Feels like an impossible task...

kiran83

Hi everyone, I have been reading the forum posts here for over a month now and have decided to take the plunge! Ok, this is my situation. My husband and I brought our first home in September 2007 for £250,000. Minus our deposit, our mortage was £212,500 for 25 years. We are 28 and 29 years old with no other debts (so far)! After spending £25,000 on a complete re-furb and kitchen extension, we are finally thinking about attempting to clear some of our mortage. We have an emergency fund of £9,000 in our cash ISA's, we gave a loan of £8,000 to a cousin, which we have been told can have paid back within a months notice and £4,500 is a current account. When i called the Birmingham Midshires this morning, they said as of today we have £192,185.01p balance on the mortage, quite a big amount!

My husband pays for the mortage which is £958.06 per month, council tax, home and contents insurance, council tax, petrol, grocery shop, gas and electric bills from his wages. And I pay the telephone bill! But it does mean that I then save 95% of my wages every month! So we have decided to make some overpayments every month....


I have opted to write a cheque for the op's as that way I have more control over the payments. I have been told how to write my cheques by Birmingham Midshires (account no, name, etc) and have been told that only over payments of £1,000 or more will be acknowledge by a letter by them. Are there any other users who have any experience of over paying with BM?

So to air on the side of caution, I thought I would wait until I receive my wages (last working day of Feb) before I sent off a cheque of £2,000 (£1,000 per month) hopefully! Am feeling very excited about this!

Engeroosi

what are your interest rates for savings and for your mortgage, if you make overpayments can you easily access the money by withdrawing it?

lincoln-potter

Hi welcome to MSE, Im new here too with a very similar figure.

So i wish you all the best of luck!

kiran83

Hi guys, Engeroosi- the mortage rate is 2.49 and savings rates are rubbish. I have a cash isa with natwest, which is paying a pitiful amount of interest and am looking to transfer it for Santander. The £4,500 is just a current account, so it pays something like 0.10 %

kiran83

Hi Lincoln Potter- it feels really daunting as its quite a large amount and reading the other posts, everybody else seem to like have quite small mortage balances compared to me!But hubby and I are really commited to making op, fingers crossed! I wish you luck too, maybe we could learn from each other? x

lincoln-potter

kiran83 wrote: »

Hi Lincoln Potter- it feels really daunting as its quite a large amount and reading the other posts, everybody else seem to like have quite small mortage balances compared to me!But hubby and I are really commited to making op, fingers crossed! I wish you luck too, maybe we could learn from each other? x

Well we have age on our side (27 here) and every OP you make can only have a beneficial impact.

You should do a SOA so we can see in a bit more detail any areas you can cut back.

Have you any specific targets for this task? Debt free by a certian age or year?

Feel free to look at my thread only started it at the end of last week :beer:

kiran83

Hey Linciln Potter- i kind of wish my mortage was with a high street bank as its a lot easier to pay in an extra £100 or £200 every week or so as you go into your bank to check balances, pay bills etc... I will do a soa soon, our main expense per month apart from mortage is petrol as hubby drives 90 miles per day to and from work. But we will get part of this offset in his tax return at a later date...

I guess I would like to be mortage free in 10 years if not earlier. At the moment we dont have kids, debts, have brought a newish car last year in cash, have new white goods and TV etc, so want to try and make as big of a difference as we can, while we can!

Ok, am going to try and find your thread now and have a read! x

ViolaLass

kiran83 wrote: »

I ...have been told that only over payments of £1,000 or more will be acknowledge by a letter by them

Have you checked whether overpaying will reduce the term or the monthly payment? It may be that they automatically reduce the term with payments over £1000 but not with payments under (that's what I've seen elsewhere). Usually you can tell them what you want them to do. Also, are there any penalties for overpaying?

kiran83

Hi Violalass, the man from BM said that the op's would reduce our monthly payment. And we have come out of our fixed rate tracker period and so have no limits or penalities as to any op's we wish to make. Just have to take the first step and make the first payment!

gizmo111

have opted to write a cheque for the op's as that way I have more control over the payments. I have been told how to write my cheques by Birmingham Midshires (account no, name, etc) and have been told that only over payments of £1,000 or more will be acknowledge by a letter by them. Are there any other users who have any experience of over paying with BM?

I make overpayments by Standing Order - when I have paid by cheque they take a while to get to the account. Also with SO I can just change the amounts and dates online as I want.

ViolaLass

kiran83 wrote: »

Hi Violalass, the man from BM said that the op's would reduce our monthly payment. And we have come out of our fixed rate tracker period and so have no limits or penalities as to any op's we wish to make. Just have to take the first step and make the first payment!

That means that they're not reducing the term, just how much you pay each month (by the sounds of it) so the mortgage will still take 25 years to pay off. If you want to reduce the term (you don't have to but I'm assuming you do from what you've written) you need to tell them that you want them to shorten the term when you make overpayments, not reduce the monthly payment. That way, your monthly payment stays the same and you pay the mortgage off sooner.