saving £100,000 ten years to utopia !!

gallygirl

SuperSecretSquirrel wrote: »

Not quite a math wizz but will give it a shot...

http://www.moneysavingexpert.com/mortgages/mortgage-overpayment-calculator

158k over 25 years at 3.89%, £824 per month, total paid over life of mortgage £247,325 (assuming rate never changes).

Add £425 per month overpayment (£5100/12), shaves off 11.5 years, total paid over life of mortgage £203,356 (assuming rate never changes).

At the end of year 13, having made no overpayments your mortgage balance would be £94,739. Having overpaid £425 a month it'd be £8,351.

You are saving your OP money in an ISA at 3%. If I use http://www.moneysavingexpert.com/savings/savings-accounts-best-interest#calc and set the following otions: start £0, save £425 a month, 3% (again assuming rate never changes), no tax, over 13 years, you'd end up with a savings balance of £80,939.

Knock the savings balance off the no overpayment balance at year 13 (withdraw savings and pay down a huge lump sum on the mortgage) and you get a remaining balance of 13,800.

Overall you would be £5,449 better off overpaying monthly rather than saving and paying down a large lump sum at year 13. But only you can decide if your happy paying this premium for liquidity. You might have opinions on interest rates in the future that might have a bearing on your decision. Not to mention ERC limits etc?

Whichever option you go for you can be safe in the knowledge that you are saving a huge amount over the life of the mortgage. I'm not being totally efficient myself, overpaying some and saving some (at 2% less than interest charged on mortgage), but it's a balance that suits us and I'm happy to take a slight hit to keep a good easy access savings balance

SSS are you available for hire :rotfl:.

SH don't panic about the debt, it's not as if you've gone crazy. Will soon be gone

streethack

Thanks for the info SSS really interesting to see the two side by side. I guess that £5,499 would be less as I’m going to do this in 10 as opposed to 13 years hoping my company share scheme will take up the slack. I’ve really made up my mind with your post that I’m comfortable doing it the way I’m doing it. Of course I’m open to change my plan and may have to with the way ISA rates are. That said if I can get a minimum of 3% ISA I will do and take the few grand hit over the 10 years.


I never even thought about ERCs I just assumed once I get a new 5 year fixed mortgage in 3 years’ time and this ends at year 8 I would just be able to pay of a lump sum as it will be just a standard variable rate mortgage by that stage? Maybe I’m wrong?


Yeah I often think my diary is probably a bit much to the point hence it’s only on page three after two years:) But I’m not sure how to jazz up something where I’m just saving up to pay my mortgage. Although not a very exciting diary I enjoy reading back over it and it really makes me want to do this every time I read it.



Hahaha yeah I guess the debt thing is a bit silly when you say it like that. After being in debt for much of my life I guess I have debtaphobia or something anyway hoping to clear that soon, may dip into my separate emergency savings.Cant stand to give these banks any more interest.

streethack

I have been pondering a lot about this thread lately it seems that saving alongside my normal mortgage payments is becoming a bad idea. It appears the current Government/banks are punishing savers to get them out spending there hard earned money on crap even with talks about negative rates . It seems I have no alternative but to start over paying my mortgage. This is something I didn’t want to do and in all honesty I’m kind of worried about it.

I haven’t assimilated a plan yet but know that I will be keeping at least £10,000 in liquid assets and still aim for 7yrs and 10mts time.

streethack

Ok so I phoned First Direct today my outstanding balance is £151,524 there are no limits on overpayments which is good.

Currently I have £10,389 in a two year ISA account paying 4%. I will be keeping this as my liquid assets.

There is £5426 in a ISA at 3.2% maturing in October once this matures it will be going straight on the mortgage.

I also have 5,248 sitting in a low interest savings account which was earmarked for a new ISA come April this will now be going onto my mortgage.

streethack

Ok so I have just made my first ever overpyment to my mortgage in my life of £5250, my current mortgage has dropped to £146,274. Im dumping my F/D regular saver and using this money to over pay onto the mortgage.

streethack

My F/D regular saver is closed and the money has been transfered back into my current account so I have just lumped another £600 onto the mortgage that leaves the current balance at £145,674, saving over £8000 in interest over the term. Eat that Bankers.

lee111s

Nice work!

streethack

Thanks Lee11s

So ive been plugging away with figures most of the day and my head is spinning. So heres the plan for the next 7yrs and 10mts (utopia date)

Overpay £400 per month but target a total of overpayment per year of £6000. With the ISA maturing in October and with the O/Ps already made this should leave around £40,000 at the end of the utopia date.

This £40,000 will hopefully be funded by my liquid assets and my company shares.

Currently

ISA: £5426 (will be O/P on mortgage in October)
Savings: £10,326
Company shares: £7696

gecko

Hi streethack,

I went through the same quandry re. savings/overpayments and came to the same conclusion. As the rates are so low it's only really worth keeping an emergency fund (10k ish) in savings and putting the rest into paying down the mortgage. Do you have the ability to get any of your overpayments back if needed? I can't except for using payment holidays which is a bit rubbish.

Well done on your progress to date...

streethack

Unfortunalty I dont have this facility. Im still kicking myself that i came off my old Nationwide mortgage which not only allowed this but tracked 2% above base rate. I jumped at 3.89% with no fees as I never thought I would see a deal so low again

Seems like your doing great yourself