Searching for Security: Our MFW Diary

Bluefire

After a two year absence I've finally found my way back to the MSE forums, so I thought a good place to start would be with a MFW diary! I meant to start one back when I was a regular member as we were actively making overpayments when living in our old house, however I never got around to it, so now that we've decided to start again here I am.

A bit of background:

We're currently living in our forever-until-retirement home (so for at least the next 25-30 years) and renting out our previous property. As this is a buy to let we're currently letting the mortgage run as is, and concentrating on our residential borrowing.

DH (35) works as an office manager, and I (30) am currently a homemaker, mainly due to a long history of depression. Although I remain hopeful that I'll return to work someday, I'm not under the illusion that it will happen any time soon. So for now, as I have the time, I make it part of my 'job' to keep on top of our finances and making sure our income is working as hard as it can for us.

We don't have children (other than the cat!) and the plan is to remain childfree. The business that DH works for has recently been taken over, and although no official plans have been put in motion, as far as we're aware the intention of the new company is to close the business within 3 years.

So that leaves us here, trying to make ourselves as secure as possible before that point, which means becoming mortgage free as soon as is viable. Hopefully by the end of 2016 if all goes to plan.

Next up, the financials!

Bluefire

Mortgage Balance

11/07/2013: £28,896.49
(Projected Loan Repayment: November 2041)

11/07/2014: £26,618.24
(Projected Loan Repayment: September 2024)

27/07/2015: £16,306.47
(Projected Loan Repayment: June 2021)

Current: £1,791.47
(Projected Loan Repayment: December 2016)

Yearly Overpayment Goals

2015 - £13,000 O/P & £5000 offset savings
2016 - £2,308 O/P

Budget

See post #115

Bluefire

The Plan

Currently our monthly mortage payment is £120.07. However since taking out the mortgage we've been paying a flexible payment of £250, so at this point we've already been over paying by £129.93 p/m.

Part 1 of the plan to pay the mortgage off in 2016 is a lump sum overpayment we're hoping to make at the end of the week, we're just waiting on the savings from a cashed in ISA to appear in the account. At the least it will be £5000, but at the end of the month we might be able to add another £1000 to that depending on what remains.

Part 2 is to start using some of the income from our rental property. Currently we receive £575 p/m, so after some is paid out / put aside for the BTL mortgage, income tax, savings, insurance & investments we should be able to make an additional overpayment on the mortgage of ~£250. If we were able to achieve this every month that would bring our loan repayment date squarely into 2018. However we've never had a tenant stay for more than a year, so I'm not relying on that by any means as we are bound to have some months where the property is vacant.

Which is why part 3 is general money saving / making. We're a pretty frugal couple generally anyway, but even we let things slip. DH has been on holiday for a week over Easter & we've used that time to go over the bank statements with a fine tooth comb. I have a list of things to look into & sort over the weekend which will hopefully save us a few pounds each month, but I'll detail that later.

I'm also going to start a mass declutter asap & clear out our spare room which has had a 'to be car booted' pile sat in it for about 2 years! I am hopeful that any extra money earned/saved will go some way to make up for any shortfalls in rental income. And if there are no shortfalls (fingers crossed!) then it will just bring that repayment date even closer.

Alchemilla

Kudos on the manageable mortgage.
Welcome and Good Luck.

Bluefire

Alchemilla wrote: »

Kudos on the manageable mortgage.
Welcome and Good Luck.

Thank you! Admittedly our mortgage on the BTL property isn't quite so manageable (£70,500, currently interest only at 3.79%) but that's a problem for down the line when no doubt the next MFW diary will begin!

Our residential mortgage is at a lower rate (2.59%) so interest wise it would make sense to tackle the larger debt, but with a possible redundancy coming up we wanted to concentrate on our home first.

Bluefire

No news on overpayments or savings this morning but a small update on a change for us. Since we decided this Easter that I would get a lot more involved in the financial side of running the household one of the things I've been keen to get on top of was the credit card. We have a joint Tesco clubcard credit card which we use to pay for everything we can to earn clubcard points. DH's style is to let everything build up over the month and pay it off when the statement comes through. By which point we've already added spending again, so the balance never actually hits zero.

Having previous been in credit card debt as a student to the tune of around 7k, since paying it off my method has always been to check the balance online every day & pay things off as they appear on the statement. This has been the first time I've been able to do that with the Tesco credit card since making it joint, and this morning our balance is £0!

A small thing, but it will be so nice not to have that 'surprise' at the end of each month now as to whether the credit card bill is small or massive!

Bluefire

There was me thinking we'd have no overpayment news today - DH just got up & discovered the ISA money had landed in the account! Part of our financial overhaul this Easter was to shuffle the savings around, so we now have £5000 earning 4% in a Club Lloyds account and we decided the rest was better off as an overpayment.

So pleased to report we've just paid a lump sum of £5000, giving us a new projected loan repayment date of 01/08/2022.

A lovely way to start the day!

Luckyinlife

well done amazing payment :] and look how many years it brought it down by amazing :]

Even tho its a small mortgage id still try to pay it off as soon as possible then you can save for yourself instead of saving to pay of a mortgage

will follow with interest :]

ajmoney

I have always looked at my bank accounts closely but even I have realised I have missed things, especially when paying with cash. I have started looking at my accounts with a renewed interest and have been surprised at what I have learned (I have only been doing this for 10 days). I am looking forward to reading your diary and see how you get on.

Bluefire

Luckyinlife wrote: »

Even tho its a small mortgage id still try to pay it off as soon as possible then you can save for yourself instead of saving to pay of a mortgage.

My thoughts exactly! Just had a shuffle around of my own savings - £2000 has gone into a TSB Classic Plus account at 5% interest, and the remaining £300 went into the mortgage account this afternoon.

That's the savings pretty much dealt with now. Next week will see me dealing with selling our junk instead!

Luckyinlife

Great job i myself have a lloyds account have 5k in the club lloyds saver get about £12 a month interest not a huge amount but thats £124 a year which in my case knocks off £500 in interest off my mortgage and 2 months off my term every year :] not bad for just keeping an account with mony in it

i always sell on ebay love it really enjoy makeing some money back on stuff iv enjoyed over the years :] good luck