Would like to become MF- any tips/ advice welcome

Money777

Hi I brought my first house in July 2007 for £230 000. My original mortgage was for £207 000 for 30 years. In 2009 I was one of the lucky people who had my mortgage with Advantage and was offered £35 000 to move my mortgage to somewhere else. :beer:
So I moved to Santander in 2009 with a mortgage of £170 000. Rate is 5.99% ( I know its not the best but to get the 35k I had a very short time to move) and was over 27yrs 9months. Paying £1050 per month.

I have just asked to make £500 a month in overpayments and this has reduced it to 13years! :j

This is my soa:

My SOA
Household Information
Number of adults in household........... Me + 2 lodgers
Number of children in household......... 0
Number of cars owned.................... 1
Monthly Income Details
Monthly income after tax................ 2030 (altho may drop by 300 next year if I drop some hours at work for uni work)
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ Lodgers £880
overtime............................about 75
Total monthly income.................... £2985

Monthly Expense Details
Mortgage................................ 1050 - not including OP
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 150
Electricity............................. 22.50
Gas..................................... 22.50
Oil..................................... 0
Water rates............................. 17
Telephone (land line)...................
Mobile phone............................ 30
TV Licence.............................. 12
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 40 ( have all meals incl @work:))
Clothing................................ 50
Petrol/diesel........................... 50
Road tax................................ 17
Car Insurance........................... 39
Car maintenance (including MOT).........10
Car parking............................. 5
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 30 lenses
Pet insurance/vet bills................. £25 (altho just had bill for 3k that wasnt covered!!:eek:- paid from savings)
Buildings insurance..................... 27.50 buildings and contents
Contents insurance......................
Life assurance .........................
Other insurance.........................
Presents (birthday, christmas etc)...... 20
Haircuts................................ 12
Entertainment........................... 100
Holiday................................. 50
Emergency fund.......................... 500- savings
Total monthly expenses.................. £2279.50

Assets
Cash.................................... 3 000
House value (Gross)..................... 230 000
Shares and bonds........................ 0
Car(s).................................. 3000
Other assets............................ 0
Total Assets............................ 236 000

Secured & HP Debts
Description....................Debt......Monthly.. .APR
Mortgage...................... 168 000...(1050)......5.99%

Total secured & HP debts...... 168 000....-.........-

Unsecured Debts
Description....................Debt......Monthly.. .APR
Total unsecured debts..........0


So do people think I'm best Over paying £500 (cutting mortgage to 13years) and putting £500 in savings? I'm allowed to overpay by 10% each year. If I payed £12000 a year in overpayments how long would my mortgage be? What would you do in my situation?

Thanks everyone,

Jennie

getmore4less

OK lets start with the lodger income.

Other income............................ Lodgers £880


That exceeds the rentaroom(£4,250) so is this before or after the tax?

getmore4less

Coments on the SOA

Electricity............................. 22.50
Gas..................................... 22.50

These look a little bit on the low side, is this a well insultated house?

Mobile phone............................ 30

Review, you can gte much cheaper than this

No land line or internet?

Groceries etc. ......................... 40 ( have all meals incl @work:))

Will you still get these if you drop hours?

Petrol/diesel........................... 50 ( £600 )
Road tax................................ 17 ( £204)
Car Insurance........................... 39 ( £468 )
Car maintenance (including MOT).........10 ( £120 seems low)
Car parking............................. 5
Other travel............................ 0
Car(s).................................. 3000

What car do you have(and age) what mpg do you get/what sort do you need, what sort of mileage do you do?

Maintanence looks low.

I think you could save some money here on tax and posibly insurance

You also need to put in a line for replacement car


Medical (prescriptions, dentist etc).... 30 lenses

Could you use glasses some of the time to save money here?


Pet insurance/vet bills................. £25 (altho just had bill for 3k that wasnt covered!!:eek:- paid from savings)

Check what else might not be covered and start a seperate line for self insurance.


Total monthly income.................... £2985
Total monthly expenses................. £2279.50

So £700 spare Is it realy that much every month?

mortgage of £170 000. Rate is 5.99%
So house worth around £230k thats a LTV of around 75%

you should be able to get a much better deal than this.

What the deal and the terms of any ERC?
Whats the followon rate after any promo period?

Looking at the actual questions
Current deal £170k @5.99
£1055pm 328 months 27y 4months
£1555pm 159 months 13y 3months
£2055pm 107 months 8y 11months

Problem is you need a bigger emergency fund so canot realy put all the money into the mortgage yet.

What is the gross salary is it enough for other lenders to consider you for £170k

Money777

Thank you for the reply. In answer to the questions...

Coments on the SOA

Electricity............................. 22.50
Gas..................................... 22.50

These look a little bit on the low side, is this a well insultated house? No badly insulated actually but I work long hours and so do my lodgers so no one is actually in the house a lot... they both go to stay with friends/family most weekends are are often away with work for weeks at a time.

Mobile phone............................ 30

Review, you can gte much cheaper than this cheapest i could find for htc which i want. its actually 25 a month but i usually manage to go over by calling 0800 or 0845 numbers- usually insurance comps.

No land line or internet? Yes i do but my lovely mum and dad pay for that and they also joined me up to a breakdown cover for the car that will pay for quite a few repairs- hence low estimate for car repairs.

Groceries etc. ......................... 40 ( have all meals incl @work:))

Will you still get these if you drop hours? I will loose one meal

Petrol/diesel........................... 50 ( £600 )
Road tax................................ 17 ( £204)
Car Insurance........................... 39 ( £468 )
Car maintenance (including MOT).........10 ( £120 seems low)
Car parking............................. 5
Other travel............................ 0
Car(s).................................. 3000

What car do you have(and age) what mpg do you get/what sort do you need, what sort of mileage do you do? Afraid I don't know much about cars. Its a Y reg ford focus. Don't know how many mpg but it takes about £50 to fill up- unleaded (don't know if its possible to work out from that?!!!) Probably do 50 or 60 miles a week I would guess.

Maintanence looks low.

I think you could save some money here on tax and posibly insurance Apparently the engine is bad for co2 emmisions so high road tax ( would get a greener car if I could afford to)
I really shop round for insurance but always fairly high due to being a young driver so this year I am 25 so should be better.

You also need to put in a line for replacement car


Medical (prescriptions, dentist etc).... 30 lenses

Could you use glasses some of the time to save money here?
I have tried but just cant get on with glasses!

Pet insurance/vet bills................. £25 (altho just had bill for 3k that wasnt covered!!:eek:- paid from savings)

Check what else might not be covered and start a seperate line for self insurance. Good idea to start seperate fund but hoping this is the last major prob- poor girl has had 3 major ops! They are usually very good at paying and pay for all her ongoing meds but this latest op was related to another so they didnt pay.


Total monthly income.................... £2985
Total monthly expenses................. £2279.50

So £700 spare Is it realy that much every month? Yes unless I go on a shopping spree which I'm trying to contol!!:o

mortgage of £170 000. Rate is 5.99%
So house worth around £230k thats a LTV of around 75% On the new valuation that was done for new mortgage they put house value down as 200000 due to house prices falling. However I've had a valuation done (by estate agent) and I know they give you best outcome- but they said I would get 230k still as I have made lots of improvements to the house. Don't know if that makes a difference?

you should be able to get a much better deal than this. Mortgage is fixed rate until Oct 2012- that means I can't change until then doesn't it?

What the deal and the terms of any ERC? I can overpay by 10% of the capital each year
Whats the followon rate after any promo period? After fixed rate until oct '12 it will be variable rate currently 4.24%

Looking at the actual questions
Current deal £170k @5.99
£1055pm 328 months 27y 4months
£1555pm 159 months 13y 3months
£2055pm 107 months 8y 11months

Thanks for that.

Problem is you need a bigger emergency fund so canot realy put all the money into the mortgage yet. I was thinking the 500 a month I put into savings could pay a chunk off mortgage at end of year if I haven't used it ( leave a bit obviously)

What is the gross salary is it enough for other lenders to consider you for £170k If I drop hours which I prob will it will be £27 356. If I don't it will be £33 008- However by the time 2012 comes I could up hours again so it could be second if it made a difference (infact could up hours more if needed). Trouble is would that be enough for me on my own to get accepted? Most don't seem to accept lodgers as income.


Oh and the lodger income is after tax.

Thank you for your help :beer:

Jennie

dimbo61

I think £500 a month OP is £6K a year but thats still a very good overpayment and at 5.99% you wont get better in savings

getmore4less

You can change deals BUT
salary multiple is going to be on the high side and the valuations may not give you 75% LTV so changing may not be so easy and an early repayment fee will make it even harder to break even short term.


With £1300 surplus then once the emergency fund is at a reasonable level, I would go for 6months expences incase of loss of income, thne you can throw the full £1300pm at the mortgage up to the limits.

If you need to use some of the fund you can top it up quite quickly by stopping the ovepayments.

Got to go out now so will review the car stuff later.

Money777

Thank you for those replies.

So are you saying I can move when in a 3 year fixed but would have to pay erc so wouldn't be worth it?

getmore4less

Money777 wrote: »

Thank you for those replies.

So are you saying I can move when in a 3 year fixed but would have to pay erc so wouldn't be worth it?

Possibly would need the full set of numbers to clarify. Whats the ERC?

But even then the £33k income £170k mortgage is a 5* income multiple so not too hot.
Even with the £12k(gross) rental still 3.7* multiple and not all lenders take that into account..

getmore4less

Back to the car.

No land line or internet? Yes i do but my lovely mum and dad pay for that and they also joined me up to a breakdown cover for the car that will pay for quite a few repairs- hence low estimate for car repairs.
Petrol/diesel........................... 50 ( £600 )
Road tax................................ 17 ( £204)
Car Insurance........................... 39 ( £468 )
Car maintenance (including MOT).........10 ( £120 seems low)
Car parking............................. 5
Other travel............................ 0
Car(s).................................. 3000

What car do you have(and age) what mpg do you get/what sort do you need, what sort of mileage do you do? Afraid I don't know much about cars. Its a Y reg ford focus. Don't know how many mpg but it takes about £50 to fill up- unleaded (don't know if its possible to work out from that?!!!) Probably do 50 or 60 miles a week I would guess.

Maintanence looks low.

I think you could save some money here on tax and posibly insurance Apparently the engine is bad for co2 emmisions so high road tax ( would get a greener car if I could afford to)
I really shop round for insurance but always fairly high due to being a young driver so this year I am 25 so should be better.

You also need to put in a line for replacement car

Lets start with the afford it bit, you have £1300pm surpus so you can afford a different car afer just a few months and will have to at some point the y reg focus wont last for ever.

The choise is is it worth changing now or not.

My feeling is that to change before you need to won't be worth it because the car has little value so low depreciation and as long as it is cheap to fix and you do low mileage the total cost to change will not have a good payback time.

Concern is about this breakdown cover, is that an insurance backed extended warenty or just break down cover to get you home and to a garage.

Neither of these will cover normal stuff and even the insurance backed warrenty will not cover much, the latter breakdown cover nothing in parts and only roadside labour to get you going or to a garrage/home. Some breakdown policies have age limits so be carefull your car is coming up to 10years old.

Need more detils on the acual model and engine but £3k sounds a lot for the value. UNless there is something special I think we are down under £2k and probably closer to £1k and less to trade in.

If it is a good un then it can be worth keeping till the costs actualy start rising.
History and what has been done recently will be the decider on what to budget for.

If we say £5000 miles a year then if you are lucky you can take a risk on reduced servicing as long as you keep the other stuff good.
Cheap basic service every 10k/2y £100 so £50py,

Tires, brakes, exhaust what do they look like with the mileage I would budget for a 5year cycle so around £80py (tyres £50each, brakes allround £100 exhaust £100.

when is the cambelt due?

I think £120py is on the low side £50 of that is gone on MOT test fee.
I would double it for now and see how the car goes on costs if good this year then look at reduction next year( or get someone to have a look and estimate when things might need doing)

Is the tax £205 pre march 01 or is it £200 and an I tax band?

looking at you basic figure say 200miles per month and £50 and £115ltr thats below 25mpg I think you need to do some more accurate numbers this is way off where it should be and might indicate a problem or lots of town/short trips.

As a start I band suggests a 1.8 petrol so should get 36/37mpg
http://www.parkers.co.uk/cars/specs/summary.aspx?model=269&page=3

Looking at alternatives we run 1.5clio diesel and get 60+mpg and £30tax 2years servicing we have done anout the same mileage as you probably around £300-£350 a year cheaper to run.

Then there are the insurance difference if it is a 1.8 focus they are quite a high group compared to a lot of alternatives.

So something to look out for on the next change total costs over expected life.

So what to budget for the next car, think about what you might like and when you think this focus will give up then estimate the monthly saving.
I would think around a minimum of £50pm allthough a £100 might be more realistic to be sure of having enough in the pot.

Money777

Wow thank you for that in depth reply. The car is a focus saloon, 1.6 ghia. Its also an automatic. I really like the car and its in very good condition so think it should stay for bit longer. I think I paid £4.5k for it about 5 years ago so you are prob right on the value.

In the last 6months I have had new cam belt, brakes replaced, bearings (?), 4 new tyres and something else quite major (can't remember what it was or what it was called) so think I will wait until something major goes wrong then just get new car (used). I prob should have got rid of it instead of fixng all those things looking at it now! I know I can afford a new car but just mean I'd rather just pay off mortgage as I dont really care what car I have.

Yes nearly all my journeys are 5/10 min ones- can't really walk because they are mostly to and from work (in the dark and not getting up earlier than I do now!)

The cover is 'breakdown repair cover'. I don't have my car serviced- don't know if I should?! Unless is that something they do at mot?!

With regard to tax. I'm afraid I don't know anything about it really. I think its actually 210 a year?

Maybe I should just sell the car now while it has a little value and nothing wrong with it and get something more economical?! Thing is I really like driving an automatic but its hard to find a second hand car I like that is automatic. Are they less economical than manual? Also is it really going to make a big saving on running costs to get a new car? Also I just scratched the side of the car on a brick wall (1st time!! :mad:) so I'd have to get that fixed before selling.

Thank you

Money777

Suspension/springs was the other thing- just looked it up. Also the tax is £215 a year. Also think its 1.6 but it doesn't seem to say that anywhere.