Mr&MrsMoomins MFIT Diary

themoomins

Okay I have another username, but that one occasionally gets into mini arguments and i've had the old tracing back through my old posts to find dirt used on me before, so, with fresh ideas and a fresh start, I'm here finally to diary our mortgage free journey. It's more a blog for us to see our progress (I'm a massive fan of Financial Bliss - started in 2007!) and I'm looking forward to seeing similar progress with us.

A bit of background then. We are recently married and we live together in the one bedroom flat that MrMoomin bought only months before we met (meeting just three months earlier would have prevented this financial disaster). It was bought at the very peak of the market in 2007, although he was very good and didn't borrow too much, it was still a 95% mortgage. Now herein lies the motivation for paying down the remaining mortgage in three years (or as close to as possible) - we want to start our family as I'm pushing 30.

So our original idea was to put the flat on the market, where it languishes today with no interest whatsoever. Strange in that it's a very desirable area and the semi's that surround us go for crazy prices within weeks of going on the market. But no, one bedroom flats, even with sea and country views, are a no no at the price we need. We so desperatly want a house but are starting to come to terms with the fact that we may be stuck here. Well if we are stuck - it has to be for the least amount of time possible.

We discuss regularly what we can do about this. So here are the basics

Borrowed 83500, bought flat for 88500 - Deposit was 4.5k.
Mortgage is now 79923, so only 3.5k paid off in 3 years. We're on Northern Rock SVR @ 4.79%, which grates since friends are paying like 1% at the moment, everything about this flat is bleeding us dry lol.

We could sell for the amount to cover the mortgage but we've put thousands into renovating it and that is basically just throwing money away, neither of us can bear to lose money when we don't have to.

So the only plan that's viable until it miraculously sells for at least what was paid for it (no chance) is to pay off as much as possible in as small a time as possible so we can move on and get our dream house. I have lots of theories on the market, and I'm sure there are plently of contrasting opinions, but we really feel that, whether we put our surplus money into the mortage or into an account which pays a higher interest rate than our mortgage, then at least we are doing the absolute maximum to better our position, even if house prices shoot up!

I have a couple of questions from people that know more about this stuff than we do:

1) Our mortgage with NR is on SVR and our current mortgage and buy price are above. We are worried that rates will go up and NR will follow, meaning anything we save will be swallowed up in interest and we will be paying the same for this GFS flat as we would be for a lovely house (our worst nightmare). Any ideas on the best mortgage for this situation (we have 6K in emergency savings so could put this in to improve LTV if needed).

2) Would an offset be any good for us - or one of those current accoutn mortgages? I like the idea but am concerned about what will happen to them if rates go up - or is this a good thing?

themoomins

I should probably give a brief outline of how we intend to overpay....

1 - Live as frugally as possible, but still have the odd night out, take-away, treat etc.
2 - Try and get a second job - I am applying at present for Arise to do from home, although my current day job is at risk from redundancy so all this might go out of the window.
3 - Hubby is trying to get a higher paid job (more scope for him as he is a brainiac engineer.
4 - Put the lottery on every week.
5- Any surveys, presents, windfalls etc all to go to the cause.

And Targets.... (offset)

At start (79923-6000 = 73923)

2010 - 72000
2011 - 62000
2012 - 50000
2013 - 35000

Yes it's a tall order but we think a)we'll earn more shortly and b) we'll become more used to frugality and putting spare money aside rather than spending it.

Iris_Blue

Hi,

I know what you mean about the user-name. I think when your talking about debts/mortgages sometimes it's best to keep things separate.

congratulations on your marriage

sorry I can't answer your mortgage questions as I can only just understand mine but wanted to wish you the best of luck on paying extra to your mortgage.