Mortgage free 20/20/20

kingster2069

Hi everyone,

I've just got an Offset mortgage with Santander at 3.19% above BBR. My long term aim is to pay off our mortgage before 2021, giving me just under 10 years! Or my OH 40th birthday (I say mine because my OH would prefer to spend the money now;))

We've remortgaged for £182K and have £10K on credit cards at 0%. Knowing that interest rates will start to head north, I want to apply as much MSE knowledge as possible to paying of our mortgage.

My initial to do list is:

1. Divert Cash ISA savings allowance of £175 per month into offset saving account (OSA).
2. Stop paying down 0% credit cards and only pay minimum payment, diverting extra cash to OSA.
3. Move money set aside for HMRC in business account to OSA, until needed.
4. Look at 0% purchase credit cards moving monthly spend to OSA.
5. Close Cash ISA and transfer the £5K to OSA.

Some questions I have, that I'm hoping someone can help me with.

1. Do I cash my Shares ISA in? Currently with the Co-op Ethical Investment fund of £5K.
2. Should I move the payment dates of my monthly direct debts, giving money more time to sit in my account?

I've calculated that I need to overpay by £500 per month to stand a chance of make my 10 year goal, based on interest rates not moving :eek:.
Our mortgage payments have just reduced from £1439 at our old rate of 5.99% to £1224. Plus £175 Cash ISA monthly money and £150 share ISA money gives us the extra £500 needed.:T

I am just worried interest rates hikes are going to blow my goal out the water. We have been paying £250 per month off our credit cards but at this rate its going to take another 40 months.:mad:

So any advice of maximizing my offset account or answering my questions will be gratefully received :beer:
Many thanks in advance


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someday_soon

Hi Kingster

Great work so far. I have an offset and getting your head around retaining cash for as long as possible is the hard part. It looks as though you are well on top of that. Don't worry about intrest rate movements, you have no control over them. Most people don't have much of a plan at all, but you have and that will allow you to adapt to small changes as time progresses.
The very best of luck

Someday Soon

Sepa74

How much do you have on your CCs? Unless you are stoozing (they are 0%) you should consider paying them off more quickly and then the mortgage.

Why don't you do a Statement of Affairs (http://www.makesenseofcards.co.uk/soacalc.html) and then the tips and hints will come pouring in!

Good luck!

kingster2069

Thanks for the comments, I am Stoozing, here's my SoA's as suggested

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned....................

Monthly Income Details
Monthly income after tax................ 2500
Partners monthly income after tax....... 1250
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 3750

Monthly Expense Details
Mortgage................................ 1229
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 165
Electricity............................. 45
Gas..................................... 25
Oil..................................... 0
Water rates............................. 25
Telephone (land line)................... 25
Mobile phone............................ 70
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 29.99
Groceries etc. ......................... 285
Clothing................................ 25
Petrol/diesel........................... 185
Road tax................................ 20
Car Insurance........................... 67
Car maintenance (including MOT)......... 10
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 568
Other child related expenses............ 80
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 8
Contents insurance...................... 7
Life assurance ......................... 30
Other insurance......................... 0
Presents (birthday, christmas etc)...... 10
Haircuts................................ 10
Entertainment........................... 400
Holiday................................. 150
Emergency fund.......................... 10
Total monthly expenses.................. 3478.99


Assets
Cash.................................... 5000
House value (Gross)..................... 245000
Shares and bonds........................ 5000
Car(s).................................. 6500
Other assets............................ 2000
Total Assets............................ 263500


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 182000...(1229).....3.69
Total secured & HP debts...... 182000....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Credit Cards...................10500.....120.......3
Total unsecured debts..........10500.....120.......-


Monthly Budget Summary
Total monthly income.................... 3,750
Expenses (including HP & secured debts). 3,478.99
Available for debt repayments........... 271.01
Monthly UNsecured debt repayments....... 120
Amount left after debt repayments....... 151.01

Personal Balance Sheet Summary
Total assets (things you own)........... 263,500
Total HP & Secured debt................. -182,000
Total Unsecured debt.................... -10,500
Net Assets.............................. 71,000

dimbo61

well we have an offset mortgage just finished a 5 year fixed deal and have overpaid by £500 a month for the last 62 months which has made a massive difference to the mortgage debt.
So you are on the right track but we had savings in the offset account and not money from a credit card 0% just incase
good luck

Sepa74

Hi Kingfisher... I'm no expert on SOAs (where's Katsu?? She always has some great comments) but your internet / landline costs seems high - perhaps see if you can get a cheaper deal through Quidco?

It might also be possible to reduce your mobile phone costs by moving to PAYG or a cheap SIM only deal.

But apart from that, I can't see anything that sticks out to me.

Not very helpful, am I!!!

adwat

Wow that's some target kingster, I reckon you'll need to make payments of ~£2200 per month to repay in 10 years. Best of luck with your challenge.

kingster2069

Quick update on how things are progressing.

1. I've moved all savings and Cash ISA into offset mortgage saving account. This has reduced overall mortgage to £172k.
2. Cancelled Cash ISA payments.
3. Increased mortgage payment to a whopping £1800 per month:eek: The repayment calculator is now showing 120 more mortgage payments.
4. Signed up to topcashback and now have £40 credit.

I know I'll need to pay more in the future to make my 10 year goal and to be honest not sure £1800 is achievable long term, but it should reduce my outstanding balance by £1250 per month:T.
I'm also going to try Ebaying some of the clutter I have around the house. Really going to try to reduce the mortgage as much as possible before interest rates go back up.

Thanks for all you comments, Sepa74 my internet and phone bills are high, but that's because I run a business from home and use lots of internet bandwidth. Our mobile contracts are ending in the next few months and we should be able to save £20 per month per contract.

Read the mortgage free roll of honour last night and can't wait until I can post my name on it

originalmiscellany

kingster2069 you should post more often! Great to see how you've attacked your debts since 2008, and are going to be close to getting your target, esp. with smaller debts and larger savings as well!
It certainly looks like you're progressing in the right direction, and you're right I can't wait to get my name on the mortgage free roll of honour (ideally in 14 months from now for me)...

kingster2069

Thanks for the encouragement originalmiscellany. Just been reading your diary, looks like your going to get you name on the roll of honour very soon.
I've promised the OH a fab holiday when we clear our mortgage. We are thinking of South America :j

kingster2069

Payday!! Paid all bills and left me a fiver a day (my challenge this month). Mortgage reached another milestone today £170,000 :T

Been working out every 0.25% rise in the BoE base rate is going to cost us £35 per month :mad:. If that isn't encouragement to lower our mortgage what is.

Targets this year

1. Get daily interest payment below £17 per day ( £168,200 )
2. Get monthly interest below £500 per month ( £162,600 )
3. Reduce mortgage to £160,000.
4. Get daily interest payment below £16 per day ( £158,250)
5. Reduce mortgage by 15% this year ( £157,240 )

Medals awarded for completion of tasks:

1. Chufty badge.
2. Bronze medal.
3. Silver medal.
4. Gold medal.
5. Platinum medal.

I'll keep you posted on my progress