Dipping my toes... 20 February 2014 at 1:06PM in Mortgage-free wannabe 13 replies 1.2K views

If_in_doubt,_do_sums

I've taken the plunge and started a diary. Scary stuff!

I believe it is customary to begin with some blurb, so here goes:

My OH and I moved into our house in November. We had a small terraced house before, which required quite a lot of DIY (and was essentially a money-pit) and never really got started with overpaying while we were there. However, because of the work we put into that house, we sold it for a bit more than we bought it for, which meant we were able to put more equity into our new home. I love this house, and this location, and I never want to move again! We both really want to get the mortgage down as much as possible, but have only really started on our MFW journey this month.

So, we have an outstanding balance of £196480, due to be paid off by 21/11/2040. My target is to kick 10 years off that and into the long grass. Fancy pants mortgage calculator has told me that that would entail a fixed payment of £1323 per month for the duration of the mortgage (this is based on our current interest rate, which is fixed for 5 years), or overpaying £4000 a year for the duration. But, assuming we will remortgage when the fix ends (which we will as the SVR is rubbish), if we put ourselves into a more favourable LTV by then (say, 60%), then we should be better positioned to get a better rate (assuming the value of the house doesn't change). This requires an OP of £5000 a year for the next 5 years. This should be totally achievable.

But, baby steps first. I have set up a static payment with the mortgage company, so we are OPing £102.82 a month at the moment. We are expecting a bit of inheritance at some point which will be used to OP. We also have an interest-free credit card we need to pay off, so we are currently paying £523 a month towards that (planned purchase – it seemed sensible to do it that way instead of using the savings we had for the house, but both of us are hating that we have 'debt', even if it is isn't costing anything. So we will never do that again!). Once that is paid off in June, we can use that to OP instead.

I also rang the mortgage company this morning to ask what the daily interest is (just out of curiosity). It is £17.96!!! Ouch!

Blurb done. Wish me luck!!

If_in_doubt,_do_sums

Oh, and I OP'd online this morning £120 that was left in the account before OH got paid. But now I'm scared it hasn't got to the mortgage company, as it's the first time I've done an online payment OP! Fingers crossed!

Thistlewhistle

Hi there IID,DS :wave:

Good luck with the diary. I shall follow with interest!!:D

Thistle:p

If_in_doubt,_do_sums

Hi there Thistle! Thanks for the welcome!

Haven't had a very MSE day today - Had to buy some ribbon for wedding invites and decorations on [email protected], and while I was there I thought I'd get a soap dispenser (that's a bit MSE as it means I can buy really cheap hand soap and not look really cheap!), but it had a hefty delivery charge on, so I thought I'd just get it up to a tenner so I accidentally bought not one, but two books. Oops!

I could perhaps twist the MSE logic, as buying one meant I don't have to go to the library and I've currently got a 90p fine to pay, and the other one should help me make my own clothes, so that could save cash in the long run. Slightly twisted logic, but let's go with it!!

gallygirl

Good luck IDS

Shame you didn't know the interest was above £18 a day as that would have been a nice achievement to clock off. Set yourself little targets and milestones to make the whole thing more fun .

I suggest you ring the mortgage co in a few days to put your mind at rest.

Best wishes

GG

Muser1

I'm exited to follow your journey. My house is a small terrace that we have been doing up slowly. The dilemma is do we stay or sell like you have and take on the bigger mortgage. It will be interesting to see the other side as it were!

Good luck x

Thistlewhistle

Hi IDS,
I also have a terraced house and my mortgage is about £86K at the moment and my daily interest is £11.40. I'm currently over paying by £88.70/month but I'm focusing the rest of my efforts on clearing my CC debt at the moment (see the signature!! LOL).
My aim is to clobber that by the end of the year, but currently my CC DFD is 10/2015, so there's a bit to do yet!

Be good to see your side of things too.

T;)

If_in_doubt,_do_sums

Thanks for all the welcomes. Nice to know lots of other people have the same mindset.:)

Gallygal, I shall be ringing them up today to double check!

Can't work out how to quote, but Muser1, we were in the same dilemma for a while, but we're hoping to start a family in the next couple of years, and decided if we do the big move now, we won't have to do it again when we have little money pits running around our ankles!

yukkibear

Good luck on your journey. We also have a terrace house.

If_in_doubt,_do_sums

I have been doing a lot of thinking about the best way forward with budgets. I have been worried for a while that we don't put anything aside each month as a contingency fund, but tend to spend it on things for the house or 'important purchases'. I have just spent this morning going through my spreadsheets (I thought I was a bit crazy about spreadsheets, but reading through some diaries on here, I have barely touched the surface of their usefulness! Very excited about writing more and more!!:j:j) and updating our household budget. I have just emailed OH with our new and updated budget, and it looks something like this:

Income: £4000
Direct debits: £1408.63
Pocket money: £1000
Credit card: £523
Petrol: £125
Groceries: £250
To annual/sporadic/emergency fund: £300

That leaves us with around £400 a month spare for doing stuff to the house, going out, holidays, gifts, wedding paraphernalia etc. Anything left over can be used to overpay. When the credit card is payed off, I would still like to ring fence that cash, although I have to admit that we should prioritise building up a nest egg first, so into an ISA for 10 months, then when there’s around £5000 saved, overpaying the mortgage.

There are definitely areas that could be squeezed - one of my missions is going to be to reduce our grocery spend. But we do include things like wine on this, which we don't want to give up. We really need to get another homebrew going at some point, as that is actually very good and much cheaper than wine. Having read some other diaries and got some ideas though, I think reducing this is achievable. I'm not very good at meal planning at the moment, so I need to improve on that. But we are very anti-waste so there isn't much wastage to reduce, and I make all our bread, and we cook everything from scratch so it certainly will be a challenge. First step is to stocktake, then to collect all grocery receipts and collate what we buy. This will then get put in a spreadsheet and I can start to manage our 'grocery stock control' a little more efficiently (cue new spreadsheet number 1!:j)

Another area that we can reduce is our pocket money, and I think at some point we will. I am a little reluctant to at the moment though as we can afford that. OH likes to save up for big purchases (at the moment he wants a new road bike), whereas I like weekends away and going out for meals with friends and colleagues, and having individual pocket money helps us do this without the other feeling pressured.

We have some challenges in the road ahead, which is one of the reasons I want to get a nest egg built up, and why I want to attack the mortgage while we can (we are overpaying £100 a month automatically at the moment). My income will be going down in 2 or 3 years time by around £450 a month (no change to my job - just being given a massive pay cut. ). We are also hoping to have a family at some point so that will affect many aspects of the budgeting. But I feel like there is enough slack at the moment to be able to absorb these challenges without too much sacrifice.

So short term goals: research ways of bringing in extra cash. I never €bay stuff, so I might look into trying this out, and I might sign up to some survey websites as well. I use £co for cash back, but I might investigate whether TCB is a better option. I also need to sign up to the banks cash back plus scheme, once I've looked into it a little more. OH is a but anti doing anything MS that takes too much effort, or could potentially go wrong. So moving the joint is out of the question. But I do need to investigate where is the best place to put our contingency fund. Neither ISA is full for this year yet, so that's probably the best place to start with.

Any hints or advice on the plan of action gratefully received!

Mrs_Rachel_Trelfa

Hi if in doubt,

Welcome and good look. I will follow with great interest.