**Deefa's** MFW Diary 5 year plan...

deefadog

Well i don't know what the hell is going on Hope someone can help.

I made and overpayment last month, so balance on online with NR was 95.362.50 - Normal payment was taken out yesterday which at least £130 would be taken off the capital, but i just checked my balance online and it's £95.774.94.

Now i think i might know what's happened, the amount above is the interest added for the month and my payment has not come off yet, so when it does i'll have a total of £95.226.24.

Does that work out? and is the interest always added at the beginning of the month? I assumed it would be calculated when my payment went in?

setmefree2

Hi

Our interest is always added about the 1st or 2nd of the month. Our mortgage is with barlclays/ woolwich.

Smf2

deefadog

Thanks, so it's normal then

So they add the interest to the balance and then take the payment - sneeky, guess they get that extra interest on the interest added for 24 hours or so!

setmefree2

deefadog wrote: »

Thanks, so it's normal then

So they add the interest to the balance and then take the payment - sneeky, guess they get that extra interest on the interest added for 24 hours or so!

This is an extract frrom Martin's"Should I pay off my Mortgage" page

Mortgage companies calculate the interest owed on a mortgage daily, monthly or annually; which one makes a huge difference. With monthly, and especially annually, calculated mortgages, it’s crucial to time any extra repayments correctly. Money put towards the mortgage only counts after the calculation is made; so don't put your money in too early as it won't have an impact and you'll miss out on interest you could’ve earned in a savings account.
Those with interest only mortgages need to be careful. Normally the repayments only go towards repaying the interest of the loan, not the capital (the actual amount you borrowed). So ensure any extra payments you make specifically go towards decreasing the capital (in other words decreasing the actual debt) to attract less interest.
Checklist of when to pay
First establish how the mortgage interest is calculated; call the lender and ask if need be. If it’s daily there’s no problem. If it’s monthly, quarterly or annually, ask for the date the calculation is made.
Then rather than making mortgage overpayments willy-nilly, simply move it into the top instant access savings or instant access cash ISA, so you’re earning interest in the meantime. Then arrange to make the mortgage overpayments a few days before the calculation is made.
If you have a substantial lump sum to overpay, ask the mortgage company if it will automatically make a calculation even if it’s not the calculation date, if it will, fantastic.

http://www.moneysavingexpert.com/mortgages/mortgages-vs-savings

It's about half way down -"Correctly Time Repayments"

Hope that helps.

deefadog

Thanks, so at the moment i get paid around the 24th of each month and i make my overpayment that day. The normal payment goes out on the 1st-2nd.

So two points:

I assume my interest is Monthly?

And secondly am i doing it right or should i overpay after the 2nd of the month?

Thanks for any help

deefadog

Another monthly overpayment cleared

Almost into the 94k - Once my normal payment comes off next week i would have almost knocked off £1000 off the total :beer:

deefadog

Ok, i have had to have a change of plan. As i mentioned before i have invested in 2 properties abroad, which i was hoping to sell once complete, but with the current climate, that's not going to be very easy, so I have decided to furnish the 2 properties and rent out for the next 3 years.

I have had to take out 20k of borrow back to do this, but hopefully with the rental side, i can pay this back within the next 3 years and then sell the properties. If the rentals are doing better than expected then i'll continue the rental as it's more cash coming in than interest being applied.

I'll still try and overpay as much as i can, but not as much as before

If anyone has advice please feel free

Take care

deefadog

Bit late updating

Need to update my signature, but as NR's online system seems to be not working anymore, i'll ring them later to find the new increased amount after borrowing back 20k for the apartments.

Going to be a busy few weeks ahead, Researching Cyprus like crazy to get the new website for the apartments on line (Luckily that's part of my job, so pressures on). Then create flyers and advertise like crazy on facebook, twitter etc.

This is all extra, as the company we purchased the apartments from will do all this aswell, but as it's something i can do for little extra cost then why not!

I would love to share the website when it's done, but i guess that's advertising, so maybe pm me if interested Mods please advise on this, don't want to break any rules).

Obviously with the overpayments borrowed back the mortgage payments are back to what they were, but with a hell of a lot interest paid of, over 4 years i have lopped off 9k!

Any savings will be put away and when we find are feet with the rentals i'll think about paying lump sums off.

That's about it for now, and if anyone has advice on advertising rentals abroad please speak up, this is new to me so need all the advice i can get.

Take care all and Happy MF Hunting :beer:

deefadog

Not much to report at the moment, no overpayments made in the last few months, as i have been buying materials for DIY jobs that need doing, especially in the garden, decking hopefully will be starting this weekend, doing it my self, so will save a at least £500!

Apartments in Cyprus should be ready this month, but we have had a bit of a bombshell, in the fact the bank has reduced the percentage they will borrow us on one of the apartments to 60%, so means we have to come up the the shortfall, so we are looking into binning the second apartment, of course i guess we will lose some money on this :mad: We will see.

But it will mean it will be more managable and can start making overpayments again!

Rocky road ahead....