Preparations for a MFW

SkintGypsy

So we are nearing the end of our debt free journey, finally!

Next step is I want to try and tackle our huge mortgage, which is currently still on interest only due to hubby losing his job and taking one with a much lower salary.

Our current mortgage fix ends in June, but because we bought at the top of the market with just a 5% deposit our LTV is likely to be very high indeed, although not in negative equity. At this time, since we have been tackling the debts rather than overpaying, we will just go over to the SVR until we can overpay enough to get a better deal. This is the current plan in any event.

What I wanted to know is, do people tend to save up a decent emergency fund before they start to overpay? This would seem like a good idea, but I am keen to get cracking asap. It seems that every little helps, so even if we can only overpay a couple of hundred a month while we save, this would be worth doing surely?

Any tips or advice on how to get us in the best position to tackle this monster?

Thanks in advance!

Gypsy

cake21

Firstly congratulations on how far you've come on your debt-free journey! :beer::money:

What's your SVR? You might well be paying less than your 5% fix I also bought at the top of the market (with a 0% deposit ) but I've been able to remortgage with my current lender as they assumed the house value hadn't gone down even though I told them that wasn't the case :rotfl:so you never know.

Anyway to answer your question! Are you able to get your overpayments back? If so, I would overpay immediately. But if you can't personally I would go for building up an emergency fund first. Don't worry I'm sure more knowledgeable folks will be along soon

uzubairu

cake21 wrote: »

What's your SVR? You might well be paying less than your 5% fix

Anyway to answer your question! Are you able to get your overpayments back? If so, I would overpay immediately. But if you can't personally I would go for building up an emergency fund first. Don't worry I'm sure more knowledgeable folks will be along soon

I would be of the same opinion.

I can take back my overpayments and I am on a fix of 4.79% until 2016, so it is better for me to put the emergency money into the mortgage saving me interest whilst I don't need it.

SkintGypsy

It is a good point you both make, thanks. It seems, and I am just beginning to take an interest in these things so please forgive my general ignorance, that our product will switch to the Base Mortgage Rate which is guaranteed to be no more than 2% above Bank of England base rate. I can't find details online to confirm.

With regard to whether I can get back my overpayments, it appears that I can offset these against any underpayments in the future, so whilst it doesn't appear that I can have it back, I guess it is a savings pot to tap into as and when required. The mortgage is certainly our biggest outgoing, and that would be a priority bill if worst came to the worst, so I guess that means we may be all systems go in a few short months!

Thanks for your help guys.

Gypsy

dimbo61

I would still build up that emergency fund its much more expensive having to take out finance to pay for a new boiler or new car when a few £K in the bank can keep your debts to just the mortgage !!

Baby_steps_2

Hi,

We are in a very similar position, our fixed rate ends in July and should have also cleared all debts by then. We will also probably go on the SVR to build up our LTV. I don;t know if this will help but this what we are probably going to do also have no emrgency funds.

1. Keep paying what we are paying now (so an overpay of about £250 straight away)
2. Split the money we were using to clear our debt and put half in an emergency fund and half as extra opment.

This way we can try to lower our LTV with the aim of fixing again early next with a better LTV.

Hope this helps.