MFW Starting Out

Chazolate

My husband and I purchased our first home together in November 09. We paid £111000, but were lucky enough to have a £54000 deposit. We took out a 2 Year Fixed Mortgage at 4.89%. To keep the monthly payments low, (they are around £300) we stretched the term to 30 years!

We have a low income, as I have gone back to college to study Beauty Therapy. So my partner is working on saving up some emergency money, whilst I have been saving my spare cash from part time work to over pay the mortgage. I’m not sure how realistic I am being, but providing I get a full time job soon after college finishes next July, I am hoping to pay it off in 10 years.

I have been reading as much information as I can about mortgages, but to be honest I still don’t fully understand everything.
I have just phoned my mortgage company and paid off the fees which were added to my mortgage in a separate sub account. It was only £34.80, but I didn’t want to pay interest on that for 30 years.

I then asked for my current mortgage balance and since January I have paid £237.72 off my mortgage. So I decide to make my first overpayment of £100 there and then. As it was being processed I asked if it was going to be paid off my capital and I was told it would be. I mentioned that I wanted to reduce the term and I was told next time before it was processed I should say I want to make a Capital Repayment. This really confused me! Can anyone explain what I have done and how that would work differently? I have been told that my monthly payment will stay the same, so I am not sure what I have gained.

SmlSave

Hi! Welcome to MFW.

Chazolate

Hi and thanks for your help!:)

dimbo61

First of all well done on buying your first home together and putting down a very good deposit!
The 2 year fix period will fly by and because you have a 30 year term you will have paid very little off in that time.
Consider that in the first 6 months ( 1/4 of the mortgage deal) that you have paid off £237.22!
Keep up the good work on the overpayments as it will save thousands in interest over the term and clearing the mortgage in 10 years would be great!
Some lenders will only recalculate the mortgage payment once you have paid enough off IE £500/1000 or if you ask for a static payment your mortgage payment would remain the same no matter how much you cleared off the debt. ( this would reduce the term)

Chazolate

Hi, thanks for the motivation. I've decided I'm going to try and overpay an extra £100 each month. Hopefully when I finish college I can pay alot more towards it.

Chazolate

Hi,

I just thought I would do a quick update! First off I am really interested in finding out where/how I can work out the amount of interest I am saving by overpaying bit by bit. I am not great with figures, but I have found some good calculators online. However I have yet to find one that will work out if I pay, say £3000 off, how much interest it will save me in the long run.

The other issue I am having at the moment is that I am really good at saving large amount of money, but then I seem to spend it on something really expensive. I am constantly trying to improve myself. I don't buy clothes or make-up that often, but instead spend the money on things like laser treatment, hair extensions and private dentistry. I have been going to a private dentist for a year and a half. I have an appointment coming up which is going to cost me £120, so I'm trying to decide if I will still over pay next month. (All of this is so I can eventually get Invisalign!) However I plan to save some cash by taking out insurance after this visit, so that I pay about £14 a month for regular visits/work.

As for the hair extensions I have managed to save myself £500 by arranging to get them done by a different hairdresser. So I am also putting down a £50 deposit for that next month as well.

To top it off I have a holiday booked in September and will need spending money. At the moment I am hoping my part time work will pick up! Currently I am an Avon Rep, I have a Sunday job at a book shop, I work a few hours a week in a salon and I help out with the occasional pamper party.

I think that’s enough about my mad self at the moment.:T If anyone has any ideas about working out the interest saved please let me know.