My story - determined

uzubairu

Well done on the overpayments.
You have done an excellent job so far.

I hope that your exam results in the new year are good.

We paid the ERC on our mortgage ((approx £2K) to get out of our 10 year fix which had 6 years to go in August.
We changed to a product which tracks the base + 1.79% (we were fixed at 4.79%).
OH reckons that we will see the benefit in the latter part of 2011.

Thanks for the update, enjoy Christmas and the new year.

golfiematt

i believe the offer is usually valid for 12 weeks but may be different with each bank. well done on the achievements!

determined1_2

New year - and the start of my final year to get to my target of sub £100k by xmas 2011 - which should be achievable. However, see next post for a potential set back to this.

Rolling 12 month basis below so the post isn't massive. Total analysis in post #1.

Stats below for balance, overpayment made, "interest saved" that month, "interest saved" to date, and months taken off (denoted as balance/OP/interest saved that month/total interest saved/months saved).

Jan 11: £111,000.00/£2,258.07/£4,655.23/£96,025.57/156
Dec 10: £113,500.00/£2,252.07/£4,975.09/£91,370.34/147
Nov 10: £116,000.00/£774.97/£1,798.32/£86,395.25/138
Oct 10: £117,000.00/£761.44/£1,818.56/£84,596.93/135
Sept 10: £118,000.00/£1,789.47/£4,465.39/£82,778.37/131
Aug 10: £120,000.00/£693.83/£1,807.98/£78,312.98/123
July 10: £120,9000.00/£377.79/£1,006.64/£76,505.00/120
June 10: £121,500.00/£299.15/£810.93/£75,498.36/119
May 10: £122,000.00/£433.17/£1,195.04/£74,687.43/117
Apr 10: £122,650.00/£807.11/£2,284.25/£73,492.39/115
Mar 10: £123,649.99/£502.57/£1,460.83/£71,208.14/111
Feb 10: £124,400.00/£413.64/£1,226.91/£69,747.31/109

Daily interest below. Each goes from 2nd of previous month to first of the month stated. E.g. £17.69 was for 02.12.10 - 01.01.11

Jan 11: £17.69
Dec 10: £18.08
Nov 10: £18.24
Oct 10: £18.40
Sept 10: £18.71
Aug 10: £18.85
July 10: £18.94
June 10: £19.02
May 10: £19.12
Apr 10: £19.28
Mar 10: £19.39
Feb 10: £19.49

Stong progress I feel. Large overpayment this month as OH gets paid every 4 weeks so had a double receip this month. Christmas costs and car insurance on credit card were due to be paid off with this but they are on 0% so may as well take advantage of this!

Some exciting news to come in the following post.............

Determined

determined1_2

As mentioned in post #311 come the aniversary of our mortgage on 1 July it will be beneficial for us to leave our current fix and pay the ERC if rates are as they are now.

Fortunately first direct hold the rates following your application for 6 months so I have a call back next week The new mortgage fees are only £99 all in at the moment as well.

I have been comparing 2 year fixes with my current rate, as that would be how long my current fix would have left to run.

My options were as follows:

2 yr fix repayment at 3.39%
2 yr fix offset at 3.59%

The repayment at 3.39% would save us approx £1.5k after the early repayment charge over the two years and the 3.59% about £1k.

However, given the increase flexibility of the offset I would be happy with the slightly higher rate. Interest only so any capital payments can be put in the offset account rate than the mortgage and will therefore accessible if needed (up to £50k as I believe that is what you would still be covered for and then any future payments into the mortgage itself).

I then got thinking about fixing for a longer period and the options are:

5 yr fix repayment at 4.29%
3 yr fix offset at 3.99%

I want to go with an offset and the repayment for 5 years is a little long anyway.

This then leaves the choice of:

2 yr fix offset at 3.59%
3 yr fix offset at 3.99%

At a rate of 3.99% we would made about £300 profit after the ERC and new mortgage fee. However it means we have secured a year after our current fix rate would end at 3.99%. I think rates will be a fair bit higher than 3.99 in 2.5 years time. If, say, the base rate moved up by 2% mortgage rate are therefore going to be roughly 6%. As such that would be all that is avaiable when I would have to get a new mortgage if I rode out my current fix.

My decision has been to go for the the 3 yr fix at 3.99%. That mean I will a small profit over the 2 years and any benefit of 3.99 vs whatever the rate available would be in 2 years time.

So I'am taking a lower garunteed (sp?) profit at the end of the 2 years for a possible significant benefit over the final year. Say 3.99% compared to 6/7% perhaps.

This means overpayments are going to drop over the next 6 months as I will have to save up the ERC of £2,900 (provided get accepted by first direct ). I anticipate the balance come the remortgage on 1 July will be approximately £108k which means I need to reduce the mortgage by £8k over the last 6 months of the year. Given I will be on a lower rate and the interest charges will be lower, I should still be able to meet my target of £100k by xmas 2011.

I would very much appreciate any of your comments/advice on my thought process above.

Thanks in advance

Determined

originalmiscellany

We've had our offset with FD for 6 months now and love it - it really "works" for us, and we're in the fortunate position to overpay and see the impact immediately, in terms of out standing debt and how much we pay in mortgage interest only payments. Really comforting!

For either, a decent fixed rate (historically these rates are very good) will give you several years of security and will allow you to budget much better, and if you get a pay increase you'll be in the position to build up a small nest egg which in 5 years time (2016 - ugh) you can clear a decent chunk of your mortgage. Great.

Ps great diary, I find it encouraging myself to see how one over time can make real inroads into mortgage debt.

Keep up the good work.

determined1_2

Thank-you originalmiscellany - will do my best

Any other thoughts anyone?

twinklie

Oh no...our fixed rate finishes in October...does this mean I have to start thinking about it as well now??

golfiematt

i think that over the next few years the govermnment want the base rate at around 5%, with mortgage companies adding their bit on i think you are right that rates will be 6% +. But as to exactly when the rate goes back is anyones guess but i would say sooner rather than later providing the economy is relatively stable. Getting a mortgage rate is a calculated gamble, good luck in the one you eventually choose!

determined1_2

twinklie wrote: »

Oh no...our fixed rate finishes in October...does this mean I have to start thinking about it as well now??

I think the norm is about 3 months in advance for a standard remortgage.

I'm doing mine 6 months in advance as I'm planning on leaving my fix and want to secure todays rate.

It may be beneficial for you to stat looking in say march/april for a rate with a company that will hold the rate for 6 months (e.g. first direct). If rates go up between april and march you're onto a winner. If they go down, can just apply for the new rate. If the lower rate is with the same company I think they will normally just amend you initial application.

Hope that make sense!

twinklie

Tell Mrs determinded not to freak out....but I love you! Thanks.