Mortgage free by September 2014 (or before!)

SmileyG_2

So here is the last week in figures ....

Mortgage at 31/07/2011
Outstanding balance: -£47,234
Estimated endowment value: £27,359 (value @ 01/07/2011)
Investments: £15,133
Deficit: -£4,742

Mortgage at 07/08/2011
Outstanding balance: -£47,234
Estimated endowment value: £27,359 (value @ 01/07/2011)
Investments: £14,649
Deficit: -£5,226

In truth the endowment value has probably also been hammered as well, maybe by as much as £1500.

What happens next?

Part of the investment fund is in Cash ISAs, some in Fixed Rate and the rest in Instant Access. I can re-allocate some of my funds to Stocks and Shares, but are we at the bottom yet? Probably not. My experience is that such corrections like this generally take a little bit of time to unwind and when the market stabilises there will be opportunities to invest the cash, but not yet.

Just had to post, it's important to show the risks associated with this strategy, just in case everyone gets the feeling that it's a one way bet!

In other news.....
Nationwide are in regular correspondance with me with rspect to my mortgage options after September 2011. My fixed rate ends and I revert to the SVR of 2.5%. Its hard to believe, but borrowing money at this rate suggests I'm a better risk than most Governments around the world!

I've also seen reports that there's a 50% chance that rates will not increase until 2013 and that rates in 5 years time may only be 1.25% higher than they are today!

Here's the best article I've seen and it's on MSE

http://www.moneysavingexpert.com/news/mortgages/2011/08/guest-comment-beware-the-fix-now-mortgage-plea?utm_source=forum&utm_medium=sidebar&utm_campaign=box

In conclusion, I think I'll put the savings to one side and they will act as a contingency against higher interest rates.

Keep up the good work, one and all. I'm off for a short break to the South Coast and let the stockmarkets wreak havoc on the rest of the world....

SmileyG

[Deleted User]

Wow Smiley youre doing great!! sounds like you'll be MF in no timce with only 5K outsanding! well done

SmileyG_2

Here's my latest update ......

Mortgage at 11/08/2011
Outstanding balance: -£47,234;)
Estimated endowment value: £27,359 (value @ 01/07/2011):undecided
Investments: £14,553 (Ouch!):(
Deficit: -£5,322 (one step forward, two steps back!):(

The market ain't been pretty and my deficit has grown since the last post. A true valuation of the endowment will probaly make it signifcantly worse....:eek:

However,

I have cash to re-invest when the market decides to calm down. Opportunities to invest have grown and my readjustments might be limited to topping up my existing investments. Some of them are back at silly prices and having been through all this in 1987, 2003 and 2008, I am well aware that good companies will recover all of these falls.

In the meantime dividend yields of >5% vs mortgage rate of 2.5% don't make sense.

My next overpayment goes out on 15 August. My last overpayment was scheduled on 15th October, but if it makes sense I could reduce the mortgage down to meet the investments + endowment (whatever that might be!)

Still smiling...:)

SmileyG

SmileyG_2

Here's my latest update ......

Mortgage at 24/08/2011
Outstanding balance: -£47,183;)
Estimated endowment value: £27,359 (value @ 01/07/2011):undecided
Investments: £14,671 (Ouch!):(
Deficit: -£5,183 (one step forward, oane and half steps back!):(

The market is still quite capricious and no-one yet knows where it goes next. I need to keep my powder dry just at the moment.

Current September 2012 targets are ....

Outstanding Mortgage at September 2012: -£46,151
Predicted endowment value at September 2013: £30,055
Predicted investment value at September 2013: £17,695
Estimated surplus: £1,599

I am tempted to get a valuation of the endowment but I'll stick with my quaterly valuations for now, but any reduction in the endowment has the potential to wipe out my estimated surplus.

Elsewhere,

I have had yet another invitation to go and discuss my mortgage requirements. My last payment for my fixed rate goes out on 1st Sep. I don't see any point in remortgaging on any sort of fixed rate given my time frame for repaying the mortgage in Sept 2012.

My next overpayment goes out on 15 Sept. I have changed it to £100 and it will be my last scheduled overpayment. Any future overpayments will be ad hoc, but I will be free to overpay as much as I want without penalty from now on. Watch this space.

Still smiling...:)

SmileyG

SmileyG_2

Here's my latest update ......

Mortgage at 17/09/2011
Outstanding balance: -£46,936;)
Estimated endowment value: £27,359 (value @ 01/07/2011):undecided
Investments: £14,899
Deficit: -£4,678

The market is still quite capricious and no-one yet knows where it goes next. I need to keep my powder dry just at the moment.

Current September 2012 targets are ....

Outstanding Mortgage at September 2012: -£46,303
Predicted endowment value at September 2012: £30,055
Predicted investment value at September 2012: £17,995
Estimated surplus: £1,747

I will get a valuation of the endowment at the ned of the month, but any reduction in the endowment has the potential to wipe out my estimated surplus.

Elsewhere,

I have now moved onto the Nationwide's base mortgage rate of 2.5%. My first payment for my new rate goes out on 1st Oct. I don't see any point in remortgaging on any sort of fixed rate given my time frame for repaying the mortgage in Sept 2012, but it still needs to be watched closely...

My last scheduled overpayment went out on 15 Sept. Any future overpayments will be ad hoc, but I will be free to overpay as much as I want without penalty from now on. Watch this space.

Still smiling...:)

SmileyG

gallygirl

SmileyG wrote: »

I will be free to overpay as much as I want without penalty from now on.

£3.67. Dare you

SmileyG_2

Here's my latest update ......

Mortgage at 12/10/2011
Outstanding balance: -£46,879
Estimated endowment value: £27,053 (value @ 01/10/2011):(
Investments: £15,310
Deficit: -£4,516

Still no decision on whether to purchase any more shares....

Previous September 2012 targets (last month) were ....

Outstanding Mortgage at September 2012: -£46,303
Predicted endowment value at September 2012: £30,055
Predicted investment value at September 2012: £17,995
Estimated surplus: £1,747

New September 2012 targets (now) are ....

Outstanding Mortgage at September 2012: -£46,303
Predicted endowment value at September 2012: £29,171
Predicted investment value at September 2012: £18,102
Estimated surplus: £970

Last month I quoted....
"I will get a valuation of the endowment at the end of the month, but any reduction in the endowment has the potential to wipe out my estimated surplus. "

Well the surplus still remains, but the predicted endowment value fell by almost £900. Still, I'm still predicting to be in surplus. I hope they get the euro banks sorted out it's playing havoc with my predictions!

Elsewhere,

I have now moved onto the Nationwide's base mortgage rate of 2.5%. My first payment for my new rate goes out on 1st Oct. I don't see any point in remortgaging on any sort of fixed rate given my time frame for repaying the mortgage in Sept 2012, but it still needs to be watched closely...

The question remains.. Will I pay the mortgage off in 2012?
Maybe not, but that's a topic for conversation in future months.

Still smiling...:) and looking for opportunities:p

SmileyG

SmileyG_2

Here's my latest update ......

Mortgage at 26/11/2011
Outstanding balance: -£46,822
Estimated endowment value: £27,053 (value @ 01/10/2011):(
Investments: £15,332
Deficit: -£4,427

No new shares purchased....

Previous September 2012 targets (last month) were ....

Outstanding Mortgage at September 2012: -£46,303
Predicted endowment value at September 2012: £29,171
Predicted investment value at September 2012: £18,102
Estimated surplus: £970

New September 2012 targets (now) are ....

Outstanding Mortgage at September 2012: -£46,292
Predicted endowment value at September 2012: £29,171
Predicted investment value at September 2012: £17,792
Estimated surplus: £671

Investments have hit a bit of a euro headwind this month. The estimated surplus has fallen to £671, so it's not a disaster and even if the economy deteriorates further, I can either move the target from September to later or use savings to make up the shortfall.

I still am making an overpayment (£10 per month ), it's just a nominal amount so that I don't have to cancel the payment arrangement; I can increase it if I need to to keep the strategy on target.

The question remains.. Will I pay the mortgage off in 2012?
Maybe not, but that's a topic for conversation in future months.

Still smiling...:) and looking for opportunities:p

SmileyG

SmileyG_2

Here's my latest update ......

Mortgage at 14/12/2011
Outstanding balance: -£46,744
Estimated endowment value: £27,401 (value @ 14/12/2011):(
Investments: £15,848
Deficit: -£3,495
No new shares purchased....

Previous September 2012 targets (last month) were ....

Outstanding Mortgage at September 2012: -£46,292
Predicted endowment value at September 2012: £29,171
Predicted investment value at September 2012: £17,792
Estimated surplus: £671

Outstanding Mortgage at September 2012: -£46,282
Predicted endowment value at September 2012: £29,171
Predicted investment value at September 2012: £18,020
Estimated surplus: £891


Investments have managed a recovery this month. The estimated surplus has risen to £891.

I still am making an overpayment (£10 per month ), it's just a nominal amount so that I don't have to cancel the payment arrangement; I can increase it if I need to to keep the strategy on target.

Will I pay the mortgage off in 2012?
Maybe not, here's the reasoning.

When my endowment has acheived the £29,000 figure identified above, I will be surrendering it and paying down a large chunk of the mortgage. That leaves me £18,000 to pay.

Current income from my investments is around £516 pa. Interest on £18,000 borrowed at 2.5% pa is £450 pa. The £18,000 is on an interest only basis until 2020.

Given that I am comfortable with the way my investments are constructed, I always have the option to pay off the mortgage at any time as I also have a contingency fund should the stocks and shares element of the investments (currently 42%) fall in value.

Will it work? I hope so but only time will tell....

Still smiling...:) and looking for opportunities:p

SmileyG

SmileyG_2

Here's my update for the end of 2011......

Mortgage at 14/12/2011
Outstanding balance: -£46,687
Estimated endowment value: £27,401 (value @ 14/12/2011):(
Investments: £16,264
Deficit: -£3,022

I've made a share purchase (see below)

Previous September 2012 targets (last month) were ....

Outstanding Mortgage at September 2012: -£46,282
Predicted endowment value at September 2012: £29,171
Predicted investment value at September 2012: £18,020
Estimated surplus: £891

Current September 2012 targets (last month) were ....

Outstanding Mortgage at September 2012: -£46,282
Predicted endowment value at September 2012: £29,171
Predicted investment value at September 2012: £18,213
Estimated surplus: £1102


Investments have improved in the last week, which means that overall I've made a small return in 2011 despite a fall in the genearal market overall.

I've also made a small investment in a Property fund which has a dividend yield of over 7%. This is versus a mortgage rate of 2.5% and is a long term investment. The percentage of cash/shares is now 55%/45%

I still am making an overpayment (£10 per month ), it's just a nominal amount so that I don't have to cancel the payment arrangement; I can increase it if I need to to keep the strategy on target. For anybody who wants the challenge of making overpayments in 2012, can I recommend the 2012 MFW thread?
https://forums.moneysavingexpert.com/discussion/3637943

Will I pay the mortgage off in 2012?
Maybe not, here's the reasoning.

When my endowment has acheived the £29,000 figure identified above, I will be surrendering it and paying down a large chunk of the mortgage. That leaves me £18,000 to pay.

Current income from my investments is now predicted at £541 pa. Interest on £18,000 borrowed at 2.5% pa is £450 pa. The £18,000 would be on an 'interest only' basis until 2020.

Given that I am comfortable with the way my investments are constructed, I always have the option to pay off the mortgage at any time as I also have a contingency fund should the stocks and shares element of the investments (currently 45%) fall in value.

Will it work? I hope so but only time will tell....

Still smiling...:) and still looking for opportunities:p

SmileyG