Seafarers_Wife's MFW Diary

seafarers_wife

Hiya

Well I finally get to join in properly on here

We have had an offer of 60K accepted on a house that needs loads of work doing to it, re-pointing, central heating being installed and lots of other bits. We are hoping to do most of it ourselves with family and friends help but will be getting the professionals in where we cant manage it.

So the finance stuff should go here I suppose.

We have gone for a 90% 35 year mortgage on a 5year fixed rate @ 6.89% with no fees and 10% overpayments allowed a year. This mortgage is with Lloyds, I know we could have shopped around and got a better deal but most of our finances are with Lloyds and it was easier to do so for us.

A bit about us both, well im 25 and working in a call centre, and OH is 26 and works in the merchant navy. We take home a very good salary each month hence why we have decided to buy a wreck of a place and also because it means long term we can put more money away in pensions as the plan is to clear the mortgage in 10 years or sooner. We also want to start a family sooner rather than later so we havent taken on to big a challenge financially for when we have to drop to one salary.

seafarers_wife

SOA when we move into house

Household Information
Number of adults in household........... 2
Number of children in household.........
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 3100
Partners monthly income after tax....... 1000
Total monthly income.................... 4100

Monthly Expense Details
Mortgage................................ 340
Secured/HP loan repayments.............. 256
Council tax............................. 120 - paid for 10 months
Electricity............................. 50 - over budgeting here
Gas..................................... 50 - over budgeting here
Oil..................................... 0
Water rates............................. 50 - over budgeting here
Telephone (land line)................... 25
Mobile phone............................ 50 - for 2 of us
TV Licence.............................. 12
Satellite/Cable TV...................... 25
Internet Services....................... 10
Groceries etc. ......................... 200
Clothing................................ 0
Petrol/diesel........................... 150
Road tax................................ 15 - saved for monthly and paid in lump sum
Car Insurance........................... 70 - saved for monthly and paid in lump sum
Car maintenance (including MOT)......... 100
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 40 - saved monthly and used for pay all pet costs
Buildings insurance..................... 30
Contents insurance...................... 30
Life assurance ......................... 50 - for both of us (oh classed as smoker)
Other insurance......................... 0
Presents (birthday, christmas etc)...... 50
Haircuts................................ 0
Entertainment........................... 400 - split £200 each for play money
Holiday................................. 0
Emergency fund.......................... 0
Baby Savings............................ 100 - for when we have a baby so there is money for what is needed
Pension................................. 200 - non negotiable for OH
Bank Account Charge..................... 25 - saves us money with travel insurance & phone insurance
Total monthly expenses.................. 2448

Assets
Cash.................................... 0 - we do have about 8K of cash left after buying house but its being used for work needed on house
House value (Gross)..................... 60000
Shares and bonds........................ 0
Car(s).................................. 8000
Other assets............................ 2000
Total Assets............................ 70000

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 54000....(340)......6.89
Hire Purchase (HP) debt ...... 6000.....(256)......0 (car loan - paid Jan 2013)
Total secured & HP debts...... 60000.....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Total unsecured debts..........0.........0.........-

Monthly Budget Summary
Total monthly income.................... 4,100
Expenses (including HP & secured debts). 2,448
Available for debt repayments........... 1,652
Monthly UNsecured debt repayments....... 0
Amount left after debt repayments....... 1,652
Personal Balance Sheet Summary
Total assets (things you own)........... 70,000
Total HP & Secured debt................. -60,000
Total Unsecured debt.................... -0
Net Assets.............................. 10,000

seafarers_wife

well the mortgage has officially started today 20/5/11

and we owe £89,256 at a rate of 6.89% :eek:

so the plan is pay basic mortgage payments of £560 a month and then from next january make overpayments of £300 a month as we need to buy furniture, baby things and replenish the savings account and will be losing most of my wage as well when im on maternity leave.

SmlSave

Welcome to MFW Seafarers_wife

seafarers_wife

Hmmm just playing about with figures on my spreadsheet, oh how i love them

Not sure what the best option is, have run through 2 senarios and wanted a bit of advice as OH is just "yeah whatever" when asked his opinion. we will also most likely be needing a new car at some point in the next 5 years if our current one gets uneconomical to repair. we are budgetting 10K for a new car 2nd hand paying cash, so that would come out of the availible cash below.

i suppose its not more the short term i.e the next 5 years, but what to do after the 5 year fix has come to an end that im pondering on. we will not be moving house as this is going to be our one and only house purchase.

option 1. pay mortgage payment of £340 a month and max both our cash isa's so at the end of the 5 year fix have approx 40K cash but owe the mortgage c51K

option 2. pay mortgage payment of £340 a month, max OH cash isa and overpay 10% a year so at the end of the 5 year fixed, owe c25K on mortgage and have approx 30K in the bank.

i suppose im leaning towards option 2 myself but unsure as to what to do with the mortgage after that, as OH job is not going to be one where he can stay till he is of reteirment age so im thinking im tempted to leave the cash in the isa after the end of the 5 years and then maybe go onto a tracker or something and continue to overpay?

i know i need to get a life as we havent even exchanged on the house yet but i need to plan to know where we are roughly heading in the next few years.

thanks

dimbo61

You will be paying more interest on the mortgage than you will get from savings so overpay the 10% allowed each year and then max out as much as you can in cash ISA,s.
Once you have reached £16K in savings then overpay the mortgage !!!

Caroline73_2

Welcome!

I think you have lots of options, so wouldn't commit to anything yet. It always make sense to have some savings as a back up plan. You are going to spending money on doing up the house, this may take more or less than you budget for.

As you are planning on starting a family you should aim to live on the one salary now, your salary can be saved either as an OP or in ISA/offset etc.

museumworker

:wave: Hello and welcome! Good luck with the house work and your MFW journey. I'm making some comments on your SOA, hope you find them useful.

seafarers_wife wrote: »

Electricity............................. 50 - over budgeting here definitely look at the best deal you can get, and saving energy, we are at £55pm for both in a Edwardian house with 5 beds and draughty floorboards!

Mobile phone............................ 50 - for 2 of us Again, look at deals. OH and I switched to Tesco mobile this jan when they were doing an offer - £10pm unlimited texts, data and 500 mins pm. This is normally £15pm, sim only, 30 day contract. You could save at least £20pm through shopping around

Satellite/Cable TV...................... 25 could you live without this, or just get a freesat box?

Groceries etc. ......................... 200 poss on the high side, especially if OH is away most of the time. We've got it down to £220pm for 2 adults, all packed lunches, and a child

Clothing................................ 0 you will need some I take it :roftl: - how about the £100 clothes challenge, which is just over £8pm

Buildings insurance..................... 30
Contents insurance...................... 30
Again, looks on the high side. Ours is about £450pa, for a london house

Life assurance ......................... 50 - for both of us (oh classed as smoker)
on the high side - there is a guide to buying life assurance on the main MSE website. We paid a fee to a company of £35 for a deal not normally available. 2 separate insurances, £200K each, level term, 25 years, OH 37, me 31 = less than £20pm altogether. And see if you can get OH to pack in the fags, that'll save £££s, and his life/health as well.

Haircuts................................ 0 you may need a haircut!
Entertainment........................... 400 - split £200 each for play money OH and I have £150pm each for this and find we have leftovers at end of month

Holiday................................. 0 definitely need ot budget for this, even a camping break or short weekend is hundreds of pounds

Bank Account Charge..................... 25 - saves us money with travel insurance & phone insurance I would query whether you are getting £300pa value out of this - annual travel insurance is cheap if you buy it direct, and most phone insurance is a con anyway.

In terms of options, I think you should build up savings and OP a small amount the first year or two. A new home always costs more than you think it will, especially if it needs lots of work. Having the money to hand will be a priority. If you find you don't need it, you can OP it at the end of the work/keep it as an emergency fund.

katsu

Rather than maximise the ISAs in your OH's name, I would save into ISAs in your name and his name. You don't have to use each ISA's full annual cash allowance each year.

Great to be switched on to OPing at the start of your mortgage, well done

seafarers_wife

museumworker wrote: »

:wave: Hello and welcome! Good luck with the house work and your MFW journey. I'm making some comments on your SOA, hope you find them useful.



In terms of options, I think you should build up savings and OP a small amount the first year or two. A new home always costs more than you think it will, especially if it needs lots of work. Having the money to hand will be a priority. If you find you don't need it, you can OP it at the end of the work/keep it as an emergency fund.

thanks for that, some points to think on

we are taking out a 20K loan as well over 5 years to do some of the work as well so will have 28K cash availible straight away for everything except the bathroom which is livable for the next few years, loan repayments are worked in my spreadsheet but not the budget i did yesterday. i also worked into account me dropping my wage at the end of 2012.

gas and electric is very over budget, we use £40 a month combined in a 2 bed so will shop for the best supplier but at the mo £100 for both is budgetted so it will be a nice surprise if its nowhere near that much.

the mobile phones we are on a very good deal with vodafone, they usually come in at £35 a month but budget £50 if needed to use them whilst OH is abroad.

the sky is here to stay, i watch a lot of channels that arent on freesat otherwise i would give it up.

£200 groceries, this is what it averages out over the year, when OH is away i use less, but when he is back i spend more, just depends what we fancy eating. we dont eat tesco finest everything and do mix and match brands but for us its a happy medium of food shopping, we know we could tighten our belts if needed and drop it but at the moment we dont need to.

buildings and contents for now have gone with lloyds, will shop around next year when have a proper handle on what im looking for

the bank account charge does save us money, i like seeing my credit report on a monthly basis as does OH so with this, our phone insurance, and the travel insurance it does save money. have looked into how much it would all cost seperatly and we do save money.

Life insurance - OH doesnt smoke, its just last week with us getting married he smoked when stressed so has stopped but needs to be smoke free for a year before classed as a non smoker. For the level of cover we have £500K each Im happy with the price that is being paid.

haircuts, holidays and clothes each come out of our play money budget. we dont tend to go away on holiday due to OH's job as when he is home he just wants to relax and i prefer not to go away unless its for a totally wow holiday as i cant see the point in a week on the beach or camping.

Thanks for the suggestions though

I think I am going to pay the mortgage payment as it is, then every year whack 10% payment off the capital and use OH's cash ISA to full advantage so that we do have liquid funds availible in an emergency. Im just a bit annoyed as the oven has just gone in our rented house and its driving me mad as i was looking forward to my lasagne tonight

seafarers_wife

katsu wrote: »

Rather than maximise the ISAs in your OH's name, I would save into ISAs in your name and his name. You don't have to use each ISA's full annual cash allowance each year.

Great to be switched on to OPing at the start of your mortgage, well done

unfortunatly the isa needs to be in his name as if its in mine i will spend it! im very good at spending money but have found if its in his name im more careful lol