Paying off the Mortgage on the Sty!

smileypigface

My plan has just been turned on it's head as I had hoped to be on a career break from my baby's first birthday, at end of May, for 4 years.

However, big changes at work while I've been on maternity leave have resulted in my request being declined and so I've got to return to work on my baby's birthday!

I'm just about over the shock - I have plans for childcare just about in place and am thinking that if I have to return to work then I may as well turn it to our advantage and firstly enjoy having the extra money (have a nice holiday each summer for exampe) and make as much as a dent in our mortgage as possible.

I was in the process of setting up a business with a friend - which I am still hoping to do - the outlay is very small and we have already got most of the set up expenses paid for - so any extra I can make from the business will also go into the mortgage pot.

My current mortgage (in my name only as hubby still had his own house (now sold) when I bought my house) - we've just spent the profit from the sale of his house to extend 'my' house so we will be happy here for several years now, although it's not our 'forever home'.

There is just under £30k of mortgage on a fixed 4.89% repayment basis until August this year - the remaining £102K is on a fixed 5.49% fixed until August 2013.

I believe we would be better off with an offset mortgage as we already have all our expenditure as close to the end of the month as possible and make as many of our food and fuel etc purchases on a Tesco Points Credit Card which we clear completely at the end of each month. This means we have a running balance of over £4K in our current account almost continually.

But I can't work out if we are best off letting the current deal expire or changing sooner - the early redemption penalty is just over £5K.

I'll put a SOA up in a sec as I'm looking at ways to reduce our outgoings - I'm already thinking of using a pushbike when I go back to work to save on fuel and car running costs.

Any views or advice would be gratefully received.

Thanks for reading x

smileypigface

Net Income - me 2200
Net Income - OH 2200
Child Benefit 81.20

TOTAL INCOME 4481.20

Monthly Outgoings

12 year old's school lunch 60.00
Baby's Music Club 30.00
Maintenance for older kids 120.00
Childcare for Baby 650.00
Savings for Baby 20.00

Service Plan Car 1 36.34
Service Plan Car 2 35.78
0% Finance (to May 13) Car 1 380.00

Water 43.00
OVO Gas & Electricity 84.00
Council Tax 158.00
Mobile Phones (x 4) 100.00
HSA Health Plan 20.00
Mortgage 879.70
Orange Home Phone & Broadband 29.00

Ikea 0% fin for Kitchen 161.29
oh 0% Credit Card 100.00 (bal 4000)
me 0% Credit Card 100.00 (bal 4500)

Dog Agility & Training 52.00
Vet Plan for 2 dogs 22.00 (covers all flea treatment/wormer/boosters/6 monthly check up)
Insurance for 2 dogs 57.00 (lifetime policies - claimed over 4,000 over 4 years so far)

Food/Fuel/Clothes etc 500.00

Monthly Savings for Annual Outgoings

Car Breakdown Cover 10.00
Car 1 MOT etc 10.00
Car 2 MOT etc 10.00
Car Insurance 60.00
Car Tax 2 Cars 27.00
House Insurance 16.00
TV Licence 12.50
Service Charge for House 22.00
Family Birthdays 40.00
Christmas 60.00
Holidays 125.00
Dog Food 12.50

TOTAL OUTGOINGS - 4043.11

Left Over - 438.09 - used to pay back loan from family member 0%

smileypigface

I'll keep a log of progress here:

31 Dec 10 - outstanding on mortgage £132,089.73

Last payment due in August 2032

Hoping to be able to post overpayments here before too long - any suggestions gratefully accepted x

cha97michelle

Hello, it is nice to see another new diary. Looking through your SOA, the only thing that seems a little high to me is your gas and electric. I'm with ovo and we were spending £72, and it is now only £60. That could be down to house size though as we are only a 3 bed semi but we are at home all day - me and 2 littlies. We also have good insulation and a new boiler last year so it should be good.

Some might say your gift budget is high, but to be honest, i am doing not much less than that as i don't want to be tight with the kids for something non-essential.

I think we need some more details though. It looks like you have 2 kids? A 12 yo and a 1yo. But then you talk about child maintenance? So that would explain why you need more for presents etc, if there are older kids you are supporting too.

Good luck with your challenge.

getmore4less

I believe we would be better off with an offset mortgage as we already have all our expenditure as close to the end of the month as possible and make as many of our food and fuel etc purchases on a Tesco Points Credit Card which we clear completely at the end of each month. This means we have a running balance of over £4K in our current account almost continually

Current account holdings don't make that much difference with offset mortgages

eg,
FD 65% LTV do a tracker @ 2.49%, equivilent offset @ 2.79%

on £132k over 20 years thats, tracker £698.93pm, offset(£4k) £696.50pm

So it might look like it works but it is the £4k that makes the difference not the offsetting.

Look at the interest, tracker(£132k) £273.90pm, offset(£128k) £297.60pm.

With the tracker you still have the £4k that can earn interest

getmore4less

A mini review of the SOA

oh 0% Credit Card 100.00 (bal 4000)
me 0% Credit Card 100.00 (bal 4500)
Left Over - 438.09 - used to pay back loan from family member 0%.

Whats the total debt that needs to be paid off before the 0% run out?


Review the mobiles, there are much cheaper options out there.

If you can go down to one car that would save a lot.
Service plans look expensive whats covered?
Car loan over £9k running cheaper cars would save loads.

No savings for car replacements

Total debt on top of the mortgage is looking like around £20k(depending how much you owe the parents could be more) this looks like it needs attention more than the mortgage.

smileypigface

Thank you for the replies.

I agree that the gas/electric bills are a bit on the high side - but we've just had a new combi boiler installed so I'm hoping to see a reduction soon. We have a 3 bed semi townhouse with 2 reception rooms and kitchen/diner - I have been at home with the baby for the last year and he will be minded in our home when I go back to work so the house will still be occupied all day - my husband works from home one day a week and I hope to do the same when I go back to work.

I have 4 children in total - my 20 year old (left home now), 17 year old and 12 year old are from my first marriage - their main carer is their dad and I pay maintenance under a private arrangement - which together with the school dinners and clothes that I pay for each month adds up to the figure the CSA would assign to my circumstances. I re-married 3 years ago and we have one baby who will be one at the end of May.

I retain a 25% share of the ex-marital home which is payable once the 12 year old gets to 18 years old - currently worth £60K - so whatever it ends up being worth in just under 6 years time will be paid off my mortgage then.

Hope that makes it clearer x

When I read my SOA back I couldn't quite believe how much the dogs cost us each month - if we were on our uppers then obviously we would have to reign this expenditure back in a lot - but at the moment it's a lifestyle choice I think we can afford - their food is very reasonable - we have them on a working dog kibble - a 15kg sack lasts the two of them for just over a month - at a tenner a sack (with free delivery if I order 6 months worth at a time)!! I was wondering whether we could eat it too ;-)

Hmmm and food for thought about the whole offset question - thank you.

smileypigface

Thanks getmore4less - added answers below.

getmore4less wrote: »

A mini review of the SOA

oh 0% Credit Card 100.00 (bal 4000)
me 0% Credit Card 100.00 (bal 4500)
Left Over - 438.09 - used to pay back loan from family member 0%.

Whats the total debt that needs to be paid off before the 0% run out? minimum payments are just over and just under £50 per month - rounded up to £100 to try and reduce the actual balance too - they were supposed to be stoozed but we have spent the stooze pot .. whoops!!



Review the mobiles, there are much cheaper options out there.

If you can go down to one car that would save a lot. Eeek - I know you are right - I'm clinging on with 2 cars as my husband works away from home 2 days a week and takes one car - leaving me with the other one to cart children and dogs around in - but I do appreciate that this is a luxury.
Service plans look expensive whats covered? Just about everything except for tyres.
Car loan over £9k running cheaper cars would save loads. Again, I know the cars are a luxury - but they are quite economical models (if there is such a thing with the price of diesel these days) and we need 7 seats if we are going to fit all the kids/dogs etc in for family days out.

No savings for car replacements I suppose because I acknowledge they are luxury items I've not made allowance for them as they aren't essentials - but as we have them regularly serviced I'm hoping they go on and on (fingers crossed)

Total debt on top of the mortgage is looking like around £20k(depending how much you owe the parents could be more) this looks like it needs attention more than the mortgage. Interest free loan from family is for £7,000 - I was planning on throwing the current excess of income over expenditure at that debt first - with the addition of husband's overtime (not factored into his income figure as it is variable) and any income from my new business venture (although this will be low) - hoping to clear it within the next year at most. Planning on moving credit card balances to new 0% deals when they expire.

That's what led me to thinking about offsetting - as we could be paying back the 0% debts to family and then credit cards whilst still gaining some benefit of paying a little bit more off our mortgage by offsetting. Then once the debts are gone we can throw the excess income directly at the mortgage.

Thanks again for replying, much appreciated.

getmore4less

What do you have to show for the £9500 stooze pot spending?

Planning on moving credit card balances to new 0% deals when they expire

But that does not pay them off and you have the BT fees(3%+) to add each time so these are costing more than 0% you might think.

If the new cards don't come up you are going to have some high interest charges so having the saving ready is essential just in case(rather than paying off the family debt which is true 0%)

At £100pm and 3% added every year that 4 years these debts will be hanging around.

Total debts are around £25k and £1000pm is servicing/paying them off.

I would focus on a plan to get out of the debt cycle especialy the long term car renewal issue.

With OH only 2 days a week away I would have thought with a bit of planning 1 car would do, how far away and does he need the car all day? any other transport options for him?

I would review the service option again, £400 each every year seems a lot, what mileage are you doing? and you still have tyres and MOT to pay for.

One very good car and a cheap run around should do the job if you must keep 2. A car costs about £500-£1000 before you drive it anywhere and depreciation on top.


we need 7 seats if we are going to fit all the kids/dogs etc in for family days out

So these dogs are costing even more, why not just use 2 smaller cars for family days out? How many are there anyway?

The 20+17 will be making there own way soon and won't be hanging around for the family days out, so the next cars can be smaller.

What are the 2 cars worth, it might not be financialy sensible getting rid/changing one but at least have a plan to do without for a while when one needs replacing or review the needfor a big/expensive vehicle.

It's all about priority and lifestyle choices but if you look you do seem to be funding this with debt(£25k), not a good situation to be in, it can spiral out of control.

Without the debts you would have £1k spare each month.

katsu

smileypigface wrote: »

Net Income - me 2200
Net Income - OH 2200
Child Benefit 81.20

TOTAL INCOME 4481.20

Monthly Outgoings

12 year old's school lunch 60.00
Baby's Music Club 30.00
Maintenance for older kids 120.00
Childcare for Baby 650.00
Savings for Baby 20.00

Service Plan Car 1 36.34
Service Plan Car 2 35.78
0% Finance (to May 13) Car 1 380.00

Water 43.00
OVO Gas & Electricity 84.00
Council Tax 158.00
Mobile Phones (x 4) 100.00 There are increasingly great deals out there - check you are on the right plan, look at sim only etc etc.
HSA Health Plan 20.00
Mortgage 879.70
Orange Home Phone & Broadband 29.00 check martin's articles to see if you can save here - seems dear to me.

Ikea 0% fin for Kitchen 161.29 0% for life of balance? How much left to pay?
oh 0% Credit Card 100.00 (bal 4000)
me 0% Credit Card 100.00 (bal 4500) Do you know how you came to do the overspending/is this buget now realistic enough that this will decrease and not increase.

Dog Agility & Training 52.00
Vet Plan for 2 dogs 22.00 (covers all flea treatment/wormer/boosters/6 monthly check up)
Insurance for 2 dogs 57.00 (lifetime policies - claimed over 4,000 over 4 years so far)

Food/Fuel/Clothes etc 500.00 I'd break this out as you can then look at savings in the different categories. For example the grocery challenge info on old style, for food savings, for petrol register with petrol prices website and check you are fuelling up at the cheapest part of town, for clothes think about what you really need and shop from your wardrobe for a while.

Monthly Savings for Annual Outgoings

Car Breakdown Cover 10.00 As you have credit cards and reasonably new cars, I recommend Autoaid. Cover for you and DH for around £42 a year but which equates to top level AA/RAC. Alternatively Boncaster's Autonational currently £66 online for 15 months and cashback via TCB - have a look at martin's article as Autonational might just be better value.
Car 1 MOT etc 10.00
Car 2 MOT etc 10.00
Car Insurance 60.00
Car Tax 2 Cars 27.00
House Insurance 16.00
TV Licence 12.50
Service Charge for House 22.00
Family Birthdays 40.00
Christmas 60.00 Pressies are very personal, but honestly nearly £1200 a year on birthdays and christmas seems a lot to me.
Holidays 125.00
Dog Food 12.50

TOTAL OUTGOINGS - 4043.11

Left Over - 438.09 - used to pay back loan from family member 0%

Some thoughts above. I'd change breakdown cover asap, and honestly I'd look at painless savings on pressies by using sale bargains, as you could make savings here without it being obvious to anyone.

HTH