£1+ a day Mortgage OP challenge for April

fairyclicks

Lois_E wrote: »

FWIW, I agree with unkster's calculation for IR of 2.5% and also with fairyclicks's calculation for IR of 1.5%. Aren't we all good at maths.

TheWebDev has good advice about asking very simple questions to get accurate answers. The other thing is not to be fobbed off by a junior member of staff who doesn't actually know the answers, but make sure you talk to someone who really understands how these things are done.

Having said that, even if we limit our discussion to mortgages whose OPs are allocated in the "interest first" way that's been described, I can't think of any cases where it would actually be advantageous to wait and pay money off later. If your OP is big enough to cover this month's interest so far, then it's worth paying now. If it isn't, then if you pay it off now, it goes towards the interest, and then the capital gets reduced on normal payment day as less of your normal payment is needed for interest, but this is no better and no worse than waiting until normal payment day to make the OP.

For this reason, there's only any point in stockpiling OPs to pay on the payment day if you also bother to put the money somewhere where it can earn interest while it's waiting to by OPed. If the money's going to wait in a current account earning nothing, then you might as well OP it straight away.

confused.com LOL! see thats what i thought originally when i said i would pay my £1 into the mortgage account daily but thewebdev seemed to say its not that simple....not had a chance to play with the figures yet to clear up the head fog :P

Lois_E

TheWebDev's point is that for most people, money does not come in equally each day. So putting in a pound a day means delaying some money from the day you receive it to the day you OP it. This may result in paying more interest than OPing the whole month's OP on the day you get paid. TheWebDev also wanted you to understand that the difference between OPing today and OPing tomorrow depends on when in the month you've got to, and how much you OP.

If your income comes in more than one installment (so for example, you have a salary and some tax credits and some child benefit, or you have a salary and a partner's salary) then some patterns of OPing are better than others. For example, suppose you get paid weekly. You'd be best paying your whole month's mortgage OP out of the week's salary closest after your normal mortgage payment day, and asking the gas/electric company to move your DD with them to a week later, so it gets paid out of the following week's pay, saving for holidays/Christmas out of the third week's pay and only buying clothes, non-perishable groceries, household supplies etc in the fourth week. Or something.

In my case, I'm paid monthly. I was able to get my mortgage lender to move my normal payment day to the 26th of the month, which is the day I get paid. When I finish paying off my family loans (see sig) and start OPing the mortgage, I'll be doing it on payday each month.

kittiej

Hi everyone.

I saved another £2 on lunch yesterday and checked my savings account with the bank and thought that's odd it says £14 odd and I had £13 odd in there last night. It turns out I had 50p interest credited :j so that was a nice little surprise. I'll have to check my other savings accounts now to see what they say.

I'm turning into such a penny saving geek freak :eek:

Anyway pot stands at £14.13 as I added another few odd pence into there.

How's everyone else doing with their savings?

elantan

Have just been on the phone with the n@tionwide, it appears that any money I make as overpayments to my mortgage comes off the capital and the interest reduces the very next day, they also run on calendar months as opposed to the day my mortgage comes out ( ie 15th)

I'm more confused than ever but will slowly work through it

Loving this challenge though Keep it up everyone

fairyclicks

I was planning to do a car boot sale today for some extra dosh but my car wouldn't start i hope its not too expensive to fix it!!!

So as i couldn't go car booting i started a selling page on fb to help me with the £££'s hopefully, though maybe that won't help for today!! For todays £1 i decided to bake bread instead of buying it - I usually buy seeded bread which is about £1.40 but i got a pack for 35p to make some hey presto £1.05 to add to the OP pot

kittiej

Yay well done fairy :T

I checked my PO account and discovered I had 2p interest paid and I didn't realise the interest is added monthly as I've only just opened the account.

I was a bit miffed to discover the £30 DD had gone unpaid - no idea why but I suspect it might be because I changed the DD amount to £100 around the same date of the DD going into my PO account. I definitely had enough money in my bank account. I'll transfer the money over manually and see what happens at the end of the month. I need that money to build up to pay for my Open Uni courses.

Anyway I have almost 10.5 days @£1.35 saved - get in!

fairyclicks

kittiej wrote: »

Yay well done fairy :T

I checked my PO account and discovered I had 2p interest paid and I didn't realise the interest is added monthly as I've only just opened the account.

I was a bit miffed to discover the £30 DD had gone unpaid - no idea why but I suspect it might be because I changed the DD amount to £100 around the same date of the DD going into my PO account. I definitely had enough money in my bank account. I'll transfer the money over manually and see what happens at the end of the month. I need that money to build up to pay for my Open Uni courses.

Anyway I have almost 10.5 days @£1.35 saved - get in!

yey go you i'm almost at 5 days of interest payments oh and have some bids on things on ebay too!

Lois_E

elantan wrote: »

Have just been on the phone with the n@tionwide, it appears that any money I make as overpayments to my mortgage comes off the capital and the interest reduces the very next day, they also run on calendar months as opposed to the day my mortgage comes out ( ie 15th)

I'm more confused than ever but will slowly work through it

Loving this challenge though Keep it up everyone

No need for confusion. Some people's mortgage OPs are allocated in a complicated way. Yours are straightforward. For you the best strategy is to pay off any money you've got as soon as you can. End of.

mortgage_girl

Just stopping by to update on my progress so far. I already do surveys and sell my unwanted stuff, so i've decided to see if I can reach my target by being thrifty and saving money on what I would normally buy. I'm amazed at what i've managed to put aside so far:

3 huge bags of free woodchip for the chooks = £24.00 saved
BOGOF margarine = £1.85 saved
Using tablets I already had rather than forking out for a new prescription (they are in date and I did check with the doc that it was ok to do this) = £7.85 saved
Freebie cereal = £1.00 saved

So far that's an extra £34.70 I can put towards my mortgage this month which i'd have probably frittered away if I hadn't put it in a separate account

Great challenge fairyclicks. Keep up the good work everyone!

MGx

fairyclicks

mortgage_girl wrote: »

Just stopping by to update on my progress so far. I already do surveys and sell my unwanted stuff, so i've decided to see if I can reach my target by being thrifty and saving money on what I would normally buy. I'm amazed at what i've managed to put aside so far:

3 huge bags of free woodchip for the chooks = £24.00 saved
BOGOF margarine = £1.85 saved
Using tablets I already had rather than forking out for a new prescription (they are in date and I did check with the doc that it was ok to do this) = £7.85 saved
Freebie cereal = £1.00 saved

So far that's an extra £34.70 I can put towards my mortgage this month which i'd have probably frittered away if I hadn't put it in a separate account

Great challenge fairyclicks. Keep up the good work everyone!

MGx

Wow that is brilliant well done!!! I think we all waste money at times but especially when not in debt or without stretched finances - i am ashamed at the amount of money i wasted when i had a good income simply because i took it for granted. I could have had my mortgage paid!!!

Anyway, glad you are enjoying the challenge - for me it makes it a lot easier to just have the thought in my head "would i prefer to use that money to pay off my mortgage" and knowing that every little £1 makes a big difference has really stopped me in my tracks when spending - yesterday i wanted to buy some things from Holland & Barrett and had stuff in my basket when i thought "hold on, if i buy this online i can earn about 200 points on swagbucks as well as get the points on my loyalty card so i put the stuff back and did just that - roughly £1.80 worth of points banked