Where do I begin?

FunLovinCriminal

Hi all
I'm a recent convert to the forums on MSE. I've recently read a lot of inspiring stories on how to become Mortgage Free, and I would like to join you. However, its seems scary.
Where do I begin?
Me and OH have a mortgage of just under £90k, we are currently paying £630 per month and its due to vanish in 2028. When we will both be 53. I would like to be mortgage free a lot sooner though, definitely before I'm 50, 45 would be nice!
My current mortgage deal runs out in 12 months, and they only allow overpayments as a direct debit.
First question is;
HELP, anyone give me any help/advice on what to do first, and how to begin this journey?

bargainbetty

Start a savings fund. When you come to the end of your present deal, either use it to pay the inevitable fees (so you aren't paying interest on them being added to the mortgage) or pay a chunk off the capital.

Look at your mortgage options going forward.

Do your circumstances indicate that an offset might be better for you than a standard variable, or a fixed rate?

How much can you overpay per annum and what is your monthly disposable income? Would it be more practical to simply bring down your mortgage term by a year or two at renewal? YOu lose the flexibility of not being able to overpay in a crisis, but for a small monthly increase, you will instantly see a spring forward in the MF date.

Save money. Sell clutter. It's working for me!

Good luck

FunLovinCriminal

Hi Betty
Many thanks for your post
We have £3000 in an ISA and £1500 in a easy access savings account.
Currently its a fixed rate mortgage, I've always liked the security of knowing exactly how much I was paying and til when, rather than worrying if the interest rate changes. I currently have made £0 overpayments - but want to start and soon - hence the post.
I'm just working on a SOA and will be posting very soon. Please offer any advice you can!

FunLovinCriminal

Statement
Wages £2,500.00
Savings £150.00
Life & Critical Illness Cover £63.27
Gas/Electric £92.00
Mortgage £632.94
Mobile Phone Insurance £12.00
Sky £80.00
Simply Health £33.00
Gym £78.00
Home & Contents Insurance £19.71
Mobile Phones combined £60.00
Weightwatchers £21.45
Council Tax £190.00
TV Licence £12.12
Food £300.00
Diesel £200.00
Car Loan £205.00

bewilderedhelpneeded

FunLovinCriminal wrote: »

Statement
Wages £2,500.00
Savings £150.00
Life & Critical Illness Cover £63.27
Gas/Electric £92.00
Mortgage £632.94
Mobile Phone Insurance £12.00
Sky £80.00
Simply Health £33.00
Gym £78.00
Home & Contents Insurance £19.71
Mobile Phones combined £60.00
Weightwatchers £21.45
Council Tax £190.00

Diesel £200.00
Car Loan £205.00[/QUOT

Check if mobiles covered on household insurance. Are you getting value for money with simply health policy? How much for Sky????????? Thats outrageous - either cancel and use box as freeview box or drop down to basic passage. You can buy youview box outright or freeview recorder if you need to record. Can phone packages be reduced? Visit oldstyle boards to get food shopping down or shop at Aldi.

Big savings can be made on your SOA which can be used for overpayments bringing you closer to your mortgage free dream!

edinburgher

There are a few things that stick out (all of these meant to be helpful, honest!)

• Have you ever revisited your insurance needs? It's entirely up to you, but maybe you're insured beyond what you'd realistically need to maintain your quality of life if the worst happened?
• Have you ever actually used your mobile phone insurance? Because I used to have it, never used it, cancelled it and haven't needed to replace a phone since (bar one that was stolen and was cheap as chips to replace)
• Your Sky bill is sky high
• You pay quite a chunk of your salaries on eating and not eating (i.e. gym and diets). Which makes me wonder if you're getting the value from those gym membership(s)?
• Your mobile phone costs are very high, which makes me think you're stocking fancy smartphones. Do you really need them? Have you looked at Tesco mobile?
• Your council tax is quite high - out of curiosity - is your home a new build?

Calfuray

edinburgher wrote: »

There are a few things that stick out (all of these meant to be helpful, honest!)

• Have you ever revisited your insurance needs? It's entirely up to you, but maybe you're insured beyond what you'd realistically need to maintain your quality of life if the worst happened?
• Have you ever actually used your mobile phone insurance? Because I used to have it, never used it, cancelled it and haven't needed to replace a phone since (bar one that was stolen and was cheap as chips to replace)
• Your Sky bill is sky high
• You pay quite a chunk of your salaries on eating and not eating (i.e. gym and diets). Which makes me wonder if you're getting the value from those gym membership(s)?
• Your mobile phone costs are very high, which makes me think you're stocking fancy smartphones. Do you really need them? Have you looked at Tesco mobile?
• Your council tax is quite high - out of curiosity - is your home a new build?

I was going to type, but edinburgher has said everything I was going to say. I would have a look at: mobile insurance and SimplyHealth in particular. Take a look at the past, 4 years let's say.

You will have spent £12 per month, 12 months for 4 years = £576
Have you ever claimed on this? Perhaps you could save that £12 into a savings account, that way if something happens, you have that fund there, if not, you always have the option to do something different with the money in the future?

Same with SimplyHealth, that is £1584 over the last 4 years you have spent. Again, have you used this? That could be a savings area. Again, nothing to stop you having a savings fund for prescriptions, dentist, glasses etc.

Finally, $ky. I can see how bill gets to that, full package, HD, multiroom and phone and broadband? I used to work for $ky (freedom!!) so feel free to ask me any details.

HTH,
Cal

MFWB440

FunLovinCriminal wrote: »

Statement
Wages £2,500.00
Savings £150.00
Life & Critical Illness Cover £63.27
Gas/Electric £92.00
Mortgage £632.94
Mobile Phone Insurance £12.00
Sky £80.00
Simply Health £33.00
Gym £78.00
Home & Contents Insurance £19.71
Mobile Phones combined £60.00
Weightwatchers £21.45
Council Tax £190.00
TV Licence £12.12
Food £300.00
Diesel £200.00
Car Loan £205.00

Hi there, good luck on your MF journey. I've put some of my thoughts about your expenses under the following headings. It appears as though there are many ways you could make savings and start overpaying more!

Mortgage deal.

I wonder what interest you are paying on a fixed rate? Hopefully when the deal ends, you can get onto a better rate, which will save you a big chunk a month.

The size of your mortgage vs. your combined income means that you could probably get a very competitive tracker rate (assuming you have 75% loan to value or better). I'm with HSBC, which seems to offer market leading rates and zero set up/ overpayment fees paying 2.99% interest.

Mobile phone/ Phone insurance

Do you need this? I assume you have expensive phone contracts. Do you need them? You can get older models of phones for much more competitive rates. I have a sony xperia U with loads of minutes/ texts and internet allowance for £8.99 a month. With a cheaper phone, you can ditch the phone insurance! Saving: £50 pm

Simply Health

Do you need health insurance? Saving: £33 pm

Gym

Although you may be used to the relative luxury of a health spa type gym, perhaps it would be worth looking at what you like to get out of the gym and see if it can be done for cheaper. For example, if you like doing no frills weights and cardio, pure gym (or equivalent) offer rates as little as £10 a month. Savings c.£50 pm

Sky TV

Whoah, either you have a mega package, or you are being ripped off by Mr Murdoch. Do you use/ need all the channels you are paying for. A free view, virgin box etc would provide big savings. Savings c.£50-80 pm

Food

Budget planning for food for a week or two a month can make good savings. We have a week or two of "lean weeks" where I plan a menu for £25 for the two of us for the week. Challenging, but can be good fun, with savings to be made! Savings c.£50 pm

Other

Your council tax seems very high, perhaps worth getting it reviewed with the council? All bills and insurance policies may also be worth reviewing with you providers. Get though to a retention team and they will probably offer you much better deals! Savings: c.£30-50 pm

Potential total savings from my brief calculations would be about £250 per month, and that excludes any savings you might make on changing your mortgage deal.

Plough that, plus your £150 a month savings into a "unrestricted overpayments" mortgage (when you get the chance to switch), and you could find that £90k going down very quickly!

Use the overpayments calculator on this website, it is good to play around with. Enter a £400 per month overpayment, and you'll probably shorten the term by about half!

Good luck!

tootoo

very good advise.
i would def recommend popping to the old style board. You can easily save on your monthly groceries (is it just two of you?).

originalmiscellany

Loads of great thoughts here as to where you can go next...

a) Get some spreadsheets up and running, and get your figures set up, showing what an overpayment of say £200 a month (which I think is very do-able) will do in speeding up your mortgage length, in a positive way.

b) What is your interest rate currently?

c) Interest rates are at a historic low, I would be researching what you could get currently, it sounds like you'd like a long term fix from what you have said - so fix it long term, ensure you can overpay and keep the overpayments as big as possible, through cutting back financially on some of the points above.

Easy!

FunLovinCriminal

Hi all,
Many thanks for all your suggestions. They are great and appreciated.
Sky is high because its a package including phone, broadband and TV - I have phoned them today and got free line rental and a little knocked off taking me to £60 per month.
Mobile phones/Insurance - OH very clumsy and with the new iphone5 I think its worth it (!) Yes we both have iphones, needed the connectivity with facetime (relatives all over the world, cheaper than calling and they dont have pc access for skype)
House was built in 2000-2001, so will check about the council tax band - worry is, what if it goes up?
We do claim for everything we can on Simply Health, both contact lens wearers, dentists etc,etc - but I take your point and see if we would save. I'll check out our claims vs payments
Gym is used, frequently - joint membership, anytime usage. As is Weightwatchers. But again, wise words, so I will keep a track how much we are using it. Again the food bill is high, but we shop healthily, so fresh fruit and veg.