids) will spend it! if it's not there, it's not available. Thinking of my mortgate as another debt is scary, but of course true, Stuart and Welshlassie. The way i see it, I've cleared a lot of debt in 2 years - £25,000 + , so if I can see my mortgage as another debt I should be able to make good inroads in to it, and eventually get it down to a managable amount. I have checked with mortgage company and I am not allowed to make regular monthly payments without changing repayment term. I think I will go for the saving £500pcm and overpaying every 2 months.....

Thanks...
Hell