My Mortgage Free Diary

mpgsheep

At the moment my plan is to first restore our emergency savings, to around £9000 (6*1500, which is roughly our monthly outgoings on mortgage+bills). At £4600 at the moment, so halfway there so far. I (hopefully), get a bonus at the end of the month, so that should be sorted then. Then the business of overpayments and savings for decorating starts! It all does seem like a very long road ahead...

mpgsheep

I just nearly fainted. I just worked out the daily interest on our new mortgage, and it is £25.24!!! Was used to it being under £8 previously. I just can't be having that, the emergency fund is fine at 3 months, and overpayments start straight away!!

jimmybrid

Good luck with those overpayments, very wise to overpay just on the higher rate borrowing. I'm doing exactly the same although my borrowings are not quite as scary as yours either in terms of value or interest rates. My current position as follows:

Mortgage 1 :
Start (Oct '11) 118,000 @BR+0.5% (life tracker) ported from previous property.
Now 116,867 (recently shifted 5k across to mortgage 2)

Mortgage 2:
Start (Oct 11) 17,000 @BR+2.89% (life tracker) new top-up.
Now 10,966

Both are current account mortgages on 20 year terms, fully flexible to overpay/underpay/transfer between. Also means we don't need an emergency fund - the mortgages are our emergency fund. LTV at max borrowing is 75% but that's kind of irrelevant as there's no way I want to lose my main mortgage, it's too good a deal!!!

Currently overpaying £600 per month into regular saver accounts at 8%, will shift those onto the mortgage accounts when they mature.
Number 2 child due in less than three weeks, so no doubt some recalculations will need to be done soon.

Peonie

mpgsheep wrote: »

I just nearly fainted. I just worked out the daily interest on our new mortgage, and it is £25.24!!! Was used to it being under £8 previously. I just can't be having that, the emergency fund is fine at 3 months, and overpayments start straight away!!

Wow, £25 a day is crazy. I'm celebrating; we've gone below £10 a day for the first time.

mpgsheep

So after the first payment went out, I have amended my payment to include an overpayment of £115.74 (as this makes my regular payment a simple £1200). So relieved to commit to this already

mpgsheep

So first overpayment went out...and of course incorrectly applied, split between both mortgages. RBS say they will fix it in 5 working days, and backdate it. Still frustrating, i made it very clear that it was only to be applied to expensive portion.

Also in process of switching our joint account to a flex-direct account (upgrading from a flex account), this should go through soon. Both ISAs are now full, so a good place to store money until the new financial year.

Continually troubled by how much I should be overpaying, saving and enjoying. Also wondered what people thought of this. My two sons have a long term savings account each (CTF and Junior ISA), and since they were born have put £50 a month in, with the intention of making sure they have something saved when they hit 18, for uni/car/house, dependant on situation. Also, want them to see the effect of saving regularly has, ie compound interest etc. Problem is I can see the effect that the £100 would have on the mortgage - significantly more! Should I switch the payments over, with the intention to make it up in the future, with the "savings" made on the mortgage?

Peonie

Well done making your first overpayment.

Re overpaying vs long term saving for your children. What are the interest rates? I would probably keep the funds in an account in your/your wife's name so you can access them if you need to. I would not tell your children about the money until you know their characters. Will they waste it on booze and clothes or on something that will help them in the long term like uni, a car or a house? But teach them the value of money management through their pocket money. Sorry if I'm overstepping the mark. I know you have not asked for anyone's opinion about this.

mpgsheep

Hi Peonie, opinions definitely appreciated!

The interest rates are nothing to shout about, but part of the plan is to use them to educate them, ie say I first show my eldest when he is 8 how much there is, and then every few months can keep track, and see that despite £50 going in a month, he is actually getting more than that. Plus has the option to add to it himself with birthday money etc if wanted.

Hadn't considered not telling them, plan was to educate them properly on the value of money etc, but obviously we are not the first to think that, and it could easily go wrong. Hmmm things to consider...

mpgsheep

Moved my payment date to 1st of the month now, so think this actually saves me some interest, plus works better with getting paid, hate seeing the money just sit in my account for ages (which i agree is a strange thing to hate...). So now at £250,498.23, so close to breaking the 250k mark....

mpgsheep

Afternoon all.

Balance down to £250,076.72 - so next month will definitely be sub £250,000.

Just rung up and increased our overpayment next month by £100, so will then be £215.74 overpayment each month. My wife goes back to work in two weeks, so anticipating a little extra income, despite childcare costs (almost fainted...).

Hope everyone is enjoying the sunshine!