Where to put the extra cash..?

cb4fwh

Sepa74 wrote: »

unless you want to do some training and invest in yourself

I'm pretty much fully trained up except for one last qualification which involves little cost - only an examination fee of circa £100. I've been called up for jury duty on 2012, so have decided to allocate what is likely to be a significant amount of time waiting around to reading up for the examination...

Sepa74 wrote: »

The way I understand it is that if you take out dividends from the company, anything over a certain limit is taxable, usually at the 40% rate. I have been limiting my dividends to what isn't going to require me to pay higher rate tax, and leaving the rest in the business even though the rate of interest is paltry (but still better than paying 40% tax on it!).

Ditto.

Thanks to everyone who has responded. I've decided that, if I am able to borrow the additional 100k ish to trade up. The only worry is that I only have one years accounts. Anyone out there had any experience as a self-employed individual looking to obtain a mortgage via Santander?

Sepa74

I think you might struggle... must it be Santander? Are you a member of PFG? They have information about specialist mortgage brokers for contractors - I have no idea how good they are, but they may be worth a try.

cb4fwh

It doesnt have to be Santander - the only problem is that I will incur early repayment fees if I switch providers...

I've spoken to plenty of specialist mortgage brokers so it won't be a problem getting one from somewhere even with less than 2 years accounts, just from a logistical standpoint would prefer to stay with Santander.

Has anyone else been in a similar predicament i.e. moving from being a permanent employee to self-employed without 2 years accounts & looking to remortgage with Santander?

cb4fwh

Today feels a good day, as I rang Santander to set-up my first mortgage overpayments!

I currently have two mortgage accounts:

i) £174,514 @ 4.79% Santander 5 year fix due to end around July 2014. Monthly cost, £1415.00 (started 2006, original term 20 years).
ii) £27,162 @ 4.99% Santander 5 year fix due to end around September 2014. Monthly cost, £219.24 started 2009, original term 17 years).

I will be paying the maximum overpayment without incurring early repayment charges of £499 on both accounts.

My first target is to to get my mortgage debt down to £159,711 (through monthly overpayments) & £17,234 respectively by July 2013 (by monthly overpayments & 10% overpayment of £2,400 in January 2013).

The plan was to make a significant overpayment on the larger mortgage as well in January, but unfortunately my old Ka is starting to show his age & is going to need replacing around the same time!

The plan is still to move around this time next year, so these dates may change but I find that it helps to have targets!

Mortgage 1:

Regular £499 Monthly Overpayment
January 2013 - £0 Overpayment
January 2014 - £10,000 Overpayment
July 2014 Take Out New 5 Year Fixed Product
January 2015 - £9,000 Overpayment
January 2016 - £8,500 Overpayment
January 2017 - £6,900 Overpayment
January 2018 - £4,100 Overpayment
January 2019 - £1,490 Overpayment
Mortgage Free Target Date July 2019

Mortgage 2:

Regular £499 Monthly Overpayment
January 2013 - £2,409 Overpayment
January 2014 - £1,396 Overpayment
September 2014 - (When Mortgage Product Ends) £7,150 Overpayment
Mortgage Free Target Date - September 2014

Overall Balance:

January 2013 - £167,201 + £21,071 = £188,272
January 2014 - £142,039 + £11,906 = £153,945
January 2015 - £115,049
January 2016 - £86,880
January 2017 - £59,457
January 2018 - £34,002
January 2019 - £10,386
Mortgage Free Target Date - July 2019

cb4fwh

First OPs have gone out today! Going to have a look tonight to see whether it would be worth swapping my mortgage product & taking the hit on early repayment charges as I should be under the 60% LTV now...

cb4fwh

Second OPs leave my bank account tomorrow! Feels good!

On track to be mortgage free in July 2019 when I'll be 41. Really want to be mortgage free before I'm 40 now! With a bit of belt tightening, this should be realistic!

cb4fwh

Third OPs leave my bank account on Monday!

Totalled up total annual overpayments yesterday & started to dream about the holidays that I could be going on if I didn't make these overpayments. Fortunately, I then came around..!

cb4fwh

Fourth OPs leave my bank account on Wednesday!

I've also put aside the 10% overpayment for mortgage 2, which I will be able to make in January.

Progressing to plan...

Sepa74

Well done!

When you shift your mortgages, I would definitely consider an offset mortgage. It works brilliantly for me as I'm able to stash away a large emergency fund, plus other bits and bobs without locking it all away.

I just wish I could link the offset to the cash in my business bank account!

cb4fwh

Sepa74,

Yeah, offset mortgages are on my list of things to read upon when I get 5 mins. What I really want is a spreadsheet if one exists where you can show the extra money that you are putting into the offset account monthly & the effect on the mortgage. Does this exist?

Anyway, I have a year until I can switch mortgages unless I take the hit on early repayment fees...

Re. business bank account, I'm quite lucky as both myself & my partner work for the same limited company. However, whilst she brings in relatively little having us both as shareholders allow us to maximise take home pay for both of us i.e. upto HRT limit hence why I'm considering the offset mortgage option...