MFW - 30 years old, no kids, just a helluva mortgage

*Jellie*

Welcome to MFW! No need to be shy as everyone is really friendly!

RosieTiger

thriftyminx13 wrote: »

Financial Bliss - thanks for advice. I know that the interest rates will go up, but do you think they'd go up to 5% quickly - the flexibility at the minute I like and it means I overpay ? Luckily the base rate tracker I'm not tied into, but need to check specifics and there are no penalties for overpayments etc. Food for thought.

That's a question that is very difficult to answer, but the key point within FB's figures is surely that you need to understand the impact of a rise of that scale.
There has been talk of rates going back to 5% within 2 years - who can really say given that there are so many variables.
Just make sure you have this in the back of your mind - outside of these boards I talk to lots of people who appear to have treated the current low rates as a permanently available extra funds. i suspect a shock is coming there way!
Welcome aboard.

Spiggle

Welcome and good luck with your journey!

For what it's worth, as your current mortgage is interest only I would tend to save as much as possible in the best rate savings account you can find. But to do this you will need to be strong willed (I'm not) and treat the balance as if it isn't yours and is already paid into the mortgage. That of course depends on what terms/restrictions you may have for repaying the capital on your interest only mortgage.

To my mind you are then earning as much as possible on the money and have an amount to throw at the capital (terms permitting) should interest rates start to fly making standard payments difficult as in FB's analysis.

But I'm certainly no expert so I'm sure someone will correct me!

Hope that helps and good luck,
Spigs

thriftyminx13

Hi all again, had a bit of spend splurt at start of the year on the sales, but in one way, it was good that I ordered them via the net because have sent most of them back!! Also was OH's birthday and this weekend is my brother's birthday. Had to also order oil which is second time in 4 months. Last 2 years 500L has lasted us a year, so hope that this isn't the beginnings of a mini ice-age!!

Looking at the SOA not sure that it a realistic amount to save. I am very guilty of using my maestro when I buy things, maybe if I were to take out £100 a week in cash - that might stop me spend £?!

Can't believe how much diesel has gone up to - 132.9p a litre over here!! It may be cheaper for me to get a transfer closer to home, although not sure any of the departments near me are too exciting.

On positive news, sold something on ebay and am two surveys off getting £50 from yougov! Not overly on target this month, January always seems to be a tough slog for me. Will know more middle of the month. Hope everyone is having more luck than I!

alex_p

I might be being a bit silly, but what is the point of paying off an interest only mortgage? You will still owe the principal?

Or does overpaying mean that the amount borrowed goes down as well?

The idea for an interest only mortgage is that you kinda pay the interest as rent. At the end of the mortgage you will still owe the amount borrowed so you need to have a plan on how to pay that big lump sum off.

Have you considered changing to a repayment mortgage?

jenova_2

The point of overpaying an interest only mortgage is to reduce the total amount owed at the end, alex_p - like you thought.

tina01904

Hello

Having read your thread we seem to be in very similar financial situations. I also have an interest only mortgage and it's been great for the last 6 years. I have managed to pay some of the capital off and have really noticed a difference to my monthly payments (which are not at 0.9% unfortunately but 2%) so it's very worthwhile!!

Good luck with your challenge - I have pledged to pay off £17k this year (a tad unrealistic perhaps but I definitely want to pay off a minimum of £12k - MFW number 50)

Tina

thriftyminx13

tina01904 wrote: »

Hello

Having read your thread we seem to be in very similar financial situations. I also have an interest only mortgage and it's been great for the last 6 years. I have managed to pay some of the capital off and have really noticed a difference to my monthly payments (which are not at 0.9% unfortunately but 2%) so it's very worthwhile!!

Good luck with your challenge - I have pledged to pay off £17k this year (a tad unrealistic perhaps but I definitely want to pay off a minimum of £12k - MFW number 50)

Tina

wow £12k that's amazing, do you keep a MF diary?

TF13

victoriaplum1

Have got me wondering about my interest only mortgage too....am worried about it as we bought our house for 105k 5 years ago, still owe 105k and its probably nto worth much more.....we had to have interest only this time as weren't in financial position to have repayment - but I don't want interest only long term so wondering about best way to go about saving money to pay off.....if you pay off some of the capital can it then creep back up because of it being interest only or does the monthly payment come down once you have paid in a fair overpayment? I haven't got a clue! I was very lucky with my last house, even after a remortgage I made 20k profit on it so that paid off my credit cards, student loans etc - market was very different then though and that was pre-kids too when I worked f/t!

thriftyminx13

victoriaplum1 wrote: »

Have got me wondering about my interest only mortgage too....am worried about it as we bought our house for 105k 5 years ago, still owe 105k and its probably nto worth much more.....we had to have interest only this time as weren't in financial position to have repayment - but I don't want interest only long term so wondering about best way to go about saving money to pay off.....if you pay off some of the capital can it then creep back up because of it being interest only or does the monthly payment come down once you have paid in a fair overpayment? I haven't got a clue! I was very lucky with my last house, even after a remortgage I made 20k profit on it so that paid off my credit cards, student loans etc - market was very different then though and that was pre-kids too when I worked f/t!

I'm no expert, I think it depends on the terms and conditions of your mortgage. But if you pay off capital it won't make the total creep up is my understanding but I'm not sure I fully know what you're asking. Maybe one of the experts on here could help? What Financial Bliss wrote above could help?