Ajmoney's mortgage reduction diary

ajmoney

I have been looking and following everyone's progress for a while and adding bits sometimes. As I said on a post a while ago I am not really in a position to overpay to the point of being mortgage free but I certainly want to reduce my mortgage so I can have a better deposit when we come to move.

I bought my house in 2005 for £63,000, I can't remember when I first started to overpay but I think it was when the interest rates started going down a few years ago. I should have upped the amount every time they went down but stupidly I didn't do that.

Mortgage at opening (2005) £56,000
Monthly payment £260.24
Monthly overpayment £60.00
Current mortgage total £48,601.07

I pay quite a lot into savings and although I could overpay by more some of the investments I set up at the beginning of the financial year have had some teething problems so I had less money than I should have. The problems seem to have been ironed out now but I am still trying to get back to where I was as I had to raid some savings to help me through.

I don't make drastic overpayments very often but I will still let you know of any extra progress.

THRIFTY_GIRL

Welcome to the MFW team. I'm sure SetMeFree will be hear in the morning to add some color to the thread, but for now :beer:

determined1_2

Welcome and best of luck!

Catanddogs

Goodluck !

financialbliss

Hi ajmoney,

Great to see another new diary.

What's your mortgage rate? How does this compare to savings rate / investment projections?

Just wondering if you'd be better off overpaying on the mortgage rather than putting money into savings?

Financial Bliss.

setmefree2

to the MFW board and GOOD LUCK with your journey.

ajmoney

financialbliss wrote: »

Hi ajmoney,

Great to see another new diary.

What's your mortgage rate? How does this compare to savings rate / investment projections?

Just wondering if you'd be better off overpaying on the mortgage rather than putting money into savings?

Financial Bliss.

Hi Financial Bliss

My mortgage rate is 2.68% at the mo, a lifetime tracker with Nationwide. I am investing in stocks and shares ISAs to use up my tax allowance and have a couple of other accounts that pay the same (ish) or less as my mortgage but that is money I can access as I have a lot of money tied up in fixed rate and long term savings. I am about to get a pay rise so am considering putting that towards it as I won't miss it having never had it.
Once I am sure all my investments are running ok then I shall see.

ajmoney

Am I allowed to be thick and ask stupid questions in the early stages of my MFW journey? I hope so cos here I go. Can anyone explain to me how the interest thing works ( I have a capital repayment mortgage)? I am sure I understood when I took it out but my brain is going round in circles confusing itself

ajmoney

I have taken the plunge, or compared to everyone else I have dipped my toenail in the water. I have upped my overpayments from £60 to £100. I know it's noot much but it all goes some way to helping.

THRIFTY_GIRL

ajmoney wrote: »

Am I allowed to be thick and ask stupid questions in the early stages of my MFW journey? I hope so cos here I go. Can anyone explain to me how the interest thing works ( I have a capital repayment mortgage)? I am sure I understood when I took it out but my brain is going round in circles confusing itself

current mortgage £48,601
monthly payment: £260.24
Interest rate: 2.68%

The interest cost is approx £3.56 per day, or £108 per month. So of your total monthly payment about £110 goes to interest and the remaining £150 comes off the capital balance. Any overpayments also come off the balance.

As the balance goes down so does the interest so less money is required to cover the interest and more comes off the capital balance. Have a play with some of the mortgage overpayment calculators.

HTH

ajmoney

I had used some overpayment calculators before but they didn't work very well, however the fact that I have a smile on my face means that has changed!

I thought my £60 overpayment a month wasn't going to get me very far at all but it turns out that it is helping me to pay it off 6 years early! It is even better after increasing it to £100 today, I can now pay it off 8 years early!

This poses a new question, as I have already stated, I am not bothered about being mortgage free (although it would be nice), I just want to reduce my mortgage so I can have a better deposit when we move. My mortgage is up for renewal next February, I am on a lifetime tracker so not sure what I will do but how does all this help me with that?