First Mortgage - First MFW Diary

5t3ve

Hi All,

Having just paid the 1st payment on my mortgage, and also making my first overpayment - I figured now would be a good time to start my MFW Diary!!!

My mortgage deal is as follows:

£120,000 over 20 years with a fixed rate of 4.39% for 5 years. This costs me a grand total of £752 monthly.

I'm allowed to pay 20% extra a month without penalty. Anything above this is charged at '1% of payment x no. years left on fixed rate'. It's a shame I get charged for overpaying more than 20% - but the cost is nothing compared to the amount of interest I'll be charged over 20 years for not paying the money into the mortgage.

I won't be able to pay the mortgage off within 5 years - so my aim is to get the balance as low as possible so that when I come to remortgage in 5 years, I'll be in a good position.

My first payment was 42 days worth of payments rather than the usual 30/31, so my payments were a little unusual this month...

So far...

Normal Payment:

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£911
Overpaid:

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£190 (Charged: £8.51)

Remaining Balance:

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£119,513
Saved:

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£223 (compared with not overpaying over 5 years)

I got charged this month as apparently I have to overpay before the direct debit, and anything after is counted as an extra payment excluded from the 20% rule. Every payment from now on is set up as a direct debit - so this won't happen again!

Its great to see that £190 now would have cost me £223 over 5 years - so I would have been charged £33 interest if I hadn't paid this! (and even more over 20 years!!).

I'll update the thread when I can, but will also keep my signature updated so the first post will reveal all!!

Thanks for reading, love what this forum is all about, and have been really encouraged by some of the other posts in this forum.

Steve

goobergirl

Good morning and welcome. You will love seeing the balance drop and what that means in cold. hard cash kept out of the banks mitts and in yours!

Sepa74

What weird rules! It's amazing what they come up with, isn't it. It always leaves me scratching my head wondering 'why'?.

Congratulations on your new home, and you're going to be so glad you got straight in and started making overpayments! Well done!

CathT

Well done on making OP's on your new mortgage straight away, that's a great habit to get into.

Radish72

Warning - MFW is seriously addictive

Symptoms include, multiple spreadsheets, the ability to quote daily interest rates, frustration of waiting till OP day and eye tiredness from thinking that staring at spreadsheets will somehow reduce it

Well done on starting from day 1 (wished I had)

originalmiscellany

Is this 20% overpayment only allowed to be per month, or is it a total overpayment over the year? E.g. if you owe 10k, can you overpay 20% over the year as you want or does it have to be upto 20% per month, allowing a total (if every month is overpaid by 20%) of 20%?

Does this qn even make sense?! Well done on a positive start - £33 saved is a great place to be in the first month of overpaying!

Ginger_Beard

Hi Steve,

Welcome to MFW board. I just wanted to echo what everyone has said so far. Well done for overpaying in the first month, very committed, and the best possible start! :j

What are your plans for becoming MF? How are you going to go about bringing it down?

Whatever you choose to do, good luck and all the very best!
GB

5t3ve

Radish72 wrote: »

Warning - MFW is seriously addictive

Symptoms include, multiple spreadsheets, the ability to quote daily interest rates, frustration of waiting till OP day and eye tiredness from thinking that staring at spreadsheets will somehow reduce it

Well done on starting from day 1 (wished I had)

Ha Ha you couldn't be more spot on with this post!! I've already spent hours making a spreadsheet so I can work out all the figures - daily rates - savings etc!! I figured it was pointless doing all this unless I really knew what the results were going to be! plus - I wanted to make sure any charges I pay over the 20% figure still work in my favour long term!

originalmiscellany wrote:

Is this 20% overpayment only allowed to be per month, or is it a total overpayment over the year? E.g. if you owe 10k, can you overpay 20% over the year as you want or does it have to be upto 20% per month, allowing a total (if every month is overpaid by 20%) of 20%?

Does this qn even make sense?! Well done on a positive start - £33 saved is a great place to be in the first month of overpaying!

Its calculated monthly - so if I make a lump sum in month 1, i'll pay a fee for this, but i should be ok to make a 20% fee free payment the following month (i think!!).

GingerBeard wrote:

What are your plans for becoming MF? How are you going to go about bringing it down?

I'm just going to keep trying to pay at least the 20% - now I've started I'm hoping i won't let myself stop. I've got a 5 year target to try and get the mortgage down to £80,000 - which means a monthly overpayment of about £280. I'll do this with my standard monthly payments and hopefully large one off payments when I have a good month of overtime etc!

This target is £20,000 less than I'd have if I hadn't overpaid - so although it may be difficult now - I feel it'll be worth it when I'm looking for a new deal in 5 years!

Thanks for all the positive feedback everyone - it really helps to keep me motivated.

5t3ve

Just made my Second Overpayment...

I've now overpaid a total of: £340.70
Which means I've saved in interest alone..

Over Fixed Rate (5 years): £84
Over Life of Mortgage (20 years): £477

Meaning I've already chopped 2 months off my mortgage, and I'm only 2 months into it!!

That feels good!

5t3ve

Hi All! Been a while since I've updated this thread. I've been continuing with the overpayments - here's a summary of where I'm now at:

Just made my 6th Overpayment...

I've now overpaid a total of: £942.58

Which means I've saved £195.31 in interest alone over my 5 year fixed period.

I'm no longer going to do calculations for the '20 year' savings, as its all a guessing game and not entirely accurate.

Summary:-
Mortgage Started at: £120,000
Remaining Balance after 6 Months: £117,181.57
Total Overpaid: £942.58
Total Paid: £5,615.50
Total Interest: £2,797.07

patrick_bs15

Well done, Steve.

Am impressed that you have had the good sense to overpay from the word go (it took me 4 years to come to my senses and start overpaying).

It is amazing that in the 1st 2 months of overpaying, you reduced your mortgage by an additional 2 months.

Keep up the good work.