Hurdler's Race to be Mortgage-Free

Hurdler

Driving to the track
So... I have posted in the redundancy thread when I decided to take VR, and now I will be starting a new job on 1st August.

Before the VR, I had been overpaying my mortgage by £300 a month and dropped it down to what it should be.
I ultimately want to go contracting, so I am viewing this new job as effectively an 18-24 month training and improvement opportunity.
I also have yearnings to become a journalist (currently work in IT) so trying to get onto a part time diploma and have the entrance exam and interview at the end of July.

I decided to give my Mortgage Free diary a bit of a racing twist!
So right now... I'm at home laying out my kit, ready for the race ahead...

here comes the science...
My mortgage is a lifetime tracker with no early repayment/annual limits.
In October, my mortgage provider recalculates the mortgage and sets a new monthly figure. By that time I will have had a couple of months salary and will have an idea of what my monthly income will be. I want to be able to reinstate a couple of things I cut out (HD on my Sky package, for example).
For a long time now, I have been doing something that Martin recommends in having separate accounts for things, so I have a treat account, cash allowance for the week, an account which I use for Oyster Card tops ups - that kind of thing.

I want to have a couple of months of understanding what the extra money will actually equate to. Then I can call up the mortgage provider and overpay by double if possible.
One of the original bank account premier perks I had was a sweepsaver account that chucks a load of money into a savings account at the end of a month. So I am going to use that as my Mortgage piggy bank and will overpay by the monthly amount whenever I have it.

I have noticed that on my online banking I have the previous day's Mortgage balance, so at the moment I am mulling over spreadsheets and how to track this... and that's where my brain runs out!!!

My next post will be around the October timeframe once I know what the recalc and what the real net income is likely to be.

In the mean time, if anyone has any good suggestions for spreadsheet tracking... I'm all ears!

Thanks for reading..

:money:

goobergirl

Welcome and good luck. Respect to you too for following your change of career dreams, that takes guts.:beer:

Hurdler

Hi there - thanks... it's scary as hell as it would mean (eventually) dropping to about a third of what I earn now, hence paying as much off now as is humanly possible.
But it's what I would ultimately LOVE to do and with experience in IT, I could hopefully supplement with contracting, once I get a lot more breadth to my skills.

abouttimetoo

Hurdler wrote: »

Driving to the track
So... I have posted in the redundancy thread when I decided to take VR, and now I will be starting a new job on 1st August.

Before the VR, I had been overpaying my mortgage by £300 a month and dropped it down to what it should be.
I ultimately want to go contracting, so I am viewing this new job as effectively an 18-24 month training and improvement opportunity.
I also have yearnings to become a journalist (currently work in IT) so trying to get onto a part time diploma and have the entrance exam and interview at the end of July.

I decided to give my Mortgage Free diary a bit of a racing twist!
So right now... I'm at home laying out my kit, ready for the race ahead...

here comes the science...
My mortgage is a lifetime tracker with no early repayment/annual limits.
In October, my mortgage provider recalculates the mortgage and sets a new monthly figure. By that time I will have had a couple of months salary and will have an idea of what my monthly income will be. I want to be able to reinstate a couple of things I cut out (HD on my Sky package, for example).
For a long time now, I have been doing something that Martin recommends in having separate accounts for things, so I have a treat account, cash allowance for the week, an account which I use for Oyster Card tops ups - that kind of thing.

I want to have a couple of months of understanding what the extra money will actually equate to. Then I can call up the mortgage provider and overpay by double if possible.
One of the original bank account premier perks I had was a sweepsaver account that chucks a load of money into a savings account at the end of a month. So I am going to use that as my Mortgage piggy bank and will overpay by the monthly amount whenever I have it.

I have noticed that on my online banking I have the previous day's Mortgage balance, so at the moment I am mulling over spreadsheets and how to track this... and that's where my brain runs out!!!

My next post will be around the October timeframe once I know what the recalc and what the real net income is likely to be.

In the mean time, if anyone has any good suggestions for spreadsheet tracking... I'm all ears!

Thanks for reading..

:money:

Welcome to the board Hurdler and as one of the others have said, huge admiration for changing career tracks, particularly as it's going to effect your income.

Re spreadsheet tracking, it's spreadsheet city round here and I keep expecting to see a Spreadsheet Wannabe board added for all of us addicted folk What exactly is it you want to track on it as I'm sure between us we'll have the answer.

Regards
ATT

Hurdler

Thanks for the warm welcome, and I'm humbled by the props for wanting to change career!
I was browsing the Should I Pay Off My Mortgage thread/article - I knew I'd seen somewhere that Martin had suggested squirelling away some emergency money - so I will do that in tandem with the Mortgage Recalculation...
I think they send the letter out in October, because I normally have to pay one month at the recalculated rate, and then they usually pick up my overpayment starting in December.
I was debating using some of the capital I have to do the loft extension, because that was the only thing "left" to do - but that depends on the cost.
I also probably need to sort out the ancient double glazing more than I need to make this a 4 bedroom house...

So in October I'll start the MFW clock, I'll put away 3 months salary (I'll have been paid a couple of times by then, so I might have a better idea of what my monthly net income is)
I really hope I can squeeze double the payment - I have a little over 19 and a half years left on the mortgage so paying double will help that down quite considerably.

I asked this question on the "Should I pay mortgage off thread" but will repeat here. When I was messing about with the Overpayment calculator - I forgot about a couple of ISAs I have which will probably account for 2-3 months towards an emergency fund if pushed. Should I do that and save slightly less of the lump sum, giving me more to throw at the mortgage... or keep it separately and have it as an extra buffer/potential additional lump sums?

Sepa74

Hi Hurdler, I responded to your question on the other thread. Just one other comment... it's only 3 months salary if you want it to be - the minimum recommended is 3 months of expenses, including mortgage, but not including overpayments.

It makes no sense to be putting lots of extra money in a low interest savings account when it could be earning more by paying off your mortgage (assuming the mortgage interest is higher than the savings interest). The emergency fund is only intended to cover short term emergencies, so should be as small as you are comfortable with.

Good luck on your mortgage free journey! What area of IT are you in? I'm a contractor, and there are one or two other contractors on the board, but not many!

Hurdler

Gah - did I forget to subscribe to that??? Grr I always forget to do that on new threads!

That is a good point actually re: Expenses/not including overpayments!

I am a Solutions Architect, mainly in the area of Service Management. I had really REALLY hoped to try and land a contract as I'd set up a limited company just before leaving on the VR - but there was nothing doing at the time, and I really didn't feel I could actually turn down a permanent role - so my approach is to treat it as an 18 month-2 year contract with an opportunity to get some external ticks in boxes (sitting my TOGAF Enterprise Arch exams in a couple of weeks)... they've committed to letting me get some other externally recognised certifications as well, and with a couple of years to demonstrate their application as well, hopefully I can give contracting another crack.
If nothing else, this role will really help bring down my mortgage at a MINIMUM from 19.6 years to around 9-10 years. The lump sum can probably knock off another year or so.

I'm just impatiemt now... want to get started on the new job, want to get started on being MFW... :j

originalmiscellany

Looking forward to your positive progress too.. It gets addictive; can I recommend you give some updates between now and October as to how you are progressing? It would be good to get something between now and 3 months time. Well done on such exciting plans though

Hurdler

originalmiscellany wrote: »

Looking forward to your positive progress too.. It gets addictive; can I recommend you give some updates between now and October as to how you are progressing? It would be good to get something between now and 3 months time. Well done on such exciting plans though

That is a good idea... a while back (many MANY years ago) I put in place a load of accounts (actually as Martin suggests) to be distinct pots for things. I'll revisit those in August and post about them - I am still actually using up the share capital I sold to be able to buy my company car at the moment, and haven't actually started any inroads on the VR money, and had some left over inheritance as well, so I might revisit my Financial Strategy and top up those pots to what I thought would be useful maximum balances and then at least I can start from the end of August (when I will initially get paid) and work from there.

abouttimetoo

Hi Hurdler

Re you saving up an emergency fund; always a good idea but another aspect of this for you to consider is can you get your overpayments back if you needed to? Each mortgage provider and product has their own terms and conditions but below are some of the variations I've seen on this board:

• can't ever get them back
• can have all of it back
• can have a percentage of it back or those paid over a defined period of time
• can stop making 'normal' monthly payments until all the OP's are used up (this is the kind I've got)

Just something else for you to consider when thinking about savings etc so worth giving your company a call

Regards
ATT

Hurdler

Hi there all - well thanks to some questions posed by abouttimetoo - I called this morning...

• My interest is calculated Daily, so by my understanding, there is no benefit to timing my lump sum/ad-hoc payments to a particular period... just when I can afford it
• Overpayments are therefore taken off the End of day Balance and I asked him several times to confirm it comes off the capital. I also took his name and made a note of the conversation.
• I ran through the last three months payments with him and established that the balance from Friday COB and the likely balance at the end of today would be in line with the 0.97% rate.
• Thanks to another thread, I discovered that there is an option on my online banking to make payments to the mortgage at any time, from any of my linked accounts at Barclays (including savings) so where I have this Sweepsave function on my current account, I can now use that as my "Ad-Hoc Mortgage Piggy Bank" account.
• I established that my decision NEVER to use the Current Reserve Account thingy attached to my mortgage was the right one!!
• The only fee I have with paying off the mortgage in full (if that day ever comes) is a £275 admin fee and the need to buy a strong box for the deeds (well in reality pay for a safety deposit box at the bank, more like!)
• Because I had my payment brought down to what it SHOULD be - it had actually come down by around £6 a month because of the overpayments I'd made from December through to April.
  So in reality, it's already BEEN recalculated ahead of October so I should be able to work off double the current amount ... the guy did try and persuade me to go ahead and change it now, but I had to point out to him that I am still living off savings until I actually GET PAID in the new job (duh!)

I have seen mixed reports about Woolwich, and I did ask him what was the catch.. it appears I just managed to get on the right mortgage at the right time with the right terms.
When I consider the hell on earth I was going through around that time, with the recent loss of a parent, an awful time at work that eventually culminated in taking the giant step of applying for Voluntary redundancy, rather than stay where I was all miserable and stressed... well I put it down to karma FINALLY smiling down on me and giving me a small break!

I found an AMAZING SOA calculator so after I have done a bit of revision for some professional certification exams, I am going to fill that in and post here.

Thanks again for all the advice