My Mortgage Quest: Go from 85% -> 60% LTV by October 2013

DJ_Mike

Well that's a spot of good luck!

Turns out Web 16 was considerably more expensive for my needs than nPower's new tariff, Go Fix Dual Fuel!

Phoned them up to request a change, and found out they'd already put me on Go Fix automatically, with the following rates:

Gas - £13.75 quarterly standing charge (£55 a year), 3.2p per kWh
Elec - £13.75 quarterly standing charge (£55 a year), 8.49p per kWh

Fixed till December 2010!

The real shocker is how much money I was wasting at the flat!! I was on their standard tariff there, wasting at least £300 extra a year!!! Geez, wish I'd looked into this stuff before now! If there was ever a case for making sure you switch and save, this is surely it!

No wonder nPower had jumped me up to £150 a month DD!

StuartGMC

Mike
I have adopted reading meters every two weeks this past year as we switched a year ago to BG fixed to 2011, but I've now just notified them we'll switch providers (£100 fee to get out, but £60 cashback via TopCashBack for ScottishPower- you will make sure you see if that's available once you get a comparison next year for whichever supplier you move to?) and we should save £230-260 per year. In Sept 08 fixing only carried 13% premium vs usual 20%+ but price drops this year and the gas futures markets indicating no significant rises meant I felt we should go back to a variable rate presently.

If you can submit readings online then 2weekly will build data for supplier, plus you can graph your usage at home too to see the trends and averages. Remember, temperatures are typically lower for Jan-Mar than Oct-Dec when trying to monitor and you need a full 12month picture ideally.

We have had to put on heating past few days as daughter is home ill, but thermostat is set at 17°C in the house and we have good double glazing and 250mm (10") insulation in the loft. We even got a grant to have that fitted - cost to us less than the materials if we bought them, yet they fitted it all plus draft excluders around hatches. Check your local authority web site or Energy Saving Trust if your loft insulation isn't great.

DJ_Mike

On target to make an overpayment of £750 this month - £100 over my target! Of course being the first month of living in my house, things are rather less than settled just yet so it'll be interesting to see how things pan out over the next few months.

One boost to my overpayment this month came from a single DVD sale - sold an old boxset of Beauty and the Beast (a rare out-of-print copy) for £40 on eBay. Haven't watched it in a while, and the Blu-ray is due out next year so now is definitely a good time to sell!

Thanks for the advice above btw - I've now started taking more regular meter readings (gonna do it once a week so I can measure my usage nice and steadily).

Unfortunately my bills from E-On and British Gas (my temporary suppliers) are gonna sting quite a lot when they come in, due to my being put on their standard tariffs (should really have double checked that) - about £100 in total I reckon. However, I checked up how much the same amount of usage is gonna cost me under Npower and it's shaping up to be about £40! Outstanding!

DJ_Mike

And so it goes! Just made my first official Regular Monthly Overpayment of £750! :j

I have a nice quiet evening tonight - think I might line up some stuff to sell on eBay!

StuartGMC

Excellent - you must be very pleased with that amount.

setmefree2

DJ_Mike wrote: »

And so it goes! Just made my first official Regular Monthly Overpayment of £750! :j

I have a nice quiet evening tonight - think I might line up some stuff to sell on eBay!

First of many we hope

DJ_Mike

Well, it's the start of a new month and I made my second ever regular overpayment, reaching my target of £650.

December is gonna be more of a challenge as Christmas has a stern habit of eating into my finances, but I've got my budget spreadsheet that I've lovingly put a lot of time into getting just right so it works well and is a good psychological boost!

Although, as it happens, November was quite a challenge anyway - quite a few meals out last month which really overspent my food budget! It's really hard when you have people in your life who frequently say "let's go out for a meal somewhere". Arg.

Thank goodness I honed my home cooking skills a long time ago!

Oh, and for those who eat sandwiches at work on a daily basis - I cannot extol the virtues of making your own packed lunch enough! I used to be a right sucker for the sandwich vans that visited our workplace, for the best part of 4 years! Spending up to £5 a day was a horrible way to eat away (literally) at my finances. Now I spend maybe £1 tops for a decent sized lunch, and all it takes is 5 minutes, and I absolutely mean 5 - not 15, not 30 - to make it just before I head out to work. It's actually a habit I got into long before I bought a house, but it's serving me incredibly well now that I'm trying to save cash. £200 a year on lunch, rather than £1000!

setmefree2

DJ_Mike wrote: »

Well, it's the start of a new month and I made my second ever regular overpayment, reaching my target of £650.

well done you :T:D

DJ_Mike

So, it's been rather quiet from me lately! Christmas has a habit of silencing me while I spend time with the family and all!

I decided to take a break this month from overpaying, so that I can build up my savings a little (want to buy a nice wardrobe soon), but it's back to overpaying next month!

I'm also due to get a substantial boost to my overpaying later this year as my girlfriend and I have decided to live together in the months ahead (once we sort out some logistical issues) - so she'll be paying me rent which of course I plan to put straight towards overpayments!

So back to the overpayment strategy... originally I had intended to overpay by a flat £650 a month, but my projections showed me that this would cause my regular monthly payment to jump around a fair bit (due to reductions in term being rounded to the nearest month).

So I thought, "How much do I need to overpay by to reduce my mortgage term by precisely X months?"

And handily Excel provides a function called 'PV' that you can use to work out just that! 'PV' gives you the 'Present Value' of your mortgage debt based on your regular monthly payment, interest rate (assuming it's fixed) and how many months left your mortgage has to go.

To work out how much you need to overpay to reduce your mortgage by X months, the formula is:

=PV(interest_rate / 12, number of months left -1, current monthly payment) - PV(interest_rate / 12, number of months left -1 -X, current monthly payment)

The first PV gives you what your mortgage would be if you didn't overpay this month - i.e. your real mortgage value. The second PV is what your mortgage would be if you wanted to reduce it by X months (hence the -X in the second one). Subtract the difference and, hey presto, you have your overpayment amount to reduce by X months!

The neat part about doing it this way is you can create a sliding goal that gradually goes up each month. My goal at present is to reduce my mortgage term by 2 months, each month. This means that in February I need to overpay by precisely £543.97. In March that goes up slightly to overpaying by £551.98, then in April to £560.08. The important thing is that my regular monthly payments stay fixed and don't jump around.

Should be fun to see how it goes!

... I know, I have way too much free time! :rotfl:

wantabetterlife

Hi DJ mike. Well done on working out that formula because i couldnt even begin to understand it :rotfl:. I too used to be a sucker for the staff canteen, although it is subsidised so not too expensive. Oh would have had KFC or similar and spent up to £10 per day on this and newspapers, drinks etc. Now he gets 50p for the newspaper :rotfl::rotfl: . These days its packed lunches all the way. I have to say it is the one thing that has definately saved us a fortune! Goodluck with your plans for 2010