Mortgage/Savings

ironman1

Self employed builder.

No holiday/sick pay, just the odd tax rebate every June or July!

staffie1

oh right - well you've earned it then. I've been thinking about having a crack at the live on 4000 a year project. There's a forum thread on here. I think I could just about manage that - and think of the saving power

barnaby-bear

s.h.m.w wrote: »

We were silly really but you know what it's like, young and not really thinking about it all in too much detail. Im going to book an appointment and sort it out as we would NEVER live to pay off the Mortgage if we stuck to what we are on now, remember that 40 years is to pay off our 60%!

If anyone else is in the same position or has been, advice would be great. Thanks to all the others by the way

Can you make overpayments - often limited to 5-10% of outstanding balance (not your usual payment)? If you overpay and insist they don't adjust the monthly payment you can set your own payment schedule - so you pay what you would if it was a 25year mortgage. 6.1% is a rubbish rate but early repayment penalties and fees for a new product may mean not worth changing. Or can you link an offset account so you 'overpay' into a savings account which you can access but the effect is of overpaying? The advantage of overpaying directly or into an offset whilst keeping the original term is that your contractual payments remain low so if something bad happens you can drop back and often use the overpayments as credit to pay the mortgage to get you through.

barnaby-bear

staffie1 wrote: »

And don't forget you can take out income protection insurance to run alongside your mortgage so if the worst happens and you get made redundant, at least your mortgage gets paid.

If self-employed builder premiums maybe high and cover may not pay out so small-print reading time.

barnaby-bear

s.h.m.w wrote: »

I understand a bit more already since my post. It would be great to turn it into a 25 year mortgage which according to a payment calculator I used, would work out roughly £70 a month more. 550 instead of the 480 a month we are currently paying. Unless something happens with our jobs or something we should be able to afford that quite easily, touch wood. Seems far better than having leftover cash that we don't do alot with!

Try the MFW board - basically similar to the TV show "Pay off your mortgage in 2 years"

http://forums.moneysavingexpert.com/forumdisplay.html?f=98

People with 25year mortgages trying to pay them off in 10years etc.... different timescales but same principles and techniques should apply - including knowledge of cunning tricks you can use - being self-employed I guess you save your tax up to pay so you might be able to offset that against the mortgage reducing the amount paying interest on,.

ironman1

It says on our mortgage paper work that we can make overpayments at any time. Also lump sum payments.

Not exactly sure how we do this because it's paid by direct debit (we have an online account) but im sure they will tell us!

So are we better off with the overpayments instead of changing the mortgage to 25 years from 40? I think we can afford to pay £100-200 extra a month at the moment...

ironman1

Just been on a overpayment site and paying £100 a month extra cuts the term from 40yrs to 23. Madness, also saves about 75k in interest, think i'll do that over the 'change the term' option.

Cheers everyone, could be saving us alotta dough here!

ironman1

Not sure if this is the right place to post it but how would you lot do this?

Between us me and the gf get about 2300 after tax per month.

Mortgage: 490
Rent: 225
Maintenance: 125
Insurance: 40
Council Tax: 115 over ten months

Gas: 32
Elec: 27
Water: ? First bill this quarter was for 45

Sky: 46
BT line rental: 12

Food: 150
Travel (Train): 180 (usually about 120 though)

Basically after all is paid out we have about 800 quid left over, we usually save some but don't have any real budget, I am wondering how much we could afford to over pay.

We live quite well and are still at the stage of not having to go out much as we love having our own place

staffie1

s.h.m.w wrote: »

Just been on a overpayment site and paying £100 a month extra cuts the term from 40yrs to 23. Madness, also saves about 75k in interest, think i'll do that over the 'change the term' option.

Cheers everyone, could be saving us alotta dough here!

yeah, its amazing what a difference overpaying makes! Def go for that.
Do you have any plans to purchase the remaining 40% of your property?

staffie1

s.h.m.w wrote: »

Not sure if this is the right place to post it but how would you lot do this?

Between us me and the gf get about 2300 after tax per month.

Mortgage: 490
Rent: 225
Maintenance: 125
Insurance: 40
Council Tax: 115 over ten months

Gas: 32
Elec: 27
Water: ? First bill this quarter was for 45

Sky: 46
BT line rental: 12

Food: 150
Travel (Train): 180 (usually about 120 though)

Basically after all is paid out we have about 800 quid left over, we usually save some but don't have any real budget, I am wondering how much we could afford to over pay.

We live quite well and are still at the stage of not having to go out much as we love having our own place

Don't know how big your mortgage loan is, but you're paying over £800/mth on mtg, rent and associated maintenance. If it was me, I would at least look at the possibility purchasing the rest of the equity and seeing if I could reduce this monthly outlay. Getting on for a grand every mth seems a hell of a lot considering you don't own it 100%