Please help us in our quest to overpay!

Plans_all_plans

Hello all,

After moving into our first home last year, we have decided to overpay in the hope of moving to an area with better secondary schools in future. I'm 25, husband is 27 and we have a 4 year old child together.

Our outstanding mortgage is £56,861 and our house is worth approx 110k (we had a good deposit) We're fixed for 5 years at 5.19%.

I work (very!) part time, husband full time. Monthly wages = £1,900. Our jobs are as secure as they can be really.

I've worked out that we have £500 left over at the end of the month. I want to get started overpaying ASAP and don't see much of a need for too big an emergency fund (my parents never had any savings of any description, for instance) But my husband thinks we'll need 5k, which I think is overkill!

We are thinking of having another child, which will obviously stretch the budget a bit more. We are sensible with money and have no real debts of any kind, except mortgage/our student loans.

Is there anything we really need to know before embarking on our quest? Any guides we can read? Thanks for any tips.

Marksy

Well, the 2nd time around with the next one, you'll know what you DO need, and what you don't really/can make do without in terms of items for the baby.. so some experience there = money saved(i..e we bought every gadget we thought we'd need - half of it we never did). We've another one on the way, so this time we've not had to buy anything (but our gap is 2 years between them - well will be!).

£500 left over after all your outgoings? Even an overpayment as small as £50 can make a difference - stick it in the overpayment calculator on the MSE site to see. If that £500 actually is all spare, you could start small o/ps like £50/mo, and then £50 into a savings account. Next month, whatever is left over from taht £500, keep aside and don't spend. See how you get on after 3 months - if you can mange it, bump the mortgage up to £100/mo - anything left you could either pay off the mortgage the follow (or in your new mortgage year as a capital payment) or bank it in the savings account.

Our emergengy fund, we worked out is enoughf ro us to live off for a year, should we both be out of work - after we'd cut back all non essential things.. probably overkill, but I'm a belt and braces type of person. You've age on yourside - we're similar ages - couple of years older and have only just started the overpayment side of things. Before, we literally threw money away.. so keep at it, if your plan does work, change it and stick at it again for a few months - if it works, great, if not change again.

Plans_all_plans

Thanks Marksy, well we've got everything we need bar the nappies if we had another girl! If we had a boy, we'd be bought loads of clothes so wouldn't really spend out too much on anything. Literally, I've only ever bought about 5 pieces of clothing for our first as our relatives come round all the time with everything from knickers and tights to fancy winter coats and dresses for her!

In terms of the savings fund, I know we should probably have some sort of backup, so I like the idea you've come up with. I put the £500 that I worked out should be spare into our ISA on payday and am seeing if we can avoid dipping into it before our next payday! Fingers crossed!

Marksy

No problem

Another way of doing it would be saving that £500 up completely, and then when you reach your maximum overpayment amount per year, baning it off in one go (although you'd be paying interest on the months that you were saving it up for...) It can become obsessive working out all the rates. My work colleagues think I'm mental, I worked out today that by doing something with my money I'd gain an extra £4/year - which I did, and they just can't understand why I think £4 is worth the time/effort I put in to working it out heh. Better in my back pocket than someone elses

Edit: forgot to add that if you've insurance that'll pay your mortgage if you lost your job(s), that'll take probably 3 months to kick in, so saving at LEAST 3 months (check your insurance!) worth of mortgage payments would be one of my priorities - if that could include the small overpayments, then bonus

dimbo61

If you have £500 spare each month why not overpay/save 50/50% until you have 3/6 months of income in savings upto £16K then OP every penny you have spare

sarahevie

I'm with the hubby on the savings - worth it for an emergency. I agree with the 50/50 split half savings half O/Ps til you have a bit of a pot

We have similiar income but our mortgage is double yours so I'll be coming for tips to get it down:rotfl:

As for second children, we made a few errors 20 months between mine so thought we'd need two cots, didn't.

Bought neutral clothes incase of a boy, was another girl so they didn't get used.

Overall though I find having two as cheap as having one:D