Free By Forty-Five

Gaz83

Just taken out my 'first' mortgage, 95% LTV on £120,000 so £114,000 with Halifax. Two year fixed rate at 5.59%.

Planning on overpaying a good chunk each month, hopefully rounding payments up to £1,000 for now. First payment due to come off is for £877 but I'm going to pay the extra £123.

Plan on being mortgage free within 15 years, just in time for the wee one finishing school.

Eek!

edinburgher

Well done on getting started, it's one of the best decisions you could make

A fellow Scot?

Gaz83

So aye, first mortgage payment today, first overpayment... just £122.33 today, but every bit put away will help!

edinburgher

I don't remember the exact figure, but when we took out our first mortgage there was a line in the letter along the lines of 'every £1 you borrow will cost you £2.75 over the life of the mortgage'. Congrats, you just saved yourself £200 or so in interest

Gaz83

Yeah we've got something similar in our letter as well. Don't think it's as much as £2.75 for every £1 but it's a great feeling knowing that I'm already ahead of schedule.

sweetdaisy

That's a great start to your MFW journey. It gets addictive seeing the mortgage balance reduce .

Gaz83

Cheers!

Yeah I definitely think this is going to be addictive. On the last day of my twenties I wrote a list of thirty things I wanted to do in my thirties. One of those was to save my £2 coins to spend on new golf equipment. I think I might change that to firing the £2 coins to the mortgage as well. In that case I've got another £10 so far this month to put away on payday.

I'm maybe getting ahead of myself here, but after our two-year fixed-rate is up, is it better to switch or keep the same deal? We're scheduled to go onto a 3.99% rate at that time.

If my calculations are correct (I certainly hope they are, being a maths teacher!) then by just paying the standard amount of £650.70 per month we'd be expected to have an outstanding balance of £110,890.37 (92% LTV). But with my projected overpayments I'm hoping to have an outstanding balance of £98,761.92 (82% LTV). Just wondering whether to try for a better deal than 3.99% given that our LTV would be much lower.

edinburgher

I'm maybe getting ahead of myself here, but after our two-year fixed-rate is up, is it better to switch or keep the same deal? We're scheduled to go onto a 3.99% rate at that time.

You're always better to look around, unless you end up on a fantastic rate (for example, after the financial crisis, people got trackers at base rate + 0.5% and the like, nearly free money!)

If you can push it to 80% LTV, it gets better yet. That's what we are currently doing (dropped from 4.99% to 3.15%).

Main points for mortgage rates seem to be 100%, 90%, 85%, 80%, 75%, 60%, 50%.

Try to avoid product fees, they can be nasty if you're looking to remortgage every couple of years.

Gaz83

Quite addictive this, eh?

Already got £30 put away to overpay. Not sure how it works, am I best to pay it just now or save and wait until the 1st Feb when my next payment is due?

Gaz83

Done some re-jigging of our finances over the last couple of days. Might be able to put away a bit more than we expected. Hoping for at least £350 come payday this month and maybe £400 per month after that.

edinburgher

Not sure how it works, am I best to pay it just now or save and wait until the 1st Feb when my next payment is due?

It depends on when your interest is calculated. Taking savings rates out of the equation, if you intend to overpay it's best doing it sooner if you have daily interest and just in time if you have annual interest. Your mortgage documents will detail which you have.