My Mortgage Free Challenge - An update

crocc

Good Evening All,

I thought as new year is fast approaching and over Christmas I seem to have lived off a diet of Turkey Sandwiches and mince pies its time to have a review of my year.

My (small amount) of previous mortgage free challenge posts can be found here:

https://forums.moneysavingexpert.com/discussion/2191757

Its been a great year the good news is that I managed to keep my mortgage overpayments going at £499 per month (the maximum I'm allowed without incurring penalties) for the full year, meaning that I have paid £5988 off my mortgage. I have to admit that some months were easier than others to pay off!

Outside of my mortgage the card card debts have continue to increase... I decided that I needed to live a little too. So I took a 2 week holiday to Japan – something which I have wanted to do since I was 17. The holiday was fantastic it was such a great experience. I also brought a new apple mac laptop which I admit I didnt really need but I wanted one for ages and finally I had a weekend away just before xmas.

As a result the credit cards are now:
Card 1: £3718
Card 2: £1367
Card 3: £600
Total: £5686

I admit that the year has been one of heavy expense which I am not going to be repeating again in 2011.

The one piece of negative news is that I mentioned my job is likely to come to an end in November 2011. I was given a very clear indication on my last working day before Christmas that my job would come to an end. I decided that I wasnt going to let this spoil my Christmas, but I realise that plans for 2011 and beyond are needed.

This year I want to:

• Reduce my credit card debt to £2,500
• Overpay my mortgage by £3,000
• My 2 year 4.19% (£423 p/m) fixed rate mortgage comes to an end in May 2011, so want to get a better deal, for another 2 years.
• Fully top up my 2011/2012 ISA.

I have a large amount of savings which I can use to pay my debts off if I cant manage to find a job quickly. One thing I am thinking of is getting a 0% balance transfer interest card for 15 -16 months a couple of months before I am made redundant.

I can also continue to pay my mortgage off for a couple of years if needed too. So its not all bad news – although I havent told my parents the news about my job yet I dont want to worry them.

crocc

dimbo61

If it was me I would spend the next couple of months clearing the CC debt before applying to other lenders for a new fixed rate deal of 3/5 years ( do you plan on staying in the property long term!)Good luck on the job hunting front start looking now ( will you get a redundancy pay off)

getmore4less

I have a large amount of savings which I can use to pay my debts off if I cant manage to find a job quickly. One thing I am thinking of is getting a 0% balance transfer interest card for 15 -16 months a couple of months before I am made redundant.


I would go for a long term 0% purchase cards there are no fees and use your cash to pay off the CC that have interest to avoid the BT fees, 3% saving.


If looking at no job I would also put on the plan cutbacks of all non essentials that have monthly outlays to build up cash reserves and reduce the drain on them in the future.
If you get another job then the spends can go back if you found you missed them.

RosieTiger

Would you not be better off paying to get rid of the credit card debt rather than over paying your mortgage?

oldestgnome

Regardless of how much you have in savings, with the potential of losing your income surely it would make more sense to pay off the credit cards to get the best possible remortgage rate?

crocc

Hi dimbo61,

Thanks for your message. I am looking to cut the credit card debt down. I nipped into my bank and paid some Christmas money in the other day and was offered a personal loan to pay my credit card off. I have booked an appointment to have a chat with them, although I think a loan wont give the flexibility in monthly payments I need.

As regards redundancy payment, thanks for mentioning this. The company I used to work for was bought out 2 years ago and we had to sign new t&c's. For this to happen we were all given our 3 months notice and then told to sign new contracts - else we would be out of a job. I'm wondering if my continuous employment status was signed away as part of this.

If not then I will get 7 years worth of redundancy payments which I think are 7 weeks pay. If not 2 weeks pay.

crocc

dimbo61 wrote: »

If it was me I would spend the next couple of months clearing the CC debt before applying to other lenders for a new fixed rate deal of 3/5 years ( do you plan on staying in the property long term!)Good luck on the job hunting front start looking now ( will you get a redundancy pay off)

crocc

Hi getmore4less,

I am planning a major review of my outgoings in the next couple of weeks. I dont believe that there is a lot to cut due to the fact that I have been o/p my mortgage by £500 per month.

However I guess it doesnt do any harm in having another look.

Thanks for the idea of the cc I havent consider that way of doing it.

crocc

I would go for a long term 0% purchase cards there are no fees and use your cash to pay off the CC that have interest to avoid the BT fees, 3% saving.


If looking at no job I would also put on the plan cutbacks of all non essentials that have monthly outlays to build up cash reserves and reduce the drain on them in the future.
If you get another job then the spends can go back if you found you missed them.

crocc

Hi RosieTiger,

This is what I am beginning to think. I was thinking of getting the cc debt down considerably (over £1,500) by the time my mortgage is up for renewal in May.

However I also want to make sure that I have made enough o/p's so that I can reduce the LBV so that I can get the best rate.

Its difficult as I think that my cc debt may go against me getting a better mortgage deal.

crocc

RosieTiger wrote: »

Would you not be better off paying to get rid of the credit card debt rather than over paying your mortgage?

crocc

Hi all,

I thought as Christmas (dare I say it!) is not far if it was a ideal time to look back on my targets for the year and achievements to date.

Back in Dec I said:

• Reduce my credit card debt to £2,500
• Overpay my mortgage by £3,000
• My 2 year 4.19% (£423 p/m) fixed rate mortgage comes to an end in May 2011, so want to get a better deal, for another 2 years.
• Fully top up my 2011/2012 ISA.

This is how I have done.

Credit Cards:

Back in December they were:
Card 1: £3718
Card 2: £1367
Card 3: £600
Total: £5686

Now they are:
Card 1: £947
Card 2: £857
Card 3: £3210 (0% until end of Nov)
Total: £5014

On the face of it, this doesn't look too good but card 3 also includes £600 that is owed to me by friends. So this is coming down, but not as fast as I would like. Although my efforts have been focused on card 1 with a 18.9% apr. Card 3 will have another 0% balance transfer soon. It does look like I will miss this target.

Overpay my mortgage by £3,000


Achieved. At the start of the year my mortgage was around £69k I got a statement yesterday and its now at £63k hurrah!

My 2 year 4.19% (£423 p/m) fixed rate mortgage comes to an end in May 2011, so want to get a better deal, for another 2 years.

Achieved hurrah! A new 2 year fixed until May 2013 at 3.29% at £362 per month. This has saved £61 per month, which goes to further overpayments.

Fully top up my 2011/2012 ISA.

Achieved

So not too bad all in, in.

As mentioned in my other posts my job is due to come to an end at the end of November this year. I had a meeting a couple of weeks ago and I have been offered another contract. Not ideal same pay (which is good!) but I'm basically on a month by month contract, although I can see work in the pipeline until February 2012 at least.

Although I dont post much I do take an interest in how other people are doing on their mortgage free quests. When I feel down you guys and girls are great inspiration!

Crocc