Due to be MF by 45, but want it sooner!

cat04

We're hoping to set up a standing order for £100 a month as OP. From reading other diaries about this, I know I need to a) make sure I can make OP's in the fixed period without being charged; b) make sure I don't pay over the 10% limit (not much chance of that, but who knows, we may hit the big time!) and c) make sure Halifax know to take it off the capital rather than shorten the term, esp as OH will be going self-employed and we don't want to over commit ourselves.

I will have to contact Halifax about point a) asap.

treliac

cat04 wrote: »

We're hoping to set up a standing order for £100 a month as OP. From reading other diaries about this, I know I need to a) make sure I can make OP's in the fixed period without being charged; b) make sure I don't pay over the 10% limit (not much chance of that, but who knows, we may hit the big time!) and c) make sure Halifax know to take it off the capital rather than shorten the term, esp as OH will be going self-employed and we don't want to over commit ourselves.

I will have to contact Halifax about point a) asap.

Thank you for sharing all your information.

I am unsure what is meant by overpaying 'off the capital rather than shorten(ing) the term'. When you shorten the term, isn't this because you are reducing the capital balance?

If there is a difference, could someone please explain. I have just started overpaying and have presumed that it is automatically coming off the capital. Thanks.

genuineplacebo

When you overpay on a mortgage you have two options -

a) To reduce your monthly payments, where the new smaller mortgage balance will be paid over the original term

or

b) To reduce the term and keep the monthly repayments the same.

treliac

genuineplacebo wrote: »

When you overpay on a mortgage you have two options -

a) To reduce your monthly payments, where the new smaller mortgage balance will be paid over the original term

or

b) To reduce the term and keep the monthly repayments the same.

Thanks. That's what I thought. You can only do a) if you pay off a lump sum then? Monthly overpayments can only shorten the term.

cat04

treliac wrote: »

Thank you for sharing all your information.

I am unsure what is meant by overpaying 'off the capital rather than shorten(ing) the term'. When you shorten the term, isn't this because you are reducing the capital balance?

If there is a difference, could someone please explain. I have just started overpaying and have presumed that it is automatically coming off the capital. Thanks.

Sorry about the confusion, I knew what I meant in my head, but didn't put it down quite right I read on a thread that someone made OP's and the bank reduced their monthly payment. I want to keep my monthly payment the same, but also pay £100 OP.

Still not quite sure what I'm trying to say, or if I've phrased it correcly....

cat04

genuineplacebo wrote: »

When you overpay on a mortgage you have two options -

a) To reduce your monthly payments, where the new smaller mortgage balance will be paid over the original term

or

b) To reduce the term and keep the monthly repayments the same.

Option b) is exactly what I want to do, got myself mixed up as by doing this you reduce the amount you pay overall (i.e. you save on interest payments as you pay off the mortgage quicker) and the term reduces.

I really should re-read what I've put more carefully - I've just got too much going round my head tonight!

cat04

I'm finally off to bed - I really shouldn't be doing these late nights, but I'm hooked on MSE, I love reading through the various threads.

To end the night on a good note, I finally made it to £50 with YouGov today, so the cheque should be winging it's way to me soon. I've also got £10.91 going into my bank account from Opinion Bar, so £60.91 towards the first OP

I won a £5 Amazon voucher from Gfk surveys today too, so overall a very productive day.

Queen-Bee_2

Well done on the surveys - I've been busy with my studies for the last couple of months so mine have taken a back burner for a while, but I've never gotten near the magic £50 with yougov!
QB

Queen-Bee_2

Also, on your SOA, the following look quite pricey:
Satellite/Cable TV...................... 40 £10 Virgin, £30 Sky (I know!!)
Internet Services....................... 40 £10 Virgin £30 mobile internet/laptop (carried from last address)

Have you thought about combining everything under one provider? Re the mobile broadband, I bought a mobile PAYG peg from vodafone, which you can top up as and when you like (ie credits don't expire after a month). It's saved me loads, and I bought it via Topcashback (I assume you know all about buying stuff through Topcashback??)

I saved a huge amount by ditching my BT landline and Virgin Internet in favour of a combined TalkTalk package which costs me £19 pcm, gives me free calls to all landlines at any time and provided £50 cashback at the start.

Also, you mobile...
Mobile phone............................ 35 £25 me, £10 OH
I have a £15 pcm SIM only deal with Vodafone that gives me something like 300 mins and 600 texts a month. I'd already got a handset I was happy with (and even if I wasn't, you can get great Nokia ones for £10, or actually £5 with cashback).

Keep us posted and good luck!
QB

rsharp

cat04 wrote: »

We're hoping to set up a standing order for £100 a month as OP. From reading other diaries about this, I know I need to a) make sure I can make OP's in the fixed period without being charged; b) make sure I don't pay over the 10% limit (not much chance of that, but who knows, we may hit the big time!) and c) make sure Halifax know to take it off the capital rather than shorten the term, esp as OH will be going self-employed and we don't want to over commit ourselves.

I will have to contact Halifax about point a) asap.

Having looked at your original mortgage balance (£63,240), current balance (£62,252.46), rate (4.19% for 2 years) and monthly payment (£471.76), it seems that you have only recently remortgaged about 4 months ago.

When you make regular overpayments (assuming Halifax allow you to etc.) your subsequent monthly repayments will reduce, but not by much.

Here's the science bit...

You overpay £100 next month.
Your subsequent monthly repayment reduces by...about 76p
This is made up of 42p lower capital repayment and 34p lower interest payment. (I mean lower than they would otherwise have been, not withstanding the fact that the capital repayment bit increases month on month throughout the term of the mortgage as the interest bit decreases)

You then overpay another £100
Your subsequent monthly repayment reduces by...about 77p

and so on (please note that these figures are approximate but not far from the actual amounts).

Because these overpayments are regular, I very much doubt that Halifax will look to reduce your mortgage term every month. I would suggest asking them to reduce the term and, therefore, increase your monthly repayments back to their original level, after a year or so of overpayments.

Please note that I am not a mortgage advisor, I just enjoy using spreadsheets and already had one set up for my own use (remortgaging myself in the next few months ) so I just plugged your figures in.

I hope this is useful to you and apologise if it is confusing :eek:.