What an eye opener - what do you do extra?

PhoneGuru

Wow, what an eye opener this forum is.

I got married in Aug last year and we took our mortgage out in Oct for our dream house (errrm big project), just before the market went crash. Which meant we probably bought at the peak of house prices, but we were lucky to get our house cheaper than asking due to circumstances. However, we still ended up taking a huge 220k mortgage for 35 years (ouch).

At just over 30 years old, I'm scared to death to be honest and I suspect this whole situation is having an effect on health and the relationship - I'm sure others see the same things. Luckily the company is doing well, even though the job is stressful. I've read most of the posts in this forum regarding payments etc.

Of our 220k mortage, I'm managing to overpay Nationwide by the full £500 per month. With the plan in the first 5 years (where it's most expensive) to reduce the term by 18 years purely due to the overpayment. I know I'm lucky to be able to overpay by so much most months.

Its also a big eye opener that the house costs us ~£38 every day just in interest alone. We decided not to put any more money into savings and use it to pay more where we can, purely due to the interest payment we would save.

Does anyone else have any tips? I'm right at the beginning of my mortgage so I guess getting into a way of living now to make things easier is as good a time as any.

dimbo61

After the cost of a wedding a small mortgage like this will be easy!
You are already overpaying by the max allowed so unless you have lots of spare cash at the end of the month then keep up the good work.
If you do have spare money you could consider shortening the term !!
Speak to Nationwide mortgage centre and put your details in "whatsthe cost"
to work out how many years you could afford to reduce the term.

firesidemaid

do you have any more money that you can overpay/save?

the other thing is to save or make extra money - there are tonnes of threads on this forum to give you lots of ideas and help you do just that.

from matched betting and mystery shopping/dining to ebaying, surveys, cashback sites and making cutbacks where you don't notice them. use all the money made/saved to overpay on the mortgage.

some might do all, but most folks will do those bits that suit them - everyone varies. i know there is money to be made from MB but i just don'e have the inclination, but i do like ebaying, quidco and economising.

it can be little things like taking your own lunches to work, buying value loo rolls (they are only going down the toilet) or halving your dishwasher tablets (i buy finish, cheaply, and now use thirds:D).

you only have to save £11.50 each week to overpay by another £50 a month - it's addictive. just wait till you break through that 200k barrier. have you thought about joining the current pay-off-your-mortgage challenge?

Desperate_Housewife_2-2

Hi phoneguru, welcome to the forum, yes, it is addictive and everyone os very nice and helpful so you'll soon pick up loads if tips and paying off your mortgage will soon become a way of life!
I agree with firesidemaid's tips and hints, how about joining a few challenges? The grocery challenge on old style is very good and you aren't in direct competition with anyone except yourself. The trick is to do what suits you and make sure you incorporate enjoyable things into your money projects (even if its a sit down and cuppa tea or a bubble bath! It doesn't have to cost much...I've got 2 teenagers so that sort of thing is a real luxury for me!)

I joined the mortgage free in 3 challenge never dreaming that I would be able to pay mine off but I am overtarget now and should pay it off before the challenge finishes. That's because I have had loads of help, support and people alongside me cheering me on every step of the way and we are all on the same wavelength. I find that people in general are not willing to talk about money so its nice to come on here and chat to like minded people.

Have you checked out the old style boards? Loads of tips there, also good to do is to look at all your outgoings, can you swap energy providers? You could make around £75 if you do it through a cashback site such as quidco. I have made around £800+ since I joined quidco.

Could you look at any possible bank charges that could have been made that you could claim? How about looking into checking your council tax band? All the info is on here, keep MSE as your home page and check in everyday.

If you want to buy anything look at hotdealsuk and freecycle or charity shops, also spend using a cashback card but pay off at the end of the month to prevent charges.

A good book to read (get from library!) is Alvin Hall 'Your money or your life' and 'The Tightwad Gazette' by Amy Dacyzyn (USA book so you might have to buy it but I have saved a fortune using her tips.

Can't think of anything else. Good Luck!

uzubairu

PhoneGuru wrote: »

Wow, what an eye opener this forum is.

Its also a big eye opener that the house costs us ~£38 every day just in interest alone. We decided not to put any more money into savings and use it to pay more where we can, purely due to the interest payment we would save.

The good thing about Nationwide overpayments, is that although they reduce the term of the mortgage and reduce daily interest, you can claim them back easily if you ever need to and the interest is just recalculated.

I'm also planning to move our emergency money into the Overpayment Reserve, so we can get some extra benefit from it while we don't need it.

Good luck with your plans. You're in good company.

StuartGMC

PhoneGuru
Welcome. The biggest influence on our plans has been to get a really accurate picture of expenditure and then the balance with aspirational savings (inc. annual holiday, replacement car etc). My household budgeting spreadsheet moved from one of estimates for groceries, clothes, petrol etc to real values on a rolling basis. With this accurate set of data we then have improved on the OP, offset, savings and investments.

It's great that you can OP so much already, but, remember you are in marathon, so set some interim targets and not just financial. Ensure you have personal goals and aspirations along the way and do take time and some money to enjoy life too otherwise the mortgage and OP will become the focus of negative attitudes as it "stops" you enjoying life.

Do you have your pension arrangements in place for both of you? This should not be overlooked especially at your age.

My thread has a few musings and comments, so take time, look through the diaries here and then select a few areas to work upon, then you can build from there. Best wishes.

daveybea

I took out a Halifax mortgage in 2006 for 69K. With a little luck I have whittled this down to owing them 47K and have reduced the term from an initial 25 years to now 6.7 years . This has reduced my interest from 70K ish to something like 6K.

Initially my wife didn't like me overpaying - however when she saw a tv programme about repossessions and the effect that had on the families involved I think she realised that the building societies are not doing you a favour giving you a mortgage - it's a straighforward business deal which doesn't make you friends . Anyway I hope to reduce the term to 4 years max by the end of the year and next year might be bye bye mortgage
fingers crossed!

Dithering_Dad

Welcome to the MFW board!

I can totally sympathise with you on the worry of a large mortgage even though mine was originally quite a bit less than yours. We felt really out of my comfort zone when our mortgage went up to £150k after we added an extension and new fitted kitchen (and other improvements) to our home. However, we knuckled down financially and reduced our outgoings to the point where we have paid over £45k off the mortgage since April 2007.

It's really surprising how quickly you can get the mortgage figure down when you set your mind to it, and you certainly sound like you have set your mind to it!

Good luck on your MF journey and please keep up posted in here on your progress.

PhoneGuru

Thanks for your comments everyone, I really appreciate it. Funnily enough I looked back on a post I made this site, 4 years ago! I wasn't married, had just started work, couldn't afford a house. Now I'm talking about trying to pay off the mortgage. Shows how things can change in a short space of time.

I've recently changed energy providers, I estimate its saved me approx £140 for the year! I couldn't believe how much I was being ripped off.

I'm taking paying off the mortgage as a challenge that gives back real rewards. The money we save in interest will pay for holidays, over a 5 year period I think it works out to an average of £90 per month saved in interest (assuming I've got my maths right).

Does anyone have any spreadsheets with calculations they would be willing to share (obviously not with your figures in) to show examples of workings?

PhoneGuru

It's been a while since I last posted (5 months) will make a concerted effort to update here once per month.

Mortgage at Oct 08: 220,599
Current Mortgage: 217,461

Progress since last post:

• The house project has been taking time and too much money for my liking. As such I haven't overpaid as much as I would like only 3 overpayments in 5 months. The work is largely done now, so hopefully now I can put a bit more concentration on moving forward with this.
• Just posted in MFIT-T2 challenge to get down to 190k or <75% LTV by 12/12/12 - got to have something to aim for.
• Taking own lunch's to work - estimate a saving of approx £60 per month (being conservative - I think it's more than this though). My wife is making me gorgeous pasta or rice salads - upshot is I've also lost weight - 4lb this week! <currently 11.5st aiming to get back to 10st and a 6 pack - wifey will be pleased about that :rotfl:>
• Can't reduce council tax band, all houses on my street are same band and it does seem to be fair for the property.
• Taking my wife on holiday to Thailand for 2 weeks, used my hard earned bonus to pay for it (I'm not in banking than god!) - so did not impact normal monthly budget. Felt guilty about doing it, but neither of us have had time off this year and both needed a holiday. I also wanted to do a bit more diving. Should set me up at least for the next 12 months focus on this task. Yes - I could have had a cheaper holiday and paid a bit more off the mortgage, but I guess you have to live too where you can.

Things I need to do / other comments:

• Need to try and guarantee £500 per month overpayments which is a bit of a stretch.
• Look at Quidco and see what I can do with that.
• Currently I do not pay into my pension, although my company does. My wife has a pension and the company contribute. After speaking with the pension's adviser, and being disgusted that the value of my fund halved during this recession (wiping out the contributions I had made), I decided / and concluded I will make significantly more money by paying off the mortgage quicker due to saved interest. At a mortgage rate of 6.58% my pension would never match that rate for gain. So I'm continuing to let the company pay in, and my contribution will go towards the mortgage (roughly £200 per month).
• Need to work out if I can make better use of my wife's tax allowance rather than me paying 40% on any earnings that comes in outside of normal work - might need to find an accountant.

Jonbvn

Given your high interest rate (6.58%), I agree that you should concentrate fully on overpaying your mortgage. You will never beat that rate with any available saving account ATM.