Plan of attack. My journey begins...

davies0121

After reading on this forum for over a year, I think it is finally time to start contributing. Before I go ANY further I must say "THANK YOU" to everyone who has given some very impressive advise over the past year.
I just bought my first flat in Jan 08 and have been planning on overpaying since before I started! As it is my first place, I planned on spending the first year buying things like furniture and making it a home. It is now a home and I'm READY!

Here is my "plan of attack".
Figures - you know you all love them.
Mortgage - Jan 08 - £110,499
Term - 35 years! (ouch)
Currently on a fix rate with Nationwide at 6.03% for five years! :eek:

Overpayments of £500 a month for duration of the fixed rate will take me down to £76K (Jan 2013). Noticed that if I remortgaged (in Jan 2013) with similar rates today for say another 10 years and make same £500 a month overpayments. I would pay off the mortgage in 10.7 years (according to "Mortgage Schedule Calculator v1.5"). 10.7 years instead of 35? Hmmm..... What a choice! :j

I would like to point out that this month (Nov), I make my first £500 overpayment - also phoned and arranged for that payment and future ones to reduce the term.
Does my figures sound about right? I have been looking forward to this since 6 months BEFORE I even got the mortgage. Can't wait to start seeing the balance drop over the coming months. Already checked after the OP went through... couldn't help myself.

dimbo61

Good luck with the overpayments
A mortgage of £110,499 at 6.03% and £500 a month extra is a lot of money to find so I hope you can afford this and still have a life.
If you overpay by £500 a month for 10.7 years thats £63,500 in overpayments alone so I am sure your figures are very close.
With an interest rate of 6.03% and ISA,s rates falling then overpaying is the way to go for you.
If you can build up an emergency fund of a few £k in ISA,s this might help you if in 5 years you want an offset mortgage to pay off the mortgage even quicker and build up a retirement fund !

JonnyBravo

davies0121 wrote: »

After reading on this forum for over a year, I think it is finally time to start contributing. Before I go ANY further I must say "THANK YOU" to everyone who has given some very impressive advise over the past year.
I just bought my first flat in Jan 08 and have been planning on overpaying since before I started! As it is my first place, I planned on spending the first year buying things like furniture and making it a home. It is now a home and I'm READY!

Here is my "plan of attack".
Figures - you know you all love them.
Mortgage - Jan 08 - £110,499
Term - 35 years! (ouch)
Currently on a fix rate with Nationwide at 6.03% for five years! :eek:

Overpayments of £500 a month for duration of the fixed rate will take me down to £76K (Jan 2013). Noticed that if I remortgaged (in Jan 2013) with similar rates today for say another 10 years and make same £500 a month overpayments. I would pay off the mortgage in 10.7 years (according to "Mortgage Schedule Calculator v1.5"). 10.7 years instead of 35? Hmmm..... What a choice! :j

I would like to point out that this month (Nov), I make my first £500 overpayment - also phoned and arranged for that payment and future ones to reduce the term.
Does my figures sound about right? I have been looking forward to this since 6 months BEFORE I even got the mortgage. Can't wait to start seeing the balance drop over the coming months. Already checked after the OP went through... couldn't help myself.

Yep it's right.

At that rate (6.03%) with that overpayment you'll be down to only owing £139 by Nov '18
Impressive stuff.

I reckon you might find life gets in the way. I reckon you'll want to move before then.... but as I've stated before, by overpaying you're giving yourself more options. Both, if you want to stay where you are and if you want to move.
Like dimbo says, dont forget to enjoy yourself along the way, but this can be done without a BMW X5 and without yearly trips to the Maldives etc.

Best of luck.

jackie_w

Hi There,


Just wanted to wish you luck on your journey to paying your mortgage.

I look forward to reading your diary.


Jackie xx

StuartGMC

Davies
Welcome to the MFW club, I look forward to reading of your progress.

As Dimbo and JonnyBravo note, do ensure you have enjoyment along the way combined with the OPs; set yourself some interim targets which you can use to confirm you are progressing. Do get the emergency funds in place too (3-6-9 months income), plus the amounts you need for scheduled costs over the years ahead (e.g. annual holiday, car costs, saving to replace the car, white goods replacement, DIY allowance, any planned major costs in future like a new kitchen, replacement boiler etc).

It sounds like you have your budget sorted and my only advice would be to "assume costs go up and salary doesn't"

Good luck.

davies0121

I reckon you might find life gets in the way. I reckon you'll want to move before then.... but as I've stated before, by overpaying you're giving yourself more options. Both, if you want to stay where you are and if you want to move.
Like dimbo says, dont forget to enjoy yourself along the way, but this can be done without a BMW X5 and without yearly trips to the Maldives etc.

:beer: Thanks JB for your advice. If I find I want to move in the next 10 years! I'm sure I will be in a better situation by doing this challenge! But at the moment, life is good and happiness is high! Enjoy myself? I've not a problem in that department. I've also got a little saving pot growing and growing (currently £3k saved) so holidays and emergencies are getting catered for... in time.

Do get the emergency funds in place too (3-6-9 months income), plus the amounts you need for scheduled costs over the years ahead (e.g. annual holiday, car costs, saving to replace the car, white goods replacement, DIY allowance, any planned major costs in future like a new kitchen, replacement boiler etc).

Emergency funds are certainly getting there, I also have MPP Insurance incase things get very bad (jobless). Thankfully my savings are growing. I had to use ALL of them for my deposit at the start of this year so £3K so far this year is going well.:T
As far as job goes, I work offshore (pretty secure) and next month I am getting promoted so the extra money will certainly be helpful. So far my budget has been without any salary increase and always leaving spare pennies for increases in the future. I like to over estimate bills so I'm know I'm safe.

financialbliss

Hi Davies0121,

Good first post. There’s been some replies on other fronts, so I’ll concentrate on the mortgage.

I’ve also got a fixed rate with Nationwide – mine is 4.79% fixed until 2011. I guess you know that on their fixed rate products you can overpay up to £500 a month.

However if you know you have spare cash each month and you could afford to overpay more than £500 a month, then you could potentially up your monthly payment by reducing your term. You’ll still be able to overpay by up to £500 a month.

My old mortgage payment was 600 a month, so with up to 500 overpayment, that’s 600 to 1,100 a month I could have put towards the mortgage. This year I reduced my term by upping the monthly payment to 900 a month, so with up to 500 overpayment, I could pay between 900 and 1,400 a month to the mortgage.

Nationwide lump the interest for the year in one “interest” line. I make a note of the interest on the last day of each month. I can then work out the monthly and daily interest. See here:

http://forums.moneysavingexpert.com/showpost.html?p=16317339&postcount=691

for a post I added to my diary today regarding interest charges on my mortgage. May want to consider doing that, even if you don’t share this information publicly, as it can be a real eye opener.

I’ll keep dropping in and reading about your progress…

Financial Bliss.

davies0121

Thank you financialbliss :j
I didn't even think of reducing the term while on my 5 year fixed rate. I know I'd get some good ideas by posting! Well done!
My monthly payment is £632 and with my £500 a month on top, that puts enough strain on the finances (but managable of course). As I work offshore, my monthly income isn't always the same (varies quite a lot depending how much I work) and so I think as it stands, I will keep my current term until at least next year when I will do a complete review. And "extra" money I make, usually goes into an instant access savings account so I can dip into it if I spend a long period at home. No point leaving it in the Current Account making virtually zero interest. (so far this year, I haven't had to dip into it at all and it grows all the time so when the time comes - I'm covered)

uzubairu

davies0121 wrote: »

Thank you financialbliss :j
I didn't even think of reducing the term while on my 5 year fixed rate. I know I'd get some good ideas by posting! Well done!

Neither did I until I read financialbliss's diary. Definitely worth a look. :T

We're on a fixed rate with the Nationwide too (see signature), and we have just reduced the term to incorporate an additional £120 of disposable income into the mortgage payments (was £646 and from December '08 = £765). We also overpay £500 per month by standing order.

Next April we plan to reduce the term further so that our monthly mortgage payment will be £925 (and still overpaying by £500).

setmefree2

& Good Luck. Look forward to reading your thread.

davies0121

SO happy! Just made second overpayment. Another £500 gone in for Dec.
Was studying the spreadsheet and noticed that since I had started the mortgage in January, I had only paid £787 off the capital. Thanks to two overpayments (and the regular amounts) two months later, I have paid off £1952 (incl. prev). That's quite a difference. 10 months payments and the amount paid off is so little? Certainly compared to months 11 & 12! LOL
Oh, also got my letter from Nationwide with my new completion date. Good to see it coming forward, even if it was after the first payment.
Think these overpayments have brought me good fortune too. Won £10 on lottery, £50 on premium bonds (after only 2 draws), £78 on Postcode Lottery and Ipod Shuffle (all in 3-4 weeks). Think I should jet off to Vegas?