Starting down the MFW road

Myself and the OH have 25 years of a 30 year mortgage left. We started with a 100% mortgage and I would like to say we have at least 10% equity in the house but with current prices it is hard to say. Doesn't really matter as we are not intending to go anywhere soon.

We are expecting a baby later this year and so busy turning the house into a true family home.

My wife received a small inheritance which we have used to pay off any credit cards and now hope to never use credit again! It has also allowed us to carry out a small building project and to finish decoratng the house in time for baby.

Mortgage Debt = £171,150.86
Monthly Payments = £1062.14 (5.67% fixed rate period ends June 2011)
Currently overpaying 20% = £212.42

Our fixed rate finishes in June and we will then be on a variable rate (currently 3.89%) and be able to overpay any amount we like. We are intending to continue making the same level of mortgage payments but should be paying around £150 less in interest which will add to our overpayment. :D

We have a loan that finishes in April and will start making the same monthly payments into savings until June when we can then add these to our mortagage overpayments as well.

I have drawn up a spreadsheet that lets us see on a month by month basis over the year how much the mortgage will be reduced by overpaying and can record the actual interest against teh payments. The target is to reduce the capital by around £10,000 - £12,000 by the end of the year.

Baby will reduce our ability to overpay extra payments but we would like to try and continue with the current level of around 20% extra in the knwoledge that if times are hard we can reduce this if needed.

I'm not so worried about interest rises as our equity is too low to secure a decent fixed rate and the BOE base rate would need to rise by around 2% for us to be paying what we currently pay. If we can increase our LTV through overpaying then we can always fix in the future should rates look like changing dramatically.

I shoudl also note that we are putting some money into savings rather than throwing everything at the mortgage so that we have a rainy day emergency fund which up to now we have never been able to afford to do.
2011 - unsecured debt free :j
2036 - mortgage free :(
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