Back from the brink of disaster....now to pay off £160,400 interest only mortgage :-(

thriftyscotslass

What an inspirational story Kate :T.

I too hope that an expert will be along soon with a suggestion for you, sorry I can't help.

As has been said, don't be too hard on yourself over past history. We too were given a mortgage that we never should have been, we were given a 35-year repayment mortgage that we could not afford. For years, we wished we had rented but we fought on and eventually brought the beast under control.

Can so relate to many parts of your story, hubby and I both had degrees and dontcha know it, those well-paying jobs never-materialised . It took me many years to love our 60's 3-bed terrace house, I was so gonna live the life in a House Beautiful fully renovated detached property .

It helped me to learn about consumerism, this link shows how we have been "moulded" into consumers - so don't give yourself a hard-time, we are the lucky ones, we can now see through the lures of the advertisers.

In the words of Mythbusters (our Netflix programme of the moment)... I reject your (consumerist) reality and substitute my own :rotfl:

Chin up, lovely lady.

Cheapskate_Kate

So...good job I only have easy dull tasks to do with work today as my mind has been elsewhere mulling this over.

Done some more calculations. If I go onto the repayment mortgage then after paying that, bills, insurances and car costs I'll be left with £584.07 a month for food, diesel, clothes, entertainment, school stuff and holidays for 5 of us. I'm sure some of you could do this but I could do perhaps a month - certainly not 14 years!

So I've phoned NRAM back and they've told me I can make as many payments as I want to the mortgage through a bank transfer. So I'll do that. I've just set up the payment online and paid 1p as a tester to see if it gets credited. So in nearly 10 years that's the first time a payment has reduced the balance. Not sure whether I should be laughing or crying at this point.

I'm still toying with the idea of building up some savings first in the event of a catastrophe. At the moment I have about £600 in an ISA and £1700 in a savings account that is ear marked for paying balance on holiday and spending money. Ideally I'd like to have 3k in savings but not sure that's wise given the mortgage situation. I'd be grateful for any thoughts on this one.

The plan at the moment is to pay what I can to the mortgage as anything is better than nothing I think. In 2 years the defaults may be off my credit record so if I can bring the mortgage down to the top of my affordability and at the same time increase the LTV then I might might might be able to remortgage onto a decent rate and extend the term at this stage. A quick look at affordability calculators puts my affordability at the very top end 148k so that's something to aim for I think?

Now on that note I need to nip to the shops and promise its just to buy milk - nothing else.

kirstypark

Hi Kate, don't panic about figures too much. How much extra could you put away a month? If you can save some between now and the end of your term then in 14 years time your credit rating will not be as bad as now and there might be more options available to remortgage what you have still outstanding. You need to get some advice on long term savings plans where you can lock some cash away for the next 14 years.

kirstypark

sorry, our posts crossed. can you get any overpayments back if you need them? we are able to do this, so don't need savings.

gallygirl

Cheapskate_Kate wrote: »

[STRIKE]So in nearly 10 years that's the first time a payment has reduced the balance.
Not sure whether I should be laughing or crying at this point.[/STRIKE]

I think you meant to say:
"So, I have just made the first of many payments to reduce the balance of my mortgage. I am grinning from ear to ear". :T

Re emergency savings - the standard wisdom is 3 months worth of money. In the big scheme of things, getting only 2% interest compared to what your mortgage rate is won't cost you a lot. Go for piece of mind and save (or maybe split between saving and OPing?).

You can, in your own head and on spreadsheets, offset the savings against the mortgage - when I say I've OP'd that's usually shorthand for 'I've bunged some money in a savings account, updated my spreadsheets and sat staring at the lower net balance for 5 minutes '. What a lot of us are trying to do is get to a positive net worth position rather than actually pay the mortgage off.

If you do keep it as savings there is always the option to use some when you do finally remortgage if you need to tip the % over a certain point.

Well done on the 1p :T. But then, I would say that - check out the title of my diary :rotfl:.

t-rexcellent

Hi Kate,

Thanks for sharing your story - you have a fantastic attitude and your grit and determination towards tackling your debts is amazing. I'm a MFW lurker - I have a mortgage but not a diary (yet!) and your thread is a great motivator to keep making those overpayments, no matter how tiny they are!

Keep posting - looking forward to following your story!

T-rex x

QB_Wolf

I'd say set a few objectives.

Save an emergency pot.
Improve credit rating
Improve LTV
Get capital to £148k

Then think of the steps you need to take to get to them, make your goals achievable.

Cheapskate_Kate

Tilly_MFW_in_6_YRS wrote: »

Hi Kate, don't forget to try out the free cinema tickets thread - they have periods where there are few but on average I pick up tickets each month for nothing which is a big help to the entertainment at no cost

Best wishes Tilly

thanks Tilly - what forum is the free cinema tickets thread on? I'd love to take them to see the Croods and was waiting for it to appear on the kids am showing at Vue for 1.75 each but free would be even better!

Polly_Wolly_Doodle

Is there a reason for wanting to be repayment?
If NR are not pushing for you to come off interest only, i'd just keep chipping away by making any ops you can.

The percieved wisdom is to have an emergency fund that can replace a washing machine / get a car through an mot / etc, so maybe have £500-£1,000. If you have to use some then you top it back up again.

Then maybe try spliting any surplus money 50/50 between the mortgage and savings until you have a good buffer saved (the 3-6 mths expenditure).

Sounds so simple on paper!

Polly_Wolly_Doodle

Did someone else mention doing a statement of affairs?
That might help you categorise your spending too and let you see where everything is going.

And WELL DONE on the 1p, the longest journey begins with the first step:money:!