£35k to £245k to £0...

pinkteapot

Why I'm here...

MrTeapot and I are in our early-mid 30s and through overpayments have got our mortgage down to just under £35k. So, are we looking forward to being mortgage-free in two to three years' time? Nope, we've just exchanged contracts and are dramatically upsizing.

We complete in Feb and our new mortgage is for £245k. :eek:

We're taking it out over 28 years, which is the maximum period that we can as it takes MrTeapot to retirement age. We've done that so that the 'minimum' monthly repayment is as low as possible (we don't have any mini teapots (one-cup teapots?) yet, but hope to), but will be overpaying from the outset to reduce the term.

Our current monthly repayment is £666 (!), but we've been overpaying by £1,750 per month. Our new repayment will be £1,013 and we estimate that we'll be able to overpay by about £800 per month (exact amount will depend on just how big the gas bills are in the larger house!).

My overpayments spreadsheet tells me that if we overpay by £800 per month throughout the mortgage, we would reduce the term from 28 years to just over 13 years and save £53k in interest, although that won't be the reality as we're getting a tracker and the rate will inevitably change.

All of our budget forecasts say that we can afford it. The monthly budget looks manageable and still leaves us with plenty of slack for interest rate rises. Still, making our mortgage debt eight times bigger is making me nervous! It will be the first time that I'm dependent on MrTeapot - I couldn't afford the mortgage and bills on my salary alone (we are getting life assurance for the first time). I'm a control freak so this doesn't sit easy with me. Already looking forward to starting our overpayments. :money:

slowlyfading

Good luck on your journey your OPs are huge!

pinkteapot

slowlyfading wrote: »

Good luck on your journey your OPs are huge!

We're very fortunate with our jobs/salaries so we'll still be making decent OPs in the new house, but they don't feel huge relative to the mortgage size. :rotfl:

Lifes_Grand_Plan

28 years is a long term (to me) but I understand why you are doing it and then if you can more than half that term with your overpayments then it'll be amazing! Good luck.

Muser1

You sound super organised and focused! Tell us all about the new house! xx

Cotta

All the luck in the world to you, doubt if you'll need it as you seem very well organised.

pinkteapot

Muser1 wrote: »

You sound super organised and focused! Tell us all about the new house! xx

Why are we moving and increasing our mortgage?

Any excuse..... Five beds / four receptions. According to the EPC, it has three times the square meters of our current 4-bed house! I'm so excited about it - it's a dream house (to us). I'll post some pics after we complete in Feb. I'm still paranoid about it falling through, even though we've exchanged!

It's perfect and we'll never move, unless (1) job relocation forces it or (2) something goes horribly wrong and we can't afford the mortgage!

I still can't believe we'll actually live there. We did a drive-past after we exchanged and it's still completely surreal.

I know some people will think we're bonkers. We're currently almost mortgage-free in a lovely little 4-bed detached and there's only two of us!

The reasons we're going for the move are:

1. Laziness when it comes to sorting out long-term investments for our spare cash. If we stay where we are we'll be mortgage free in our 30s and will need to do some serious retirement planning with our money after that. We wanted a house that we could downsize from in retirement to free up funds. Our current house is about the same price as a nice bungalow - the new one is almost twice as much so will always give us that flexibility.
   
2. It's more peaceful than our current house. It's still in the same town, but we're currently close to a fairly busy road so the garden has road noise in it.
   
3. We both used to commute into London for work - about 1.5 hours each way - and our current house is near the station. Now we're both in local jobs, much happier, and aren't tied to being within a short walk of the station.
   
4. It's in a good area. Only three houses have come up for sale this year (including this one) and all have sold within days. There's a good primary and the best (currently) secondary in our town within a 10 minute walk, so it's hugely popular with families. All of which means that if we do get into trouble and have to sell, we shouldn't have too much difficulty (touch wood!). Our mortgage is only at a 52% LTV so we're unlikely to ever be in negative equity (she says!).
   
5. The sums all suggest we can afford it, so why not? :rotfl:

MrTeapot works as an accountant, so by the time he gets home he has zero interest in sorting out our finances. I'm a hyper-organised control freak so more than happy to do it. For the first few years after uni (pre MrTeapot) I got into debt and took out a 100% mortgage at 4.2 times my salary. :eek: Sorted it all out with the help of this site and am now a keen saver, so very cautious about us stretching ourselves.

I'm really pleased with all the OPing we've done on our current mortgage. If we'd put the money into savings there always would have been a temptation to spend some of it. By ploughing it into the mortgage we've built up 'house money' that's enabling us to make this move.

pinkteapot

Cotta wrote: »

All the luck in the world to you, doubt if you'll need it as you seem very well organised.

If we get our mini teapot then all the best laid plans will go out of the window. We'll be dipping into savings for a couple of years rather than overpaying. But it'd be worth it.

slowlyfading

Ooh your house sounds fantastic :j :j good luck with the mini teapot plans too

Lifes_Grand_Plan

Your post #7 makes your situation sound very similar to mine and Mrs LGP.... we are well past half way on the mortgage on our little three bed terrace but we're looking to relocate and when we do will be going from £60k left on the mortgage and reducing rapidly up to £250k ish. We just need jobs to fall into place now which is the hard bit as we have a lot less control over it - fortunately we have little LGP to keep us busy though.

So, so jealous that you have the jobs and house - in a nice, very happy for you sort of way. Can't wait to see piccies of the house if you don't mind posting

Keep us updated.

pinkteapot

Lifes_Grand_Plan wrote: »

Your post #7 makes your situation sound very similar to mine and Mrs LGP.... we are well past half way on the mortgage on our little three bed terrace but we're looking to relocate and when we do will be going from £60k left on the mortgage and reducing rapidly up to £250k ish. We just need jobs to fall into place now which is the hard bit as we have a lot less control over it - fortunately we have little LGP to keep us busy though.

Very similar situation! It's hard, isn't it? I feel a little like we're going backwards by increasing the mortgage so much. I have to remind myself that we're still going to be better off month by month, as we have been so far. We'll still have all the equity we've saved to date in the new house. If we do the "house value minus mortgage outstanding plus savings" (i.e. net wealth excluding pensions) sum then it's not going to decrease.

Lifes_Grand_Plan wrote: »

So, so jealous that you have the jobs and house - in a nice, very happy for you sort of way. Can't wait to see piccies of the house if you don't mind posting

I'm resisting the urge to post the Rightmove link as I'm paranoid about jinxing it. :rotfl: I'll be plastering the thread with photos when we actually get the house.

I'm jealous of your mini LGP. Good luck with the job moves! How far away are you looking at relocating? If it's too far to be commutable in the short term, are you trying to sort out a job for one or both of you before moving?