Shell1000 MFW diary!

shell1000

Hi I'm shell!

I started overpaying my mortgage in november 2008 when I remortgaged and felt in a position to do so as a result of renting my spare room out.

When I remortgaged I owed £137,674 and have already progressed in paying this down to £136,914 at the end of 2008. It seems a big mountain to climb but im 30 and any overpayments are a bonus as far as I can see. Also I have a first direct offset mortgage and I am trying to save money in linked savings accounts to reduce the interest I pay.

I've also renovated my house over the past 2 years, I spent £12k on it and ran out of money just short of finishing the kitchen, I don't want to do a cheap job so I'm saving up for a decent kitchen.

So I have two goals for 2009! To overpay my mortgage by £1500 and save at least £1200 more towards my kitchen fund (obviously being saved within my linked savings accounts to help offset my mortgage interest):T

Wish me luck, and I'll keep you updated :j

Also, thank god for MSE, MWB and offset mortgages, amazing for motivation!

Shell x

dealhunter

Good luck Shell!

I'm about to take on a similar mortgage amount. However, since we have two incomes, I'm planning to pay of £20k in the first year, and upto £10k afterwards, so it's down to a more manageable amount!

setmefree2

Welcome and

StuartGMC

Shell
Best wishes in your plans and especially with the kitchen; we had a bad experience some years ago with the company going bust part-way through the job. I'll spare you the detail but it was painful.

If you can do so, get the installers to do so via Credit Card payment as you'll be covered if they don't do a good job, go bust etc. I know we had to pay by cheque, but, with the present climate you may be able to lean on them to accept cc payment (even if they push to add some to the cost).

Offsets are indeed very good for some of us
I look forward to hearing of your progress.

shell1000

thanks Stuart, that's a great plan about the kitchen, you just can't be too careful at the minute.

Your ofsetting is making a great difference I see! I've saved myself twenty pounds this month but it's a start. How much do you think you need in you account to make a real difference? I've been thinking of stoozing but I don't know if I have enough control!

shell1000

First update, rent money in so first overpayment of £150 made, although actual mortgage payment doesnt go out for another week or so.

Start as I mean to go on!:T

halight

Hi Shell,
Just wont to wish you the very best of luck!!!!
You know what you wont! so go out and do it!!!

All the very best

shell1000

Januarys mortgage payment has now gone and I have saved 3 pounds this month by offsetting apparently... not much but a start, as the funds can only build up from now on!

Interest charged was 667 and I have paid off 950 which i think is really good

Bringing my total owed to £136,631.. still looks a huge task but its heading in the right direction Amazingly it looks like I have paid £1k off my mortgage since i took the mortgage out which i think is amazing considering they added £300 to the loan in fees!

I took the day off yesterday and worked on the kitchen with my dad boxing pipes in and im having a new kitchen floor put in on monday, so at least the kitchen will look liveable for the next couple of years while im saving up for a new one

it feels like spring already?! i'm determined to get everything on the right track!

x

shell1000

I just did an overpayment calculation through a site shown on the other thread and it says if i keep paying as i am, I will reduce the term of my mortgage by 8 years and save myself £50,000 which i think is unbelievable!!

StuartGMC

Shell,
Any amount you have to offset will help, we also offset the current account too which (at a future date) can be a significant proportion of the outstanding capital. Something you may want to think about in a few years time.

In the past the typical recommendation for offsets was to have 30% saved, but that was when the interest rate was significantly higher than other offers, so you needed to beat this with the savings. I think they are now more competitive and 10-15% would make a difference. You need some emergency funds plus some ready access savings so these can sit there offsetting rather than earning a low interest rate.

You haven't mentioned an emergency fund in your thread so far and I would recommend you get one in place, typically 3-6 months income is the guideline. You may also want to be sure that you have a buffer of say, two months rent saved, for any periods in a year when you don't get the rent?

What about other foreseen costs in future (holiday, replacement car, windows, doors, soffits, guttering etc) which need to be saved for too?

I've never stoozed but we have always overpaid since 1994 (interest rates of 8-9%) but it saved us over 3yrs when we moved the mortgage to offset in June 2006. Our offsetting in addition to savings, is to put all purchases on the credit card (we earn points with NatWest currently, but you can get cash back etc) then pay it in full each month 3 days before due. This can be a sizable amount especially if there is a thousand or so of company expenses on there which I can claim as soon as it is listed online, then it sits in current a/c offsetting

You are on a First Direct offset; I think these allow you to offset Cash ISAs? Worth considering putting some longer term savings in these, they won't increase in value, but once the mortgage is paid, they remain in the tax-free wrapper. We haven't done this due to past finances, but will be loading up the allowance each year once mortgage-free, and presently have Stocks & Shares ISAs sitting in negative territory but which I hope will recover with the markets from 2010 on.

Overall, I would say for now, you are on the right track. You need some time to get a feel for future costs in the home and your household budgeting then you can look at other items like stoozing although I think it is getting more difficult to find the right cards to achieve it. You are doing very well so far, don't over stretch yourself and do remember to have some "fun" along the way via holidays and time out, it's a long journey and you don't want it to become one that is so boring you decide to jack it in.

shell1000

yeah i understand where you are coming from stuart, its hard to have enough savings to pay the mortgage for six months but im planning to save it just to make sure i have a buffer. I currently have a mortgage protection policy in place which covers me for everything but unemployment, it could be scary with current circumstances but my job is reasonably secure, i work in the public sector in a department that is exceptionally understaffed and my job is a legal requirement, so if i left they would be in trouble.

Anyway, i digress!

I currently have four savings accounts and my current account linked to my mortgage, one of the accounts holds money that i save all year round for christmas, not much but 30 a month.

The second account has savings for holidays, i tend to save 50 a month for holidays.

The third account has savings for yearly bills at a rate of 50 a month for things like mot, car tax, car insurance.. ive managed to pay this years car insurance off in full and therefore i am now saving the 45 i used to pay monthly into this pot in addition, to help me offset.

The fourth account is the my kitchen fund/excess from the rent money. But i'm really debating whether to move my ISA savings into this account as its barely earning any interest now with nationwide and I need it to be instantly accessible just incase.

I guess you could say im reasonably organised with my finances and always have some rainy day money just incase.

My car is five years old with low mileage and well taken care of with regular servicing etc, my house is recently renovated all excepting the kitchen, so new heating, electrics, bathroom, light fittings etc.

I do have british gas care for heating/elec/plumbing and drains which i pay 28 a month for currently, but im thinking of dropping it to just drainage care (as i have shared drains we all have to be covered to gain treatment) and saving the rest of the money into my yearly bills instead.

I guess no one knows the future, but hopefully im starting to build some savings up now which is a good thing and will help the offsetting.

I may try this month to do as you say with the credit cards, i currently have an egg card and a capital one card which are clear. But i could definately cancel one of them and open a new one that does as you say, do you have any idea which the best ones are? maybe the credit cards sections will have more advice!

Thanks for all your pointers though stuart, its all much appreciated