On the road to freedom!

Anna_Glypta

This year we made a promise to ourselves to sort out the finances instead of just doing what we had always done. I've listened to Martin talking about PPI schemes time and time again on TV and had promised myself to look at mine - it worked. A couple of hours completing a form from the bank's own website and they offered me £2,500 back - if it was that simple there had to be other savings to be made!

Next - looking properly at an old endowment policy for a mortgage that was paid off some time ago and we had been intending to use as a retirement fund when that time finally comes!! We soon realised that if we kept on paying into it for the next 12 years until it was due to mature we were no better off than if we put the money in the bank. The problem was what to do with the money if we cashed it in - where was the best place? With the interest rates so bad for saving I have to give the OH kudos for the lightning bolt moment.

It was his suggestion that we should look at overpaying the mortgage and once we started looking at the numbers it was clear that it really was the only sensible option. No time to delay - we cashed in the policy and ended up with a larger sum than we had expected so things are looking even better than we first thought.

So our situation is....

Main Mortgage at 31 December 2011
£82,891.02
Fixed at 4.99% until 31 March 2016. Term remaining 10 years and 11 months to 1 March 2022

Secondary Mortgage at 31 December 2011
£13,740.42
Base rate tracker at 1.99% Term remaining 11 years 3 months to 1 April 2023

We aren't able to overpay on either of the mortgages without penalty however we decided to take the hit of 3% on any overpayment on the larger mortgage which still means that we are in line to make a huge saving on interest payments.

On Monday this week we were both really excited to pay of £50,000 of the capital sum on the main mortgage. As of today the new balance on the main mortgage is £31,448.32. Monthly payments have of course been reduced considerably but we will continue to bank the same amount and save, save, save until we can make another capital repayment.

Our aim is to pay off the main mortgage by April 2015 - twelve months ahead of the end of the fixed term and nearly seven years earlier than the current end date and then focus on paying off the secondary mortgage by April 2016.

I've been reading a lot of the stories on the forum and can emphasise with others who feel strange telling friends that this is what we are going - it feels a bit like bragging that we have been able to do this. So in order to satisfy our need to share we both agreed that it was time to put our story on the boards and by saying it "out loud" committing ourselves to carry on this journey!

WE CAN'T WAIT!!

Tilly_MFW_in_6_YRS

Love your name

I understand exactly how you feel and the one thing about this forum, is that people understand your desire to be MF. Good luck with your savings, loads of ideas for how to cut cost and increase your disposable income allowing you to save for the next capital repayment.

Best of luck, Tilly

coldcazzie

What a fantastic op to start you on your journey! :T

Looking forward to reading your diary!

Pinky15

Wow sounds like you are really organised and have a good plan there!

Anna_Glypta

Thanks for the support everyone. :-)

Does anyone have any experience with mortgage protection insurance policies? I've asked my provider for a new quote considering the balance of the mortgage has gone down considerably but with the new "sort out the finances" head on I probably should get some alternative quotes.

Next job to sort out a signature and target date for the next repayment.

abouttimetoo

Welcome to the board Ann Glypta (as Tilly says, great name! )

Well done on all you've achieved so far, you are in a great position

I'm afriad I can't help with your mortgage protection question but Tilly has recently been wrestling with this very question. It would be wrong to speak for her and I'm sure she'll reply herself but I think she might be able to help with your thinking here

Regards
ATT

Tilly_MFW_in_6_YRS

Hiya AG, we were paying about £180 per month for mort. prot. insurance. It was high as until the last few years we both worked in the same company so were each insured (we earn about the same). Neither of us could have afforded to run the home individually, hence the need for cover. However, as we have cleared circa £100k, it means, if push came to shove, we could pay the mortgage on one salary, albeit with no OPs.

Whilst I am not saying this is right for all, we made the decision to cancel the insurance and OP the cash. As the policy we had did not pay out for the first three months, if you get three months 'in lieu of notice', which we would. Then paid out 75% of the actual mortgage for 12 months, we decided it was better to keep our OP (off set and capital repayment) to the maximum and not bother with the insurance.

It's always difficult to know what to do, but what we are focussing on is making our money work harder for us, and this seemed the logical choice.

Good luck, Tilly

Anna_Glypta

Thanks Tilly, mine is nowhere near that much but I think I will make a few calls when I have the new quote just to make sure that I'm not paying too much.

The regular mortgage payment has just come out of the account so I can't wait until next month when I can update my savings goal in my signature. I have a feeling this is going to become addictive!!

Anna_Glypta

Awake far too early and been checking out the new posts and looking for a decent savings account!

It's occurred to me that although Natwest charge 3% on an overpayment, as I can't find a savings account to better the 4.99% charged on the mortgage I may be better to make a monthly overpayment and take the charge than sit on the cash whilst I save up a lump sum. I think I need to start playing with the mortgage calculalators and spreadsheets and see what it means In reality - surely it would be better to keep reducing the capital and therefore the interest being paid out rather than earning minimal interest drip feeding a savings account. I'm not in mainland UK so not eligible for ISAs and many of the other accounts which are on offer!

I'm becoming addicted to apps and am now using one to track my spending - wish I'd done this ages ago but I guess you have to start somewhere. My OH and I are quite competitive (all in fun) and are coming up with all sorts of mini competitions to keep ourselves spurred on! I think the GC looks like one to start with next month and NSDs too (although it did take a while to work out what that actually was!)

It could be time to get up and get the laptop although if I wake the dog up he'll be nagging me to take him for a walk and it's definitely too early for that! perhaps now I've got this out of my head I can try dozing off again- well yu never know!

Happy Easter everyone.

abouttimetoo

Hi AG, did you manage to doze off again?

Yes, definately have a play with the mortgage calculators, I know that others have found it better to OP and pay the penalty fee that to save

Although I've been up for several hours yet my brain doesn't seem to be quite firing on all cylinders yet so bear with me for the following

Have you thought of something called slow stoozing? Effectively what it is is you take a credit card at 0% for all your spending. You then put all your spending on the card. At the end of the month you pay off the minimum payment to the card and then either put the remainder of the money in a savings account, or in your case, pay it off the mortgage, over time you are then transferring your 4.9% mortgage to a 0% card.

This does depend on a few things, e.g. that you get a card limit high enough to help you with this and that you are disciplined to manage it.

Have a look at Financial Bliss's thread, in particular the last few pages as this is the approach he has been doing for a while as his mortgage is now on the home strait.

Apologies if you've already done this but are you absolutely sure that Nat West will impose the 3% penatly on every overpayment no matter what the method used is. The reason I ask is that I know that C&G for example (with some of their mortgages) will let you make free OP's provided they are done on-line and are below a certain amount but would charge £10 if they were over a certain amount or done by cheque

Regards
ATT

Anna_Glypta

Thanks ATT - didn't manage to snooze again but never mind. Perhaps I'll fit in a nap on the sofa before dinner!

I've drafted a letter to NW so will send it to them tomorrow and find out what the facts are - it's definitely worth asking so thanks for your very helpful suggestions.

I'll also have a look at the stoozing stuff but I'm very conservative when it comes to money - terrified I'll get out of control and it will all go wrong - that's why this board is so good, it's great to read about other people's experiences and their stories.

I'm definitely hooked! :-)