SeriouslySeekingtoSave strongly strides straight into slaying her mortgage!

SeriouslySeekingtoSave

I’ve been a lurker in these forums for a fair while now but I’m just now getting into gear to get fully involved; I want to support others and get the motivation to keep to my goals and really improve how I deal with money.

So about me and my current financial status – a novel follows…

I bought my very first place at the tail end of last year, and boy am I proud and happy I lived in what was frankly a dive for over two years (although it didn’t start out that bad). It was a flatshare with 3 other people (who started out being professionals but then flat turnover and the turning of the wheel of time changed them into flatmates who… weren’t). The place was however convenient to work, very safe (which was important as I was working some later shifts and was often home at around midnight) and cheap – I paid £280 a month including all bills.

So, for the first year it was an acceptable place to live. Then it started to get worse. Untidy flatmates leaving food out in an area with a very high mouse population; people downstairs doing renovations which caused my bedroom floor to collapse :eek:. They nailed it back up but I could always hear sound from downstairs from there on in and, more importantly, it provided a lovely corridor for the mice to wander around in. I stopped going into the kitchen because they left food out and the cockroaches moved in :eek::eek:. The ceiling in my roof started to crumble:eek::eek::eek: and the mice were having a field day in the house. Time to move out!

I was planning on renting somewhere else and as I’d totally had it with that area and living with the slobs I was with I was considering rather more expensive places to live and the possibility of renting on my own. My bank at the time had first put the idea in my head when they kept saying that I had around £10,000 sitting in the bank (earning no interest because I’m slack and lazy and it is because of that that I am getting involved here) and at some point I checked out interest repayments and realised that I could be getting my own place for not that much more (or even less) than I would be paying in rent if I was going to be renting in a halfway decent place. That was really the tipping point – I hadn’t considered buying but there is nothing like doing a serious calculation and having the numbers right in front of you to make you realise the goal is very achievable.

I eventually found a lovely little place to buy in an area that I liked and was still close to work. It was on the train line rather than the tube (which I love!) and the trains were about every 7 minutes or so into town. It was also still quite close to London, zone 4 so only slightly more in Oyster card costs than I was paying in zone 3, and about half an hour train journey in. Location was really important to me, I don’t have a car and didn’t want to either have to buy one (with all of the costs associated) or have to catch a bus to the train station. I would have if I had found an absolute bargain (well, I might have but it got away). The place I got is a 7 min walk to the train, or 5 if I’m running late

I spent a lot of time looking for both the flat and the right mortgage. When one of the estate agents who rung me up asked why I was still looking after 3 months I told him that buying a house wasn’t like buying a pair of shoes. He then tried to sell me a place because ‘it has nice curtains and you women like that sort of thing’. Well, I didn’t buy the place… Actually I found Estate Agents to be pretty useless. I lived on Right Move for months and combed all of the areas that I was considering buying in. In the end I struck gold; a lovely Victorian conversion flat with a nice garden and in the place I ranked as my top pick. I got ‘that feeling’ when I first walked in and that was the only place I felt it with.

My mortgage was approved with HSBC who were the best deal that I managed to find. The property was bought at £125,000 and I had £25,000 deposit. I took one of their split deals which involved me actually getting two mortgages. The first was the Tracker at £75,000 and the Fixed for two years at £25,000. By taking as large a tracker as 75% I got an interest rate of 2.99% which could change at any point for my Tracker. I can officially over pay my fixed up to 10 – 20% (can’t remember which) but as it’s fixed and I will be looking to re-mortgage once it comes off fixed and onto their floating rate I’m leaving it alone and throwing all my overpayment efforts into my Tracker Mortgage which doesn’t have an overpaying limit and is currently much more vulnerable with interest rates set to rise at some point.

I’ve been paying since September so I’m still very much a Mortgage newbie but I’m determined to nail this thing on the head! There is no way in hell I’m leaving this alone for 25 years! On the first day it was open I put in an OP of £3,000 (not a penny of interest!) and I’ve been working on a current OP of £600 a month (although I had a lot saved up so I overpaid £1,200 on Christmas as a present to myself – hey, the interest charges on 25 years makes that a pretty good gift to myself!). :beer:

My goal is to take £10,000 a year off for the first two years – using both OP’s and actual mortgage repayments which take something off the total. My reason for that was:

• It’s a definite goal and one that I was thinking was going to be very challenging for my second year (my first year should be ok because I had that £3,000 saved up and could pay that off in a lump sum.
• After two years I can look at re-mortgaging. I’m not sure if I will but I want to have the option, and by repaying £20,000 off my £100,000 mortgage I will then have £45,000 equity in my flat. It’s not quite the magic 40% but it’s close and I’m hoping that my flat may be valued at £5,000 more by then. Fingers crossed

It turns out that it isn’t going to be as difficult as all that, especially since I have been given a £5,000 pay rise :j which started as of the first of January. If I make OPs of £600 a month which is not proving difficult at all even on my old salary, that is £7,100 and with my actual mortgage repayments as well nibbling away at the principal, even in the first 12 months that is my target reached. With all of the extra’s I’ve been throwing at my mortgage my £75,000 tracker is a bit under £69,000, so, four repayment months in and I’m less than $4,000 away from my yearly target. Now, so long as the interest rate stays low…

So that’s the basics of where I am the next part is going to concentrate on where I want to extend my goals now that I’ve nearly reached the first target I set myself and everything else that I want to achieve by sticking to these forums and aiming high! Don’t wish me luck, wish me consistency and determination, cos that’s what I need!

Jock_Tight

Wishing you consistency and determination in your mortgage free journey

Well done on the overpayments, they really make a difference in the long run.

Do you have a ~6 months emergency fund built up, if not consider creating this rather than through everything at the mortgage.

CathT

Glad you have somewhere you can finally call home! Good luck with your OP's

alex_p

Wishing you consistency and determination!

I liked your story especially about the mice! :eek:

katsu

Your story and your overpayments sound very impressive.

All the best.

abouttimetoo

Hi SStS and welcome to the MFW board :hello:

You sound very determind and that's half the knack here, along with - as you say - consistency. Well done on what you have achieved so far, there are lots of us on here who wished we'd started making overpayments the second we got our first mortgage so it's great to see that you have instantly latched on to it as it makes all the difference.

You sound very organised so forgive me if you have already thought of these things but some other things you may want to condider doing are:

• use of credit cards to ontain rewards/cashbacks etc
• use of 0% interest credit cards whereby you save the money you would have used to pay the monthly bills, earn interest on this money, then repay the full balance at the end of the 0% term
• investigate sites such as quidco and topcashback before you by anything at all as it's amazing how much money you can generate by doing this
• join one of the MFW challenges e.g. cake21 is running the 2011 one
• regularly review your standing orders and direct debits
• keep an eye on savings rates as there may be times that you can earn more interest than the interest rate you are paying on your mortgage

Good luck with your plans, I look forward to reading about your progress
Regards
ATT






Ps, i love all the S alliteration in your thread title :rotfl:

abouttimetoo

oops, thought of something else

As Jocktight mentions it's good to have some emergency savings but the other thing you could look into is wagt happens to your overpayments; each lender is different so you will need to speak to your provider but some will give you all the OP's back if necessary, some will give a proportion back, some will not give anything back, and some will let you suspend normal payments until the OPs are used up (if you see what I mean)

originalmiscellany

Most enjoyable read too. I dread to think what the house was like to live in with cockroaches and mice running around. Ugh. Sounds like you've made the right decision in moving out, make no bones about it! And your head is screwed on too, in terms of overpaying - we're doing that too, and it really does make a huge difference, even a little bit can make a big dent long term. 10k is definitely do-able - keep up the good work and I look forward to reading about your progress over the coming few years.

SeriouslySeekingtoSave

So the other part of this is, other than by just paying off a mortgage how am I going to achieve the financial security that gives me the ability to not worry about my retirement (unless something awful happens) and the freedom to still enjoy the now?

Well first off I am not the best person with money. Not because I get into debt, but because I just don’t think about it. This isn’t because I don’t have the intelligence; I’ve startled myself (and everyone who knew me ) at how well I did regarding my getting my flat and my mortgage. I did my research, put in the time and I reaped the rewards. I am however rather lazy and I don’t like hassle – and chasing around after organizations and banks, making sure you aren’t getting cheated is a hassle. However I shudder to think how much money I’ve fairly much just flushed down the toilet because I’ve had my savings sitting in an account which was earning me no interest.

I’m also pretty frugal in many ways; I’ve always had simple tastes and I don’t need a whole lot of gadgets or the latest fashions to make me happy. A day spent laying out in the sunshine with a good book and lemonade ice blocks from the freezer makes me far happier than a days shopping on Rodeo Drive would! So even though a friend once accused me of wasting a fortune on clothes (I do love my clothes) I pointed out that yes I did spend some money on clothes, but 1. I love clothes and I wear everything in my wardrobe, 2. I work at a city job and clothes wear out, 3. I was buying them on eBay and I could buy about 10 tops there for the price of one new one on the High Street (I’m good at finding bargains) and 4. and most importantly, unlike her I didn’t smoke and I didn’t drink very much so I would be spending less money than she did on booze and fags and I’d actually still have something substantial 24 hours later. Yes we are still friends

My biggest extravagance as far as I’m concerned is food and the amount I waste. If I buy clothes, or books, or DVDs or anything like that I have something physical that I could conceivably sell if I really needed the cash or decided later that I didn’t like it. In actual fact I don’t tend to resell what I buy; I’m a bit of an impulse shopper but I don’t buy things that I actually don’t like or use. Food is different – I’m not talking about the ‘go out to dinner with friends’ type of food. That’s entertainment and so long as it doesn’t get out of control it’s a part of enjoying life. I’m trying to be frugal but I’m still on a decent enough wage and I don’t need to cut out life pleasures. I’m talking about the things which don’t add to my life enjoyment – the ‘I don’t have anything for lunch so I’m going to have to go out and buy it’ type of food purchases. If I can cut those out I’d save hundreds of pounds a year! The other way to cut down on food costs is learning some cheap recipes and I’m hoping for some pointers here. I saw an excellent poster in one of the Debt Free Wannabe Forums (which I read because even though my mortgage is ‘good debt’ the advice and tips which you can learn are fantastic and very very inspiring) talking about a soup book was full of wonderful recipes and how incredibly cheap they are to make. I filed that away under the ‘great idea’ folder. Now that I’m getting serious in the New Year I’m going to see about buying a Food Processor (on eBay or Amazon or in a very good sale of course!) and trying something like that out. If anyone out there might know the book she was talking about or have other suggestions on where to find really cheap but healthy and tasty food recipes please pass them along. Oh, they have to be easy and quickish to make as well

My other big expenditure is flying home to NZ once a year. I tend to do it around Christmas when the weather is a good thing to get away from and my work is at it’s quietest period. But, flying to NZ once a year is never going to be cheap. I look around for bargains every time I buy my flight but this is always going to be a big drain. Not much I can really do about it however, my parents aren’t getting any younger and I don’t want to go for longer than a year without touching base with my friends and nieces and siblings and everyone else who is dear to me and who I live so far away from.

So the two major changes that I want myself to make this year are:

• Learn how to make my money work for me
• Stop wasting as much money on food

Along with these two main gaols I have specific targets to reach. I may not reach all of them but…

1. Reduce my Mortgage principle by £10,000 before September
2. Find a decent ISA and put as much money as I can into it before the 8th of April.
3. Keep my pension payments up – currently I’m paying 3% of my salary, work matches 3% and a further 3% is also going in as part of my benefits package
4. Go to the gym at least 3 times a week
5. Maintain a monthly spend spreadsheet like I did 3 months before taking out my mortgage. This was fabulous in motivating me everyday to NOT spend money on frivolous things. I will post this at the end of each month so I can have the shame (or the congratulations) of anyone who wants to look at it and say ‘why are you spending that much money on food!?’
6. Cut my monthly food budget to £150. (does anyone notice a theme here...)
7. See about any extra savings I have (after my £10,000 mortgage target and a cash ISA of £5,1000 – hey, thinking positive!) and see the best place to invest it. Perhaps more on the mortgage, a good savings account or a stocks/shares ISA.
8. Work on my new place – for this year I just intend to do the things that I can do at a low cost ie painting and maybe the floors.

Right, I think that is quite enough to be getting on with! Wish me consistency and motivation

SeriouslySeekingtoSave

Jock_Tight wrote: »

Do you have a ~6 months emergency fund built up, if not consider creating this rather than through everything at the mortgage.

I currently have a bit over £3,000 sitting in my HSBC account (earning me no interest!). As I am very close to my mortgage goal for the first 12 months and I only have until April to get an ISA up and running until I lose it for this cycle, I am considering leaving my OPs for now and setting this up.

If I do do this, I'll want to leave something like £700 sitting in my account for expenses during the month and at the start of each month when I get paid I'll shift any extra out to the various saving accounts I want to build up. I do know that I need to have a set amount of money sitting there for emergency funds however tempting it is to throw it on my Mortgage and watch that total drop further and further and further....

Hopefully I'll never have to use it (never had to yet but I've never owned my own place before) but just in case...

I'll also check other saving account options. Some of them might be better than an ISA. There was one around not so long ago that gave you 6% interest for up to £300 a month. Although after a year it dropped down again. This would be a perfect saving account and I'd have ready access to my money in case of disaster

SeriouslySeekingtoSave

CathT wrote: »

Glad you have somewhere you can finally call home! Good luck with your OP's

Thank you! Good luck with yours. See you on the MF Roll of Honour!