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

brizzledfw

Hello - me again - its either feast or famine with this posting lark and me..

Quick chat with OH (who is still hiding under the covers after a very good but very drink fuelled dinner with friends (our house so much cheaper than going out!!)) and agreed to up our regular overpayments to £532 to bring it in line with what I think I need to do to bring our mortgage down by 20k by end of 2010 (which fits within the 3 year target). Bit of a deep breath as I did it but now thats done as a DD every month which makes it much harder to slide back. We're on a brilliant mortgage tracker (really lucked out on this one - am sure my luck on this will never be repeated..0.99% above BoE for 3 years and no fee) so must make sense to pay as much as humanely possible now when rates are low

Was reading what others had said about not having savings and instead using the overpayment account - think this may be a good idea but have heard it can be tricky if say you lose your job or they see you as a downgraded credit risk so I think I will keep some savings in a savings account and only put some savings etc towards the mortgage. Spread the risk so to speak.

Have also now got the details of the mortgage so that I can make overpayments as and when on an ad hoc basis via my internet bank - not sure why have never done this before..if theres no minimum (must check) then no reason why I can't follow all you guys and just pay off odd bits here and there..every little helps.

Have fun this eve.. Brizzle

Kipper

Happy New Year !

Aless

Jonny Bravo thanks for your comment but I am not sure you are correct.

I know that the interest on the savings is compounded. My opinion was based on the effect of compounding on a large sum (the mortgage) being greater than on a small sum (the savings account).

I have done a few more calculations and I think I am correct (but I would love somebody to tell me whether I am wrong or right).

For example: (this is assuming there are no fees, taxes or any other charges)

Say I have a £200,000 mortgage with an interest rate of 5% with a term of 20 years.
I have £20,000 cash and I can either put this into a savings account paying 5% interest or pay down my mortgage which would mean I would pay interest on £180,000 rather than £200,000.

If I put £20,000 into a savings account paying 5% interest and leave it there for 20 years I will have £54361.91. This is a gain of £34361.91.

If I put it into the mortgage (from day 1) I would have saved £42776.49.

Meaning I am better off by £8284.58 if I put it into the mortgage.

What I am having problems with is what happens if you pay in later than day one. I think I need to go away and give this some more thought rather than clogging up the board.

curlygirl1971

Aless are you using one of the mortgage overpayment calculators that are floating around on various threads? They would help clear up your query for you and illustrate to you the effect of making such a lump sum payment at one particular point during the mortgage life

I use Locoblades calculator - you should be able to find it by searching on his name

If the interest rate is the same (and assuming no tax/fees) then the amount either saved on your mortgage or earned on your savings is the same providing you are comparing the same period of time

chickadee

Hi there, I'd like to join in as well please! I was a member of the original MFIT thread and have managed to reduce my mortgage by over £28k during those three years.

My balance now stands at £36,621 and I'd like to pay it all off by the end of the challenge. I'm getting made redundant in March but that will mean a modest pay-out, which I'll put towards the mortgage. I have got a new job lined up but it doesn't pay as well as the one I presently do, so I'll still have to stay focused.

Happy New Year to you all! (Just off to get ready for my night out!)

Mortgage-free-2010

Hi,
I would like to join the challenge as well.

My goal is to:
Reduce mortgage from £125,000 to £90,000.

Happy New Year!

taxi73

Happy New Year to you all xxx

loopy-juice

Hi. HNY. has anyone got a spreadshreet that I can put in my yearly start figure and then input a daily figure that will give me a daily update of interest paid on a daily/monthy/yearly total?

Thanks in advance

cazmanian_minx

I think I have to change my target - OH got down on one knee at midnight, so we now have a £40k mortgage reduction AND a wedding to pay for by 2012 :D:D:D:D:D:D:D:D:D:D

Happy new year everyone!

Caz

loopy-juice

OMG!! I've lost 22k off my mortgage somewhere!!

Balance on 31st Dec 09


Balance on 1st Jan 10