'Shock and Awe' approach to Mortgage from Monday morning

Franko43

Currently me and my bro have a £40,000 mortgage. Been paying it off for over 2 years now and its only down to £37,400. Fixed interest rate period is up last week. Got married last September so I've been trying to save all my wages while Mrs Franko pays Mtg and keeps the ship afloat - not easy though (
Friend of a friend is a IFA so making the trip to him Monday to see what better deals there are out there. I've £7,000 saved so I hope to knock that off, after that intend to knock lumps of it at every given chance - no quarter given. (Well - thats all the talking done, lets see me do it)

Overall picture - bought the house 3 years ago - me and brother went half on it for £80,000. Since I got married I live in it thus pay the mortgage. Mum/Dad lives on a small rural farm on which I hope to build a house on in the near future. The house price in this area (Tyrone, NI) has now jumped to £170,000 for the same type of house. I'm hoping to pay lumps of the mortgage now thus reducing our monthly payments and in about 20 mths time sell the house take half the money (+ half of the the 6K from Bro's share) and hopefully...hopefully - be able to build my own house without getting a mortgage. Maybe instead 2 smallish bank loans to cover the remainder. Should be able to self build for circa 100,000K. Thats the idea anyhow.

I have about 6K in share ISA's which havn't made a penny in 5 years. Tempted to cash them in and knock it against the mortgage. The more cooler heads on this board advise me against this. It would seem a more mature approach...

Tigerlilly_4

Good luck with it!

I would say cash in the shares if they're not doing anything for you but I don't know anything about shares so feel free to ignore me!

beebee1

We cashed in our isa's this year, for the same reason, didn't make anything on them. We put most of it onto overpayment for mortgage and the rest doing the kitchen floor, but our feeling was that the interest saved on the mortgage was more than that made by leaving the isa's as they were, we just hope we're right! Good luck with your plans, it sounds like you're pretty clued up!!! We've got 2 young kids so we're only slowly reducing the mortgage by overpaying monthly now, and lump sums with any cash left at the end of the year....

gallygirl

Cracking title for thread!!!!

I wish you luck with IFA - but in all honesty your debt is so 'small' you may not have that many mortgages to choose from. Also, the remortgage fees will be a much higher % of loan than on say a 100k mortgage, so may not be worth changing even if he does find a better deal. Also, there mnay be tie-ins and restrictions on overpayments.

Unless your current rate is v high I'd suggest you stick to it and concentrate on overpayments. (Can you do this without penalty - are there restrictions??? You need to know this beofre seeing IFA).

Assuming there are no restrictiosn my plan would be:
1. 7k off NOW
2. Has your shares ISA really not gone up in 5 yrs? I'd be inclined to ditch it - the value of shares can go up as well as down - but your mortgage interest will ALWAYS remain (and is rising at the mo....). That only leaves 24.4k to find......
3. Not sure why you want to reduce monthly payments??? Have you managed to save all your wages as planned? (7k not much of a salry if being doing for nearly a year ). Work out how much you HAVE actually saved each month. Then increase mortgage payment by that amount - if you haven't got it you can't spend it. (This is assuming your mortgage interest is calculated daily - again, you need to find this out. If not, open the best regular savings account you can and withdraw at best time to make a lump sum). To pay 24.4k over 20 months is £1220 a month - except in reality you'll need less than this as you'll be saving interest - try this link
http://www.whatsthecost.com/snowball.aspx to fiddle with your options.
4. Increase your income to help you achieve this - mystery shopping, used quidco when renewing insurance etc, earn vouchers from pigsback etc.
5. Finally, cut your expenditure to give you extra money. Post your SOA (Statement of affairs) on the DFW site, look on money saving old style for menus, stop going out - you actually have an achievable goal if you're prepared to make short term sacrifices.

Good luck!!!!

Franko43

Just to let you know how I got on with the IFA. My new interest rate is 5.7. There are better rates out there but buying into them may make it as cost effective to stay put. Have a mortgage of 37,400. Have £8,500 savings and £6,000 in a Shares ISA. That makes £14,500. I can make overpayments to that leaves me with a lump sum of £22,900. My monthy repayments will be £210. So say I pay on average £1,200 per month that would leave my mortgage paid in about 19 mths. Assuming interest rates stays around the same. Will pull out the Shares ISA, currently with an underperforming fund at the moment. Market is not going to return any real gains right now, maybe safer investing in a new ISA in about 6 mths time.

gallygirl

What good news! 22.9 def manageable (in a scary kind of way).

Keep us updated with progress.

Another poster on here has suggested a grid where you fill in a square per 1000 to monitor progress - you could do this for 100's instead. Also work out % each month - e.g. 1200 is over 5% of 22.9k.