MFW newbie would like some advice please!

DennyChomp

Hi all

I'm a long time lurker on this forum and have decided this year that I would like to make some headway on clearing my mortgage. Before I make that first overpayment, I'd like to ask for a bit of advice before I begin.

Here's a little bit about my current financial background:

Mortgage gubbins:
Outstanding mortgage £67,553.40
26 years and 4 months on the term (4% SVR)
No penalties for overpayments

Loans etc.
£0 consumer credit debt
Student Loans - £130 a month (4 years left to pay)

Savings/Spare Cash
£5k emergency fund
£900 disposable income after all bills and food etc. (Will be £1k come July)

My student loans are pre-1998 (I know, I know I should I have paid them off by now! ) and the interest rate on them is lower than my mortgage (3.4% if memory serves me correctly). I'm just wondering if I should clear the SL first or just hammer the mortgage... Or both?

I'm 34 and would like to be MF by the time I'm 40 but that might be a bit too optimistic? I consider myself quite 'good' with money but I'm a total MSE newbie!

Any advice is greatly appreciated!

Thanks in advance

DC

elantan

personally speaking i would hammer the mortgage first ... especially if the student loan is less interest than the mortgage ... the SL comes of your wages anyway doesnt it ?

i was paying £25 a month to my student loan ... but i earn less than £10k so i didnt need to pay a penny ... have now decided to let it run it's course and when i do overtime i sometimes have to pay a wee bit into it ... maybe £4 a month or so ... but that doesnt even cover the interest

However if the SL is annoying you and you want piece of mind maybe best to pay that off for the psychological boost

your choice really


good luck

DennyChomp

Thanks for the response.

My student loan is pre 1998, so it's the mortgage style loan. As I was earning under the threshold required to pay it back, I kept deferring it year after year.

I think I'll take your advice and start hammering the mortgage

I'll start a diary on here and hopefully that will help me to get started and keep me on track!

Thanks again

edinburgher

What is your LTV? Your mortgage rate isn't particularly great, remortgaging to a fixed rate, or remortgaging in general may be an idea?

I like your avatar, although I worry it's watching me

DennyChomp

Thanks for the response Edinburgher

My LTV is currently 79%. I'm lead to believe that I'd get a slightly better deal at 75%? I was a FTB-er back in 2010 - I can't remember the exact particulars but the interest rate was something like 4.69% and the deal lasted two years.

Since then I've just been on the SVR and trying to free up money i.e. car loan, money borrowed from family and other stuff bought on credit.

I'm actually quite rubbish with all this mortgage business to be honest!

PS: Thanks! My avatar a.k.a. 'Doge' (don't ask! ) is primarily there to keep an eye on me!

edinburgher

We just remortgaged to 3.15% with Woolwich with an almost identical LTV (no fees, £250 cashback on completion), fixed for 2 years.

I believe that would be over £500/year cheaper for you, sure you can find similar deals?

DennyChomp

That sounds pretty good! I'll have a look... During your fixed term, are you restricted to 10% overpayments a year on your outstanding balance?

Actually, I just realised I don't even understand what that means exactly...

If I owe £100k on my mortgage, I'm allowed to pay back £10k during the mortgage year without penalty? Or is it less than £10k because my first overpayment already took the mortgage below £100k?

Now I'm totally confused :huh: (doesn't take much!)

edinburgher

Yes, that's correct.

If you're wanting to make a bigger overpayment (as a proportion of the total debt), you could lower the term?

DennyChomp

Ahh...

So I re-mortgage, which gets me a better rate and lowers the term (say 15 years) in one fell swoop?

edinburgher

Yup, just play with one of the mortgage calculators and see how much a month you will feel comfortable with. It doesn't hurt to be ambitious and some lenders will let you change the term in future if it's too much (although you may pay a fee for this).

DennyChomp

Yes I've been messing about with the MSE overpayment calc for the last couple of weeks. It's good fun putting in the big numbers but I'm not brave enough to put it into practice yet!