The Mortgage Free in Three - Take 2 challenge (MFiT-T2)

setmefree2

loopy-juice

loopy-juice

Why you sent me a pic of a red cross?

Jock_Tight

loopy-juice wrote: »

Why you sent me a pic of a red cross?

Sometimes a linked image does not load, thus you get a red cross in a box

Aless

I hope everyone had a wonderful Christmas, it has just flown by for me.

No. 160 checking in. Have overpaid £2,500 this month, partly due to a larger than expected Christmas bonus. Next year it will be rubbish but I may as well enjoy this year's.

I was hoping somebody could help with a compound interest question that I have not been able to resolve:

I thought that if I paid a sum off money off my mortgage then, due to the effects of compounding, the amount of money I saved would be more than I would have received if I had just placed the same amount of money in a savings account (which pays the same percentage interest as I pay on my mortgage).

When I put the figures into (several) compound interest calculators they calculate the amount of interest saved by putting the money into the mortgage as exactly the same as the money I would have earnt if I had put it into a savings account.

Am I wrong? Is the flaw in my reasoning that I am not taking into account a number of years rather than one year? Or am I just not using decent compound interest calculators?

pawlala

Hi Shaz (mum of 2!)

I would get straight back on to them and demand that they up the OP to your original £200 if you are able and willing to pay that amount. Interest rates aren't likely to increase a great deal any time soon which gives you the best opportunity NOW to make the most of it - OP OP OP OP as much as you can IMHO!

shaz_mum_of__2 wrote: »

Hi guys

Just back from the H/fax and the lady was so helpful we have reduce the term of our mortgage to 7 years from 13 making our repayments just over £100pcm ( we had offered £200 pcm but she advised would better allow for interest rates going up!) also found out the different components of our mortgage 15,000 of it is subject to no overpayment penalties and is on a great tracker rate the fixed part is on a rubbish rate which ends in 18 months and has a 10% maximum overpayment restriction. (when we can overpay as much as we like)

We are planning a 5K overpayment in the next week or so off the main chunk then pay smaller amounts as and when during the year off the bit with no restrictions

Bit waffly but i know where i am now!

Good luck to everyone else ..we can do it!

financialbliss

pawlala wrote: »

Interest rates aren't likely to increase a great deal any time soon which gives you the best opportunity NOW to make the most of it - OP OP OP OP as much as you can IMHO!

It could well pan out that the BoE base rate doesn't rise until late 2010 or even 2011 (which is fine by me), according to TiM:

http://www.thisismoney.co.uk/news/article.html?in_article_id=496582&in_page_id=2

So, in my first year, I'm going to overpay my the full £500/pcm allowed, effectively diverting some of my emergency savings into the mortgage and treating it as an offset account, since I'm locked into my fix until 31st March 2011.

I need a savings rate of 6.0% to beat my mortgage rate of 4.79%, so moving our savings to the mortgage is currently the best option. It also brings our mortgage free date forwards by 6 months too :T

FB.

loopy-juice

FB how will you update the spreadsheet? What do you need to know for information.

financialbliss

loopy-juice wrote: »

FB how will you update the spreadsheet? What do you need to know for information.

Hi LJ,

There's an update form, which I'm hoping people will use as their primary method of getting updates to us as it doesn't use the MSE forum mailbox which is limited to 50 entries.

The online form is here and I suggest you bookmark it for use throughout the challenge:
http://spreadsheets.google.com/viewform?formkey=dGtzMTdvS1VnNXUwakpPc3NjZzRHMVE6MA

All that is needed is your name / challenge number and the current mortgage balance you wish to report. The data provided goes into a temporary holding spreadsheet, which I then just copy to the relevant chart, ie chart 01, chart 02, chart 03 etc.

As for when I need the updates, chart 01 isn't actually going to be officially published until 12th March 2010, so I don't actually need any updates until about a week or two before that - roughly from 1st March onwards.

FB.

JonnyBravo

Aless wrote: »

I was hoping somebody could help with a compound interest question that I have not been able to resolve:

I thought that if I paid a sum off money off my mortgage then, due to the effects of compounding, the amount of money I saved would be more than I would have received if I had just placed the same amount of money in a savings account (which pays the same percentage interest as I pay on my mortgage).

No.

If the interest rates are the same then the amount you'd save on your mortgage will be exactly the same as you'll earn in savings account (for the same term and same rate.... saving interest is also compounded)

The big difference in practice is you will usually pay tax on your savings and therefore not recieve all you calculate.

Hope that has cleared it up for you.

RosieTiger

loopy-juice wrote: »

Balance left on millstone = £49,859.82


FEEEEEEELS SOOOOOOOO GOOOOOOD!

Big congratulations on passing the £50K barrier - way to go !!!!!!!!!!!!!