First Mortgage - First MFW Diary

5t3ve

patrick_bs15 wrote: »

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.

Thanks for the kind words. I stopped working out the term reduction figures after month 2, as it made the spreadsheet i'm using far too complicated!!

HSBC actually sent me a letter saying that if I continue to overpay at my current payment (and interest rates stay the same!), then my mortgage will be paid off in 14 years 7 months. Thats a much nicer figure than the original 20 year term!

Its hard to work out sometimes whether it makes more sense to save, or just keep throwing money at the mortgage..

5t3ve

Hello all,

It's been a while since I last updated this thread, so I thought I'd provide an update as I'm approaching a year since I took this mortgage!

So… I'm pleased to say that I've managed to keep up the 20% overpayments throughout the year, and this has resulted in:

== 12 Month Summary ========
Total Amount Overpaid: £1,845.40

Remaining Balance: £114,303.33
Would have been: £116,181.50 (without overpaying)
=======================

What's interesting looking at my calculations is that even though I've overpaid by £1,845 - I'm only £1,878 better off than if I hadn't overpaid. This means that this year I seem to have only saved £33 in interest. I can't see a fault with the calculation, so I guess perhaps this goes to show that the benefits of overpaying are only really seen long term.

The main thing that's motivated me over the past year is that with overpaying, the monthly interest charge is below 50% of my monthly payment. If I wasn't overpaying, over 62% of my monthly payment would be taken back as interest! It's still a pretty hallowing figure, but it does help to know that over half my monthly payment is actually being knocked off the overall balance!

Well here's to another year of overpayments and spreadsheet calculations!

R_P_W

Im no expert but i get my annual mortgage payment in January each year and that shows me what I have paid in normal payments, overpayments and then it gives you a bit of a slap in the face when it calculates the interest to be added.

You are doing the right thing overpaying, if you didnt then you effectively just stand still for the first couple of years.

Spiggle

Hi Steve,

Now I'm not the best at the calculations part of OPing so I could be wrong here (and friends will correct me if I'm wrong!) but you must have saved a lot more than £33 by OPing £1845. To my mind, every penny of OP is capital cleared. That capital has been cleared for the rest of the term of the mortgage and would have cost much more over that whole term. So the initial saving in this first year may be £33, but over the longer term it will be a higher amount.

Am I totally deluded? I may just go and have aplay on locoblade's spreadsheet to see if I'm way off mark!!!

Anyway, congratulatons on your progress so far and good luck with the future. I wish I'd thought about OPing early on but I didn't start for a very long time! Oh the money I've wasted ... lol.

All the best,
Spigs

5t3ve

Spiggle wrote: »

Now I'm not the best at the calculations part of OPing so I could be wrong here (and friends will correct me if I'm wrong!) but you must have saved a lot more than £33 by OPing £1845. To my mind, every penny of OP is capital cleared. That capital has been cleared for the rest of the term of the mortgage and would have cost much more over that whole term. So the initial saving in this first year may be £33, but over the longer term it will be a higher amount.

Hi Spigs,

That's a good point actually. The whole point of overpaying is looking into the long term, so although it's only £33 now, I guess over the course of the mortgage it's actually worth so much more (not just in money, but in time!).

Thanks for the kind words.

5t3ve

Hi all - I'm now 19 months into my mortgage, so I figured I'd provide a quick update for anyone looking for inspiration..

I've been sticking with the 20% monthly overpayments. I had a few months recently where money has been tight and I considered stopping the overpayments - fortunately those months passed without action so I'm still on track.

I've updated my signature with the latest figures - By overpaying £2898.69 to date, I've saved £541.05 in interest over my fixed 5 year term (I've given up working it out over the life of the mortgage, and its pointless with unknown interest rate changes anyway!).

Even if I'd put this money into savings for 5 years, I'd only earn £318 (with the best interest rates I can currently find), so it goes to show that overpayments are the best place for my money.

Thats all for now folks - happy overpaying..