Dmharper MFW wannabe

dmharper

ok heres the starting stats

mortgage 53940.76
Further advance 11352
Bank Loan (Consolidated debt) 21940 Projected end date 2014
Loan 7014
ISA 175.78

Projected Mortgage end date - Aug 2024 at age 45 - goal is 40 !! only 7 years away :D

originalmiscellany

mortgage 53940.76
Further advance 11352
Bank Loan (Consolidated debt) 21940 Projected end date 2014
Loan 7014
ISA 175.78

Projected Mortgage end date - Aug 2024

So let's get this right:
You "owe" 54k + 11 + 22 + 7 = 94k give or take a bit?

Which is attracting the highest rate and therefore should be paid off first? I imagine the bank loan? Does that allow overpayment?

You mention you have an ISA too - if you're not getting anywhere near the same interest rate as you are for your bank loan, I'd stop paying into that and start clearing your bank loan...

Does that sound right or have I mis understood the stats?

dmharper

Current payments are

407.37 @ 2.5 % for 54k mortgage

111.22 @ 6.98 % for 12K loan(secured loan)

608 for Loan (21K)@ 8.9 % just about to start paying this (should pay off in 42 payments)

170 for Loan (7k) think this about 8% just about to start paying this ( should pay this off in 4 years)

pretty sure they all allow for over payments !

my first plan was to overpay on the mortgage by 75 for the first 3 years potentially saving 2 years and 5 months !
after the first 3-31/2 years the 21 k loan should be finished freeing up £610, the plan may be to move house or put this into the mortgage ?

idelly we would like to move house pretty soon, due to stuff happening in the area, houses set on fire and other things..... but the likely hood of us getting rid of the house in the next year are slim !

all advice is wellcome !

lvm

I'd forget about overpaying the mortgage for the time being. You've got an excellent rate so should keep the payments at the lowest amount possible.

I'd find out the exact APR for the £7k loan and if you're right about it being 8%, I'd be overpaying as much as possible to the £21k loan.

I'd put some goals/targets in place for paying off the loans early if that's what you want to do (e.g. you want to get rid of £21k loan in 30 payments instead of 42 payments - a year early).

After all the loans are paid off, I'd then look at your mortgage. This obviously depends on your mortgage rate remaining at 2.5%.

Good luck!

dmharper

lvm wrote: »

I'd forget about overpaying the mortgage for the time being. You've got an excellent rate so should keep the payments at the lowest amount possible.

I'd find out the exact APR for the £7k loan and if you're right about it being 8%, I'd be overpaying as much as possible to the £21k loan.

I'd put some goals/targets in place for paying off the loans early if that's what you want to do (e.g. you want to get rid of £21k loan in 30 payments instead of 42 payments - a year early).

After all the loans are paid off, I'd then look at your mortgage. This obviously depends on your mortgage rate remaining at 2.5%.

Good luck!

yeah i guess freeing up the loans would provide some serious additional cash £780 !!!! rough guess that would be a serious overpayment on a mortgage/new house !!!

Sepa74

I agree completely with IVM. You will save much more interest and become mortgage and debt free sooner if you focus on paying off the debt with the highest interest rate and then snowballing.

I know it sounds counter intuitive when the mortgage is the debt that goes on the longest, but what matters for overall wealth is minimising the total interest paid, and that means paying off the loan with the highest interest rate.

If you haven't already, why don't you start a diary and set yourself some goals for getting the high interest rate debts down down down

dmharper

Sepa74 wrote: »

I agree completely with IVM. You will save much more interest and become mortgage and debt free sooner if you focus on paying off the debt with the highest interest rate and then snowballing.

I know it sounds counter intuitive when the mortgage is the debt that goes on the longest, but what matters for overall wealth is minimising the total interest paid, and that means paying off the loan with the highest interest rate.

If you haven't already, why don't you start a diary and set yourself some goals for getting the high interest rate debts down down down

really good advice thanks, id still like to be mortgage free by the time im 40.

dmharper

maybe im in the wrong forum area, maybe i should be in the debt free wanabe, horses for courses ????

Sepa74

I think you should be where you feel most comfortable. A lot of people on the DFW board are in really tough straights, often really scraping the barrel to get by. I go there for a lurk when I want to feel inspired by amazing people who have made mistakes in the past but are now really determined to deal with things.

On the other hand, those of us on MFW are all different - some of us are VERY focused, while others are here because they find it helpful to remember to prioritise their finances and focusing on MF is a good way to do it (that's me!).

There are plenty of people on here who have other debt as well as a mortgage. I think the big difference between the two boards is that we're here because we CHOOSE to be, DFWs are here because they HAVE to be. I think results in people who are a bit more relaxed about our finances and life in general, if that makes sense.

But I think the fundamental thing to remember is that we want to be MF because it is the route to wealth and freedom from debt. For you, the route to wealth is definitely to get rid of those high interest loans as soon as you can, and then pile all the spare money on to the mortgage.

You seem on top of your debt - you've consolidated it and know exactly how long you will be able to pay it off. If you want to keep a diary here that focuses on reducing your other debt as a route to MF, then we would all love to welcome you and will enjoy reading your diary too.

dmharper

tried to discuss things over with the OH last night but she wasnt grasping what iwanted to do, so will need to sit here down and explain a bit better. we are in a much better position financially just what with the OH now a permanent employee for NHS. so things are on the up

My plan is to reduce the 7k loan by overpaying, £100, im still going to keep my isa payment as i feel i never have any savings and would like to start saving for items that i want eg new t.v, holiday. i estimate that tihs will reduce the term from 48 payments to 27 Payments approx not sure how accurate this is ?

7k current payment £171 planning to over pay £100 :eek::D

Oh and going to start back my runnning and football, i have an aim of doing the coast to coast challenge, 100 miles in 2 days, run, bike, kayayk :eek::eek::eek:

originalmiscellany

Now 100 miles sounds like a good challenge! Coast to coast I assume means going from say the east to west of England? Sounds quite a challenge, and fair play to you if you fancy a go at it Certainly you won't catch me doing it!