RS Clio's Mortgage free dream

RS_Clio

Hi all,

Been a lurker on this site for some time now but recently started posting so I thought I should start a diary too, as it seems to help people focus and stay motivated.

I guess i'll give some history:

Took out our Mortgage in 2006 for £110k, and am now on our third fixed rate term. Unfortunately it's not a great fixed rate (4.69% iirc) with daily interest which is good I guess, runs until early 2013 - but oh how I wish we went for a Tracker Mortgage now !

Been a keen overpayer almost from taking it out. I save hard and through careful choices have avoided loans and credit cards so far. Currently have £40k left to pay off the mortgage and I've made the 10% penalty-free overpayments this year. Having said that it feels like lifes on hold at the moment.

Lately finding it a struggle to keep motivated and on track, and had lots of bills in recently or due in next week like car repairs (£1k+), a new central heating system (£4k+), vet fees etc, which have or will take a large chunk of savings away from where I intended them to go (o/p) but thats life isn't it.

I enjoy reading this Forum and find the content and posters really helpful and knowledgable so hopefully the motivation will come back ! I've not set a MFW date as it just seems so far away still but definately aiming for gone by the time i'm 40 (6 years).

Cheers,
RS Clio.

Eating_Daisies

Well done on paying £70k in 5 years! :T:T Well over half way!

getmore4less

Do a long term budget that includes money for the car, house etc.

Waiting for the bills to come and not planning for them is what makes you think they are set backs reality is just a bit of underplanning/budgeting.


Whats the followon rate on your loan?

RS_Clio

Thanks Eating Daisies

@ getmoreforless - I'll do a long term plan, thanks. Something I've been meaning to get to !

It wasn't so much that the heating bills were not planned for as such (I didn't explain that very well in my 1st post did I), rather I hoped that the money saved could go to overpayments rather than a boiler etc, but i'm sure come December i'll be glad of the heating !

The rate will go to 3.5% standard variable in Feb 2013. Then no idea whether i'll tie in again fixed or leave it.

One thing I dont quite get, and I think it's pretty simple so sorry for asking. I'm on a repayment mortgage. Round figures.... I owe £40k. If I pay off £20k as a lump sum (plus the 2% fee because I have made my penalty free overpayments in this 12 month rolling period, will I still have £20k left on the mortgage or will it be less, simply because the interest will be less because the term will be less ? Can't quite get my head round that.

Thanks again.

Eating_Daisies

You will still owe £20k but you will be paying the capital PLUS interest on 'only' £20k rather than £40k. It's worth looking at some of the mortgage calculators as they will tell you how much interest you pay on top of the capital. They can also help you decide whether it's worth paying the £20k off & incurring the charge or if you're better paying it off next year.