MFW - Newbie, advice/comments!

gnimia

Hi all,
I moved into my first home at the end of July, and am starting to think about overpayments on the mortgage, but i have a few questions i was hoping you knowledgable folk could help with! It

- Mortgage is 140k over 25 years, fixed for 4, at 4,84% plenty of equity.
- I have about £500 "spare" per month, and was wondering if there was a split people used to go into savings/overpaymnets, bearing in mind I will need savings in 2/3 years for improvements to the place, plus emergencies etc. I'm used to whacking every spare penny into savings...
- I seem to recall my MA saying i could overpay upto 1k per month, but the NW caluculator says £500 max... will have to check my papers I think
- Whats the easiest way to set up regular overpaymetns - this is probably the most basic question ever!:rotfl:
thanks in advance! Friendly thoughts/opinions welcome

gratefulforhelp_2

Welcome and good luck! Each bank/BS is different, they may be able to set your direct debit to a different, higher, value monthly - or like mine you may have to set up a separate standing order. If you have internet banking you may be able to do it yourself, so give them a call/email and ask them.

Can you get overpayments back? If not, you will need to be a little circumspect about overpaying too much and leaving yourself short.

Maybe have a 4 year target for overpayments to get your LTV into good shape for when you remortgage, unless it is below 60% already?

drewwa

Make sure you have 3-6 months 'living costs' stashed away in an instant access account first, just in case the worst happens.

If you've done that, check with your bank as to whether you can retrieve the overpayments if you need to. (Some will, some wont and some will take some time to give you back the money).

Then work out what you want to achieve by overpaying. Clear mortgage asap? Reduce term by set number of years? Lower LTV for a better rate for re-mortgaging/moving house?

Once you've done that we can help you work out by how much you would need to overpay, and then you can balance that against how much disposable income you want for holidays etc...

Cheers,

Drew.

gnimia

Thanks people - food for thought. Its very helpful to have things set out a bit - I'm single so dont have a partner to mull stuff like this over with! (Although from experience, guess it works both ways!)
I'll have another good look over the papers this weekend, will start plotting a course. I think a basic goal could be MF by the time i'm 40 - 11 years :eek: which would average 200 extra pm, but thats pretty long term, and not sure how sustainable.
Need to get some more spreadsheets going! I heart spreadsheets!

gratefulforhelp_2

Its only an advantage in MFW to have a partner if your partner is on board!! Maybe you should do like we are supposed to do with our careers and have a 2/5/10 year plan?

Imelda

Hi and welcome!

I would definitely echo the above comments and recommend having some savings in reserve in case the unforeseen happens, especially as you are doing it alone.

That said, I would find out from your mortgage provider whether you can make little and often payments. I could with my last mortgage and I loved paying just £1 or £2 here and there (to round my account down to the nearest £10) I think even little amounts make a difference

Good luck!

gnimia

Thanks again everyone!
Well - i have no officially made 2 overpayments... a total of £300! Gotta start somewhere £150 pm is now set up as a standing order, so testing that out for a more few months. Although already thinking of upping this a bit... hmmm

Been working through some of the very useful speadsheets, and am more than a little bit frustrated that even if I was able to do the maximum overpayment allowed (£500pm) i'd miss the 40th birthday target by 16 months... The mroe reasonable 250pm misses it by over 5 years... although 45 isnt such an inspring number somehow!

I suspect i'll be able to manage £more (maybe even over £500!) some months - ie when council tax isnt due, so I'm going to make a spreadsheet (:j) to log each OP, and how much it should be so i dont go over the limit, but pay the maximum i can get away with.

Very useful board - great to see people's ideas and challenges -thanks again!

gnimia

Have just realised that I've been overpaying for almost exactly a year!
I've put in an extra £3,671 over that time, and the OP dd is currently £400 with the odd extra going in from cashback payments etc. Can't go over £500 due to ERC so this feels safe (!)

According to my lovely spreadsheet, this has already knocked 14 months off the full term - not bad for 12 months of extras!

I used one of the speadsheets recommended, but have hacked at it a little (not a lot, my maths/excel skills arent that great!)

But the nicest thing i've added is the milestones - 1/4 mortgage paid, gnimia is 40, 1/4 left to pay etc. Ive tried to add in one per year, although some feel a bit made up so fill in the gaps... Still two years off any of them, the first is first 20k paid. But i'll get there.

One question- how do people accomodate what will happen to their payments after their fixed rate ends.
I'd like to do some extra scenario planning for this and was wondering what figures people used. Ie, mortgage co's svr - but what else?

The first of the big projects on teh house is due to start before xmas too, so thats very good indeed