My Mortgage Free Diary

mpgsheep

Back from a week in the sun, was brilliant. Nice to see a decent chunk come out of mortgage this morning, and although quite a long way to go, can actually envision paying the thing off early. We did discuss a lot on holiday, and agreed that this wasnt the house we wanted to live in forever, so overpaying is more important in order to be in best possible position to move again in 5-10 years.

Peonie

Interesting. Are you going to set a target?

mpgsheep

Hi Peonie,

I wasn't planning to, as dont foresee adding any extra to it. Quite happy that we are paying an extra 38% per month, and will increase by £90 next year once sofa is paid off, maybe a bit more here and there. Anything you would suggest?

Peonie

I would just work out where your usual OPs will get you to in 5 years time and have that as your target. If you smash it, then brilliant.

mpgsheep

is all a bit subjective though, we have a fixed portion ending in january, with a portion at 1.5% above base rate, so maybe remortgaging, or interest rates go up etc. Will think about it.

mpgsheep

Down to £243,045.67 with August payment + overpayment. Noticed on their online mortgage management page that i can apparently apply to remortgage with RBS my terms now, think 3 months prior to when i had in my diary - going to try and find out as eager to fix again for a longer period.

mpgsheep

I spent some time on the phone with RBS yesterday, and have a call scheduled with their mortgage advisor on the 20th August. I don't really want their advice but in order to have a free revaluation courtesy of the homebuyers index, have to remortgage through them.

Spent yesterday and this morning doing some maths, and wanted to check my figures as follows...

My mortgage is in two parts,, first part is £142000 at 1.5% above base, lifetime tracker. Will not be touching this, happy to "gamble" that interest rates won't rise so fast that I don't have time to get this fixed at some point in the future.

The second part is £100,000, which an free to remortgage from October 31st, which will confirm on 20th August. My choices with RBS on this portion are:

2 year fix, 3.39% no product fee - £420 a month
2 year fix, 2.55% £995 fee - £374.27 a month

5 year fix, 3.99% no product fee - £456.13 a month
5 year fix, 3.65% £995 fee - £436.03 a month

So to work out the differences on these choices, i multiplied the 2 year fix monthly cost by 24 to give how much they will cost over 2 years. Then added on £995 to the product fee one. This gives me my total outlay on both. For reference:

2 year fix 3.39 = £10,077.59
2 year fix 2.55 + 995 fee = £9,965.16

So initially my thought was that paying the fee is worth it. But then on the no fee one, I will earn interest on my £995. At 1.75% per year (my isa), it increases by about £30, so the result changes to:

2 year fix 3.39 -£30= £10,047.59
2 year fix 2.55 + 995 fee = £9,965.16

Still £82 in favour of paying the product fee.

Using the same maths for the two 5 year ones show £106 in favour of paying the product fee.

So my questions are as follows:
1) is my maths correct!
2) is the maths affected by the fact that I overpay? I don't think so but pleased to hear.

Currently I lean towards fixing for 5 years, as my risk is then on the other part of the mortgage, and this can be my steady simple part. Anyway pleased to hear!

mpgsheep

Guess my rambling got a bit long last time...mortgage meeting tomorrow, and at the moment leaning towards 5 year fix, no fee. So technically the most expensive but safer option.

mpgsheep

Had my second remortgage phone call last Thursday, and all confirmed now. Had a nice suprise in that the house price index revalued our home higher, pushing us to 68.63% LTV, giving us better rates. So now we will be on following from November 1st:

Part 1 - £100,000 - 3.09% fixed for 2 years
Part 2 - £142,000 - 1.5% above base (thus 2.0%) lifetime tracker

The result of this means our required monthly payment reduces to £891.34 from £1084.15, almost £200 saved. We will of course be maintaining our payment of £1500 a month, thus overpayment will now be £608.66 a month - which of course we are both chuffed about! Need to rejig my sheet to work out our new MF date, will come back!

mpgsheep

February 2031 - that is our current mortgage free date. I will be 47 then. Sounds like a long time away, but that is better than not overpaying and it being January 2048!