MFW in 10 year plan -Year 1 update

karom

Hello

Wanted to share with you our experience. We have a £130,000 mortgage fixed rate at 4.39 for 2 years with 10% overpayment allowed per year.

Quick calculation based on 4.39 and 25 years shows interest total of £84,400 to be paid :eek:

Overpaying by 10% a year shows a total interest of £28,645 and reduction of the term to 10 years.

We have therefore decided to bite the bullet and overpay the 10%. We are lucky to have savings and keep our emergency funds. There is always the thought (why don't we just spend the money on something fun) but the idea of being mortgage free and seeing the amount decreased do help.

Overpayment is going through this month for this year. Challenge now is to build up the overpayment for next year (£11,000)!

newgirly

Wow, thats a big OP well done !

LilacPixie

It's nice to have a plan. What do you plan to do?? pay monthly or save it somewhere and make larger one off payments?

karom

Hi I plan to make one or several large one off payment(s). I find it easier to manage and found it more satisfying to receive the letter that shows a big jump in the term reduction. For this year I decided upon taking out from NS&I and ISA to put into the mortgage as the interest rate is worth it and this was saving but not emergency funds.

LilacPixie

Personally I was struggling to find a savings account with a better rate than my mortgage but if you can then its great. If the net AER on savings is more than savings I would be paying over once a year just before the cut off point for your year.

karom

Ok the overpayment is now complete, took several days as I wanted to do it by card over the phone and every time check that i t was all applied correctly.

And the result is ..... Term decreased by 4 years and 2 months, remaining 19 years 11 months from 24 years 1 month

Jock_Tight

Thats a nice reduction in the mortgage term, well done

karom

Update - 10% paid for 2012. Down to 13 years 9 months and 83,900~
Cut nearly 10 years on the mortgage so far. Worth it seeing the amount decrease. Very satisfying.

karom

Just found this one in my thread. It is done. Well thanks to new job over the years and priority versus car and holidays. Just in time to start again. Feels good while it lasted but interesting as I feel that since we have achieved it once we can do it again