Mortgage Free ASAP

Queen-Bee_2

Hello All,

Inspired by what I've read on this Forum, I thought I'd post my own diary to chart my progress and strengthen my resolve. Hopefully also to try and pick up some tips/assistance along the way - this is the first time I've tried to budget for nearly 20 years!!

The story so far is as follows...
In March 2006, mistakenly assuming that interest rates would rise (:rotfl:) I bought my house with the assistance of a £100k mortgage fixed for 5 years @ 4.59%. The monthly repayments were £645 for a 19 year and 4 month term.

By January 2007, the total sum owing was £97.89k, including £3.3k's worth of interest charges. By January 2008, the total had only reduced to £94.63k and I'd paid a further £4.49k interest. During the course of 2008, I made an overpayment of £5k and was irritated to see when my annual statement arrived in January 2009 that this was mostly wiped out by the £4.34k interest charge for that year.

Only at this point, did it strike me that the interest on what I'd borrowed over the 19 year term was going to add up to an awful lot of money. Odd as it might seem, l'd never stopped to calculate how much over and above the £100k I'd actually borrowed would need to be paid back. In fact, I still haven't. Probably I'd fall off my chair in shock if I did - though it'd be motivating to know and I need to start doing it to nudge me along in my efforts!

So in March this year (2009), I shortened the mortgage term to 7 yrs 6mths, which increased my monthly payments to £1,100. By shortening the term, the extra money doesn't count as an overpayment and I wouldn't get penalised for it. Again, I've not worked out the interest saving, but it can only be in my favour.

Unfortunately, barely 2mths into my new regime - my employer announced there needed to be redundancies and on 1 July, I joined the growing ranks of the unemployed.

I decided to seize this as an opportunity to Do Something Different and have secured a university place from September 2010 to retrain in a completely different field (it will be a vocational degree). As I have spent 20 years in my existing profession, this is quite a radical step. It also means that my finances need to be very robustly managed with every penny working as hard as possible.

Consequently, my aim over the next 12 months is to try and reduce as much of my mortgage as possible, whilst still leaving me with enough dosh to put myself through a further 3 years at university come next Autumn.

I'm not sure exactly where I will end up. But along the way, I hope to pick up tips and advice from other MFWs - really you're an amazing bunch and I have already learned a great deal from reading your diaries.

Now this is a long post, but it's more of an initial scene setter. Future ones will be a lot shorter, I promise!

setmefree2

to the MFW board and GOOD LUCK with your MF journey. Look forward to reading about your progress.

uzubairu

Good luck and welcome.

pammyj74

Liking your 'initial scene setter' queen bee and welcome to the forum
That was a brave thing to do to reduce to 7 yrs and HAVING to pay the extra but well done you.
It may be a blessing in disguise about your job and I see you are taking full advantage of it. I imagine you have the cash behind you to enable you to do this and still pay bills!

There are many people on here who are doing fantastic and have loads of tips adn advice should you need it but it looks like you are doing very well already!

Good Luck
x

Queen-Bee_2

Thank you for the welcome messages!

I've been thinking about ways to keep a better track on my spending and reduce my outgoings.

First things first however.. Until now, I've only received annual mortgage statements, but having read other people's diaries it seems that these days, they're viewable on-line. I like the sound of this, and have registered myself to do the same. Wonder what details the Nationwide will provide. Total owed? Interest accrued? Can't wait to find out!

I've also downloaded the budget planner. Apart from anything else, I need to work out how much I can actually live on every month, so I can see how much I need to put aside to that student place next September. I'll report back on my findings!

uzubairu

Queen-Bee wrote: »

First things first however.. Until now, I've only received annual mortgage statements, but having read other people's diaries it seems that these days, they're viewable on-line. I like the sound of this, and have registered myself to do the same. Wonder what details the Nationwide will provide. Total owed? Interest accrued? Can't wait to find out!

Total owed = Yes (Year To Date)
Interest accrued = Yes (Year To Date)
Monthly payments received = Yes (regular payment and overpayment combined to give one total)

Interest charged daily and it updates at midnight, so you can see exactly how much your mortgage is costing you every day.

Queen-Bee_2

Thanks Uzubairu - I guess I'll find out in a couple of days' time! Have to say that I'm curious though!!

What I really need is something I can use to work out how much interest I'm saving/have saved and being able to benchmark this against my original position - I don't think I can work out much I'm shaving off the term, cos I have shortened this on a temporary basis as a means to try and pay off as much as possible without being penalised (only allowed to pay off 5% per year during the fixed term)!!

Mortgage_Reduction_Novice

A budget planner is a great idea. You can also try recording all those silly little spends too and see if you could cut back in other areas.

Best of luck!

Queen-Bee_2

The First Step - Taking Stock of the Phone & Broadband Bills

A quick tally of my phone bills for the last 12 months showed that I have forked out £326.62 to BT and am on the hook for £211.32 to Virgin for Broadband (£17.61 pcm). Consequently, my annual landline/internet total has been a staggering £537.94, or nearly 45 quid a month. Ouch!

Having browsed the options available on the Net, I've decided to combine the two services and sign up with TalkTalk. It's an 18 month contract at £17.74 pcm, plus a £4 pcm 'boost' for anytime local calls. 'Cos I'm spending a lot of time in the house at the moment, I think the extra £4 pcm boost will be worth it. If not, I can remove it - it's adjustable monthly.

I'm also going to sign up to the paperless billing option, which, at £1.25 pcm, will shave a further £15 off the annual total. By going through Simply Digital, I will get £50 cashback after 90 days - the annual value of which (bearing in mind the contract's for 18 months) equates to £33. Hence, if my maths is correct, my new annual bill will be iro £164.50, or £13.71 pcm. This is an annual saving of £373.39!! I got them to waive the annual £29.99 set up fee - it wasn't originally part of the deal I'd signed up to, but they were open to bit of nice persuasion

Phew..

Am still waiting for my on-line passcode from Nationwide - can't wait to get my teeth into the mortgage figures and [try to] work out how much I am going to save in interest charges by getting the debt down!!

LilacPixie

Welcome Queen Bee. Think we 'spoke' today over on OS. I usually hang out over there as I personally feel spends on food/cleaning products is a major issue in our household.

I think that we can just keep taking baby steps to get where we want to be. A lovely poster on here sent me his budget planner and OMG is it comprahensive. I would suggest you definatly use one as it lays things out so clearly.

Queen-Bee_2

Today, I was finally able to access my Nationwide mortgage statement on-line. However, I was in for something of a shock. The alterations to my July direct debit, which I had pulled out all the stops to increase significantly before the end of the month, had not been actioned, and my account was showing nearly £3k more than it should have done!!



This was annoying for two reasons:

• It meant I would clock up interest on an extra £3k, which should have been paid off
• I had moved the money from a high interest account into the bank account from which my mortgage is paid (which has a derisory interest rate) thereby loosing out on a higher rate of interest

I called Nationwide and after a little bit of persuasion and going up the customer service hierarchy, they agreed that yes, I'd given them plenty of warning and the changes should have been actioned in good time. Consequently, they'll take the additional funds from my bank account today and adjust my mortgage account so it reflects what should have happened (and I don't loose out financially). I thought this was good customer service - clearly it shouldn't have happened in the first place, but it nice to end up speaking to someone who went out of their way to put matters right. :T

So... Whilst I won't be in a able to see my true position for another couple of days, I can't resist putting down the situation at the present time, as it is such a novelty for me to see a part year statement.

The scores on the door are therefore as follows:
- Total payments (Year To Date) £11,345.80
- Total interest charged (YTD) £2,230.28
- Current balance outstanding £76,618.30

All I need to do now is capture this on a spreadsheet and generate some motovational charts comparing my current position with that I'd started with around 3.5 years ago...

Also, as has been pointed out to me,

uzubairu wrote: »

Interest charged daily and it updates at midnight, so you can see exactly how much your mortgage is costing you every day.

I'd like to do something with that little piece of information as well, but as yet, I'm not quite sure what!!