MFW newbe any help greatly appreciated

Mummymortgagefree

Hi everyone,

Would love to be MF a.s.a.p and love everything i've read on this site so far thought i was the only one in the country that felt like this !!!

We have 2 mortgages to get rid of thanks to me buying a flat a few months before getting married Hubby already had one on his house.

Aim is to get rid of flat mortgage as soon as poss.

2008 mortgage £95,000
2011 now £76,300

Flat is rented out which gives me a start with a £500 per month overpayment. Currently paying mortgage at 4.99% (its not a buy to let mortgage so does anyone have any advice on whether changing this is a good idea or not and where i might try ?) Hubby currently paying 2.5% on his mortgage !!!:mad: and is very smug about it .
Any help would be greatly received. A bit of background about us, we both work full time and have a baby son who eats into our over payment pot a little. Any expert advice from anyone out there who has done this before would be great.

Ta

Engeroosi

Firstly have you informed the bank that your now letting the flat out? There will be plenty people come here and tell you all the ins and outs you have to do legally to be a landlord.
For tax reasons you can offset the interest on the flat mortgage against any income you gain from the rent. Again others will let you know in more details.
I am in similar position as I had a flat before marriage, as did the wife, and we have bought a house together. So all in all we have 3 mortgages.

originalmiscellany

Yes, we too are in a similar position, where we both bought before we married, and when we were getting married, the market slowed down, so we have 2 houses, 1 with a small mortgage and a second rented property.
We changed mortgages to a BTL (you really need to inform your bank of this should there be any problems later on down the line), and re-mortgaged at the peak of the financial crisis, where we paid 1.5k in a setup fee! Ugh. But it's on a base rate +1.49% which is great for a BTL.

Our plan is to clear one mortgage first then the other one. It doesn't really matter which order (Well the higher interest rate really) as long as we clear our debt and don't have debts we can't afford to pay hanging over our heads like a dark cloud.

Key things are to post an SOA, and get the wider public to comment on where potential savings can be made, I'm sure there are lots of small changes you can make, which turn pence into pounds and so on!

Also, if your'e serious, set up a signature which itemises every time you're saving/post to this thread. It's amazing how addictive this becomes and how it can focus your mind. Lastly read some posts from some of the "old timers" who have managed to do absolute miracles with their money saving over several years. That's encouraging.

kingboth12

Hi,

i am also in a similar position to yourself. Bought a flat about a year before moving in with the gf. So i have now ended up an accidental landlord.

As has previosly been mentioned you need to tell your provider that your flat is now being let out. Depending on who your provider is their response may be to change it immediately or give you a timeframe to do this. I was lucky enough that Nationwide simply told me that i would have to remortgage within three years.

Also, have you done any calcs to work out if paying the mortgage of is the most efficient way to save money? Interest rates v mortgaes rates (4.99% will be tough/virtually impossible to beat though).

However, as its a buy to let property, its worth remembering that the more money you pay off your mortgage, then the more tax you will have to pay on your rental income. This may swing it and you could be better saving in ISAs etc rather than directly into your mortgage?

Hope it all works out
KB

p.s. hopefully you have but have you made sure you comply with all necessary rules for rental properties? i.e. gas certificates, deposit schemes etc

Mummymortgagefree

Thanks for all the great advice:)


I have informed my mortgage provider that I am renting the property.
I'm with the Alliance and Leicester, they ask an annual fee of £95 for permission to let, which seems a good deal ??. There is no requirement to change to a buy to let mortgage, but I wondered if this was a better option in the long run ??

For the over payments I make each month I have asked my provider to reduce the term of the mortgage rather than the monthly payments...this is managable at present and I think makes more sense from a tax perspective too ??

The gas safety certificate, electrical survey and tenants deposit scheme is all in place so everything in ok there.

Thanks for the advice about paying off the higher rate mortgage first, it was not something I had even considered !!! ....... feeling very stupid now, in my mind the flat was not our home so it should be paid off first doh !!! So more luck than judgement there I think....

I now need to sort out my bills, I know I spend far too much each month on our grocery shopping which comes in at £500 and sometimes more depending on our wine intake !!. From reading other posts some of you are able to budget on half that amount, I really need help I must do better .

lincoln-potter

Hello and welcome to the boards.

If you get chance post an SOA so we can give helpful little tips.

Mummymortgagefree

Ok you're gonna love me here, what is an SOA ?? said I was new to this .......

lincoln-potter

Mummymortgagefree wrote: »

Ok you're gonna love me here, what is an SOA ?? said I was new to this .......

Ohh sorry I should have said (Statement of accounts), its the best way to see exactly where your money goes each month and thus see where you can trim.

Mummymortgagefree

Ok thanks,

I'll take a look at my outgoings and list them down...think this is going to be an interesting exercise. If possible can you give me an example of the type of information people would need to see to be able to offer helpful tips/advice?

lincoln-potter

Mummymortgagefree wrote: »

Ok thanks,

I'll take a look at my outgoings and list them down...think this is going to be an interesting exercise. If possible can you give me an example of the type of information people would need to see to be able to offer helpful tips/advice?

Heres the one I cribbed when i did mine first.

Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 2
Monthly Income Details
Monthly income after tax................ 2256.36
Partners monthly income after tax....... 532.07
Benefits................................ 171.20
Other income............................ 0
Total monthly income.................... 2959.63
Monthly Expense Details
Mortgage................................ 796.52
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 210.00
Electricity............................. 31.50
Gas..................................... 0
Oil..................................... 200 (400 lasted us two months over xmas)
Water rates............................. 30
Telephone (land line)................... 15
Mobile phone............................ 20
TV Licence.............................. 12.37
Satellite/Cable TV...................... 0
Internet Services....................... inc with phone
Groceries etc. ......................... 300
Clothing................................ 50
Petrol/diesel........................... 100
Road tax................................ 0 (pay annually)
Car Insurance........................... 0 (pay annuall)
Car maintenance (including MOT)......... 30
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 25
Other child related expenses............ 20
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 55.40
Contents insurance...................... combined
Life assurance ......................... 34.68
Other insurance......................... 0
Presents (birthday, christmas etc)...... 50
Haircuts................................ 20
Entertainment........................... 100
Holiday................................. 0
Emergency fund.......................... 100
Total monthly expenses.................. 2200.47 (the oil will drop obviously in summer)

Assets
Cash.................................... 2000
House value (Gross)..................... 335000
Shares and bonds........................ n/a
Car(s).................................. 15000
Other assets............................ 0
Total Assets............................ 352000

Secured & HP Debts
Description....................Debt......Monthly.. .APR
Mortgage.......................195500....796.52.....2.95
Total secured & HP debts...... 195500....-.........-
Unsecured Debts
Description....................Debt......Monthly.. .APR
Total unsecured debts..........0.........0.........-

Monthly Budget Summary
Total monthly income.................... 2959.63
Expenses (including HP & secured debts). 2200.47
Available for debt repayments........... 759.16
Monthly UNsecured debt repayments....... 0
Amount left after debt repayments....... 759.16
Personal Balance Sheet Summary
Total assets (things you own)........... 352,000
Total HP & Secured debt................. -195,500
Total Unsecured debt.................... -0

Mummymortgagefree

Thats brilliant you've been so helpful I really appreciate your time. Will be working on my SOA over the next few days :-)

Have started saving money by shopping for vegetables at the market and cooking meals in batches this morning ( Its started !!!!).