mychoice home buy ownership

thriftychap_2

I purchased a 2 bed flat in march 2008 for 109,500, original price 142,950. I have a 58k mortgage (60%) with the coop at 296 per month, i over pay to round it up to 350. The other 40% is the usual nothing to pay for 5 years, 1.75% after this and 3.75 from 11 to 25 years.

Im pretty good with money and have a surplus 900 pounds a month, i currently save 700 of this. My OH (we are getting married next year) is qualifying as a nurse in feb and has a job lined up, she will earn about 1200 take home. This means we will be able to save about 1300 per month.

Im pretty good with money and have decided the best thing for our future is too pay the 40% (43k at the value i paid) as back as quickly as possible (staircassing or 1 lump sum) we would love to move into a 3 bed house with garage and garden etc but we want to be able to keep the flat with a buy to let mortgage and then move so its paying for itself.

What i am not sure about is the best way of going about saving the 43k in as little time as possible. ISA? Bonds? Im aware i could rent out the flat with a LTV of less than 60%, i have seen mortgages for 80% so this is an option too.

Any advice would be greatly appreciated. I am sure i have not been vey clear so im sorry about that.
Thanks.

abouttimetoo

Hi Thriftychap, welcome to the board:hello:

I'm afraid I don't have the answers to your questions but I'm sure lots of others will be along soon with their thoughts.

In the meantime, just a few other questions/thoughts from me

• what is the interest rate on your main mortage (58k) and what type is it, fixed, variable etc?
• do you have any other debts, loans cards etc and are they a higher interest rate than your mortgage?
• do you have some emergency savings?
• is the wedding all paid for or do you still need to factor that into your plans?
• as well as thinking about using your 'spare' money to save/overpay have you looked at what you can do to increase income e.g. moneyback sites such as Topcashback and Quidco etc and using credit cards to pay for everything to then get rewards for it
• what sort of savings account are you using to save your £700 per month and what is the interest % you are receiving?

Oops, sorry, lots of questions, I think that's enough for now

I look forward to reading about your progress

thriftychap_2

Hi, Thanks for the prompt reply, ill try and answer the questions.

• Interest rate on mortgage is 2.49 untill April 2012
• No other debts except student loans, oh and 0% sofa and bed.
• I did have emergency funds of 5k but i just paid the balance of a car loan so this is now only £1400 inc this months £700
• Much of the wedding is being paid for, we need to find about 6k in total, of this we have paid about 1k already.
• I have considered a cash back/points credit cars but i hate the things so am loathed to go down that potentially dark route. I have registered as a mystery shopper.
• My savings are just in a standard saver, poor interest of 1% at the moment which i need to adresss but not sure what the best way forward is.

I like the fact i over pay the mortgage but maybe i would be better off saving this?

Also i am more than happy to tell everybody how well this government scheme is working out for me, they have very bad reputations but i believe if you are financially astute they can work strongly in your favour, something i am keen to exploit!!

abouttimetoo

Hi again

Thanks for all those answers lol, it might have been easier if I'd just asked you if you had any other debts at higher interest rates than your mortgage.

Regarding whether to save or overpay the mortgage, I think this is a very personal decision with no right or wrong but something you need to be comfortable with; you will see many people on the board who always save the money if they can get a better savings interest rate than their mortgage is being charged at (don't forget to knock the tax of when you consider rates) and they also like the security of knowing they can access this lump sum if needs be rahter than perhaps not having access once it's repaid off the mortgage. I say perhaps because there are several different things that can happen to your overpayments so you will need to check you own terms and conditions, some examples of what different mortgage providers do with your mortgage overpayments are

• once the overpayment goes to the mortgage there is no getting it back
• allow you to reclaim all the overpayments back if you need to
• allow you a percentage of your overpayments back
• not allow you the overpayments back BUT instead allow you to stop your 'normal' monthly repayments until the overpayment total is used up to make you where you would have been had you not done it (hope that makes sense and this is the T&C's that my own mortgage is on

Other people like/prefer to see the mortgage balance reducing even if they can get a better savings rate as there is satisfaction of seeing the balance reduce plus no temptation to dip into the money if they had saved it. This last was my preferred option for the first two years but now I'm doing a mixture of overpaying and saving.

Re your 1% interest rate, you really must do something about that. I'm no expert but off the top of my head Lloyds do a Vantage account with 4% gross on balances between 5-7k (must pay in £1000 a month), this account sometimes flies under the radar of savings comparison sites as it is a currrent account not savings so doesn't get picked up. They've also just started another with 5% on max of £250 saved monthly. On a different thread I've also just noticed the posted say, "I've opened this year's ISA today with Nationwide on their Christmas Loyalty 3-year fix at 4.5%" so that might be something else to consider.

Other things you might want to look at are how is your interest charged? Daily interest is best but there are still some companies who apply it monthly or even annually so this might influence your choices.

Re credit cards, I know they can be a slippery slope but you sound quite focussed and don't forget you can set the direct debit to pay of monthly minimums or maximums if needs be. A scenario some people would do (using your own situation) is - get a 12 month 0% spending, put all wedding expenditure on it, then instead of paying off monthly you put that money into savings thereby earning interest on it for whateve the interest period is then at the end of the term pay it off with your savings and you've made a bit of interest to boot.

Re Topcashback and Quidco, I'm a mere novice at it but have made about £300 in a year and some people get much bigger amounts so whatever you are going to buy be it for the home, car/home insurance whatever make sure you run it by one of the cashback sites first,

Don't forget to check in with the other forums re savings, current accounts and credit cards.

By the way, thanks for your offer of information on the government scheme, as this is a subject that comes up fairly regularly and you are right - normally in a poor light so it will be good to hear the other side of the coin

Regards
ATT

thriftychap_2

Once again thanks for the advice, especially the wedding payment with a credit card, ill look into this. Im also looking at the nationwide ISA as i type.

I do like knowing my mortage is reducing, if only by a little so ill leave the small overpayment as it is.

I still need to establish the best way to pay the remianing 40%, maybe an ISA is the way to go.

getmore4less

thriftychap wrote: »

I purchased a 2 bed flat in march 2008 for 109,500, original price 142,950. I have a 58k mortgage (60%) with the coop at 296 per month, i over pay to round it up to 350. The other 40% is the usual nothing to pay for 5 years, 1.75% after this and 3.75 from 11 to 25 years.

Im pretty good with money and have a surplus 900 pounds a month, i currently save 700 of this. My OH (we are getting married next year) is qualifying as a nurse in feb and has a job lined up, she will earn about 1200 take home. This means we will be able to save about 1300 per month.

Im pretty good with money and have decided the best thing for our future is too pay the 40% (43k at the value i paid) as back as quickly as possible (staircassing or 1 lump sum) we would love to move into a 3 bed house with garage and garden etc but we want to be able to keep the flat with a buy to let mortgage and then move so its paying for itself.

What i am not sure about is the best way of going about saving the 43k in as little time as possible. ISA? Bonds? Im aware i could rent out the flat with a LTV of less than 60%, i have seen mortgages for 80% so this is an option too.

Any advice would be greatly appreciated. I am sure i have not been vey clear so im sorry about that.
Thanks.

If you want to let the place out check the terms of the shared ownership that you can actualy do this.

If you want to buy another place you will need a deposit how much is this going to be?

For the first 10 years you have £40k on no/low rates so no point in paying that off unless prices start rising and that share goes with them increasing the amount you have to pay.


Whats your mortgage rate?

thriftychap_2

to rent it out i need to purchase the 40%, hence saving and remortgaging in a couple of years.

We would aim to save as much deposit as possible, we plan on moving in with in laws for 6 months, should be able to save 15K in that time, plus whatever other savings we have left after remortgaging. Its all very complicated but it will work but maybe not in my desired time frame, realistically it will take 5 years, the discussion has made me realise this.