thinking ahead...opinions please

needtopaymydebts

hello,

i have spent quite a while reading other peoples posts, i tend to type replies then delete them before posting! i also keep thinking of starting my own diary, but just don't seem as interesting as everyone else.

anyway, as my name suggests i did spend most of my time on the debt free wannabe board but have finally made it to overpaying the mortgage, we do still have car finance remaining but that is as a result of my car (almost paid for!) being stolen and we had to replace it.

anyway...i'm waffling now... we took out one of those fabulous Northern Rock 100% mortgages plus a bit extra then added half the cost of our wedding onto it too!:o:o:o

that's behind us now but as a result we're left with the mortgage plus a secured and an unsecured loan! we're making regular overpayments of about £450 a month and are attempting to clear the additional secured loan first. If we can scrape together some extra money to make a couple of extra overpayments hopefully this will be gone in a few months (well maybe quite a few?) but my question is, which bit should we concentrate our overpayments on next? the mortgage left or the unsecured loan? I could see why we needed to clear the secured loan but I'm just not sure which is best to get rid of first. We're now on the variable rate with NR but in negative equity at the moment which isn't good. However, i see it as a lesson learned and we're on the way out of it.

thanks for taking your time to read xxx:)

ViolaLass

What are the interest rates on the unsecured loan and your mortgage?

herewegoagain2010

Hi Need2

I know what you mean about the diary thing. I started with a DFW one and then a MFW one. I use them as a motivational tool for me to keep me on track and as a reminder why i'm scripping and saving lol! Try and do a SOA on the DFW forum to see where your money goes and get rid of your highest interest charging debt first. I;d say get rid of the loan every time. It's a great feeling when the debts are gone and you can use that money on the mortgage. Coming here means you've made a great start and you're planning for the future. Good luck x

needtopaymydebts

Thanks for your comments and advice,
the interest rates are the same at 4.78% for each bit.

I don't think we can save much more as we've cut back on a lot of things since we really came to terms with the mess we're in. I'm sure there probably are some areas that we could make cuts in so i'll maybe post up an SOA for some advice on where to save next. I have had a look at out balance now and t the same time last year and i'm so proud of how much we've actually been able to pay back. I would just love to be able to do it even quicker. I would dearly love to move to a bigger property but, after everything we've learned here, i think we'll be in our little house for a few years yet. I am determined that when we do move we will have saved a decent deposit to put on a new home.

one year ago it looked like this!
mortgage around £96500 / now £94,000
secured loan around £19000 / now £12000
unsecured loan around £11500 / now £11200

the car finance stands at around £4500 but at the moment i'm hoping i'm doing the right thing in paying the mortgage down as the rates on this can change where as the car payments will stay the same.

As long as the interest rates stay equal on each part of the mortgage i think we may be best to obviously clear the secured loan first then pay down the unsecured loan leaving us with just the actual mortgage to work towards

so a total reduction of £9800 in a year

wynnvegas

Hi Need2,

Firstly, massive congratulations on identifying the hole you were in and then managing to pay your way out of it. It's not an easy journey but you're on the home straight with it now and that must feel brilliant. How much negative equity do you think you're in at the moment? Obviously, a lot of things will depend on how long you're happy to or able to stay in your current house but it seems like you have a good handle on your situation and the best thing to do. There's no point thinking about taking the risk of interest rates rising when you have a guaranteed loan amount outstanding on the car. I hope interest rates stay low for you for the next year at least (I'm sure they will) to allow you to make the easy decision to keep battering away at the various bits of your mortgage.

As for doing a diary, the secret is to make it for you and you alone. Sometimes you'll witter away like an idiot and sometimes the most incidental thing will strike a chord with someone else and become very motivational. Whether or not you get the explicit support or raft of comments is by the by - do it for you and you'll gain a wee following to cheer you along to mortgage freedom!!

Cheers,

Billy

LilacPixie

Need2

congratulations on joining us. Seriously do a diary, it is good to keep you sane and for looking back on in months/years to come and see how much you have acheived. Currently, and since easter TBH the theme of my MF thread is actually increasing liabilities as I'm looking to move and increase mortgage plus OH 'fessed up to a large amount of debt so eeek.

Your car finance, what is the APR on the car finance, can you overpay or do you need to save for a full and final settlement. What about the secured and unsecured parts of mortgage/loans? APR's all the same and no penalties for overpaying? Does the unsecured parts intrest rate rocket when secured part is paid off?

You are from the DFW board so you will be familiar with the snowball calculator on the whats the cost website, i would put all the details in there and see what happens. TBH I think IR are not moving for at lease 9-12 months and i'm basing my stratagy on that so we will see.

needtopaymydebts

well, properties similar to ours are up for sale for around £105,000 but i doubt whether they're actually selling for this, one has sold recently but no idea how much it's gone for as it's not showing on any of the house price sites just yet. I think we need to get the total amount down to below £100,000 before we even think about moving anywhere, fingers crossed by that stage house prices might be a little more settled, the house was up for sale a few years back for so much more, with an offer of £118,000!

we're running out of space in this home, we originally bought it as a first place for the two of us with no intention of ever having children here, by next summer there's going to be the two of us and two little ones! but we made our choices so will have to stay put until we can clear the negative equity at least. Once that's done we'll be in a position to sit back and make some big decisions.

it's just so strange that the more we pay the quicker it reduces, so obviously it's going to take a while to make a bigger dent into the mortgage but once we get out of negative equity every penny will be more towards the deposit on our proper family home and i'll really feel like we're getting somewhere.

fingers crossed interest rates go nowhere for a year and maybe a little win on the lottery or the premium bonds!

SmlSave

Welcome to MFW needto

I look forward to reading your diary

needtopaymydebts

"Your car finance, what is the APR on the car finance, can you overpay or do you need to save for a full and final settlement. What about the secured and unsecured parts of mortgage/loans? APR's all the same and no penalties for overpaying? Does the unsecured parts intrest rate rocket when secured part is paid off? "

Thank you. I'm not sure what the APR is on the car finance, we can't overpay though and would need to save the full amount to clear it off early. I just can't bring myself to 'save' the money up then pay this off when i know it could have already been paid to the mortgage. If we are lucky enough to get our hands on enough to clear the car in one payment, through bonus or some other way then we would probably aim to pay this off as it would give us around £140 extra that we could pay as a regular payment to the mortgage!

Yes, all parts of the loan are the same APR, just had a look at the last statement and yes if we clear the secured bits then the rate on the unsecured would increase. Once we clear the additional secured loan, then the unsecured bit is going to be by far the smallest amount so we'd see quicker results paying this down next. There's officially 25 yrs left on the mortgage and unsecured loan and 24 years left on the secured loan, not taking much notice of these for now though as i don't still intend to be paying them in 24 yrs time!

tootallulah

Hi, I am looking forward to reading your diary. I agree the thing to do is do it for you, warts and all. I decided to increase my mortgage and get my house up to standard so I will have added £20k to my mortgage whilst trying to be mfw! I am hopeless at budgeting, have no financial control buttons but I find the diary has helped me enormously and whilst I am still rubbish at frugality I'm better than I was before- it' s a learning curve. I am looking for inspiration from January when serious paying starts, your diary will be on my list.

Secret_Saving_Squirrel

Good luck, I will be cheering you on,

Squirrel