Perkipsie Diary of MFW

Perkipsie

I’ve been a long time lurker here at MSE, following many peoples tips, ideas and diaries and have finally kicked myself in the bum to not only get on an deal with our finances but attempt to document to keep myself on the straight and narrow.

About us :

My husband and I have been married 4 years, have one child between us and both have them from previous marriages bringing our grand total of children to 5, all aged under 13.

We have a small company that we started a little over a year ago. It was an extension of what we already did for a living just doing it for ourselves instead of making someone else rich. The work is seasonal to an extent but we are fairing better than ever before. This is where my inspirational kick came from…. “What if this is the best it’s ever going to get? What if it all falls apart in a couple of years?” So the plan was to pay off as much debt as possible, build an emergency fund and generally prepare a back up should the company (aka me) become a victim.

The House and Mortgage :

We have a 3 bed terrace house in the average part of our town, we bought in 2005 at £168,000 and due to being self employed took a nasty sub prime mortgage (£153,000 at 3.5% above base tracker) to get ourselves on the ladder. We rode out the interest hikes, never missing a payment. With the interest rates dropping our payments dropped to £840 per month from the £1200 it had been at it’s highest. I separated the mortgage direct debit into an account that only it went out of and continued to pay £1200 a month into it figuring that would give us a cushion should rates go straight back up. As the amount in that grew I used it to pay off some higher APR debt.

I tried to start to make direct OP to the mortgage company and was told that although there is no limit to my overpayments they must be lump sums of over £5000 which did deflate me a little as I had intended on just sending them the £360 payment every month. The mortgage bank account has £1900 in it at the moment but our tie in period has now ended and with rates likely to head upwards soon I’ve started to look at a remortgage that would allow over payments and tie us down to a fixed rate for maybe 5 years? Credit history is now pretty good and I have the 3 years accounts that the bank will want. My husband’s suggestion is to remortgage and reduce the term straight away by committing to the £1200 we’ve been setting aside. The figures on this look like we could reduce our remaining 19 years to 12.

So today the mortgage stands at £137,000 and I’m very keen to make a good dent in that figure.

Any additional ideas are appreciated

yukkibear

Good luck with your journey and welcome to the boards

SeriouslySeekingtoSave

It sounds like you have done a fantastic job; and yes, I would agree that shifting your mortgage is a good idea. A £5,000 OP is insane.

Perkipsie

It's been a manic few days, the end of one of our longest working months is near with the mountain of paperwork that comes with that growing. I have called the financial advisor at my local HSBC to discuss our remortgage options. The figures on £1200 a month do bring the number of years down to 12 instead of 19. They have asked for a whole bunch of figures for the last few years earnings for both me and company and projected. I've made an appointment with the accountant for next Weds to finalise my 10/11 figures to get them sorted as soon as the tax year ends.

One of the things I left off of my introduction (quite a biggie on reflection) was an extension to the house that we started building in 2009. Part of the reason it has taken so long is that we have funded it piece by piece so that there was no further borrowing against the mortgage. An inspection by the local authority has told me I am now one sealed window away from it being signed off as completed. The advice I am seeking is how do I value the property now? Local estate agents are rather vague and I vaguely recall mortgage valuations to be a little different. I am just aware that it could alter my LTV hugely....

dimbo61

well if you go to HSBC they will only offer you HSBC mortgages so you might want to talk to a " whole of market mortgage adviser"
We had an offset fixed mortgage with YBS for 5 years which dropped onto a tracker and we had the flexability of unlimited overpayments.
I cant see the point of reducing the term as that limits things if you struggle with the higher payments ( we took a longer term and then paid £50 to reduce it but we always have the option to extend if back !!!)
Building up funds in the offset is a great way of saving for the tax man /emergency savings etc)
YBS have deals at 85% LTV but like I said check out the whole market

Perkipsie

Daft question, who are YBS? and are they likely to do the same and consider company profits as well as my personal salary/dividends?

And while I'm asking daft questions I do understand the principle of offsets but find it a bit tricky to really work out the interest calculations. With current rates are they still than option that makes sense?

I apologise if these questions are a little juvenile but being honest I dont truly understand the mortgage I have other than it's a repayment and the lender was not the best. I guess I have alot to learn to make myself more financial savvy.