MF by age 40! Then I am buying a Mercedes SLK

diamondsonly

Hi all,
Not much money news. Re-mortgage call booked for Saturday. Plus dentist appointment..ouch
NSD today. I was great a bringing lunch from home in January, last week was a bad week 4/5 days I had to buy lunch. Back on track this week though

Sleep deprived today, children took over an hour and half to settle past bedtime and then they were up multiple times during the night.

Early night tonight hopefully!

Diamonds xx

diamondsonly

Ok so my mortgage application call lasted a total of 10 minutes. We didn't get into any finances but right at the beginning he asked how much we had outstanding and then he asked if we wanted any additional borrowing. So I said well we have always thought about doing a B2L so would it be better to borrow now at a later date? Mortgage person said its always better to borrow additional funds now but as you have mentioned B2L we can't proceed with the call. You need to go away and do your research about how much you would want to borrow and and the value of the property. It was a hypothetical question that if in the future we may consider B2L. They ended to call by saying go do your research and then call us back!!

I said to him its fine we we just want to borrow only enough to re-mortgage but he said now i've mentioned it I must go away and do research.

Its completely thrown me... Its a great rate but how can I research for something we aren't going to do?
confused..very confused xx

gallygirl

diamondsonly wrote: »

Its completely thrown me... Its a great rate but how can I research for something we aren't going to do?
confused..very confused xx

Phone them back tomorrow. Tell them you have now done your research and it's not for you as the risks are too high/yield too low or whatever so you definitely don't want to do it .

diamondsonly

Thanks GG that's what I was thinking too but he said I'd still need costings associated with it if I found it wasn't an option for us..DH is tempted to go with another provider although N&P is the most competitive rate for us... so annoying.

gallygirl

diamondsonly wrote: »

Thanks GG that's what I was thinking too but he said I'd still need costings associated with it if I found it wasn't an option for us..DH is tempted to go with another provider although N&P is the most competitive rate for us... so annoying.

You were thinking of York as you have family/would like to relocate on retirement whatever. Replace York with anywhere with houses roughly the same value.

A fairly basic 2 bed terrace is around 155k - not considered a flat as don't want leasehold. Rent is around £625 a month, £7,500 a year. That gives a gross yield of 4.8%. In your opinion that is not enough for the risk involved.

If they want more info:
155k + 10k purchase costs & initial work = 165k. Assuming you finance through a combination of 10k savings, a small remortgage on own house to release the deposit and a BTL mortgage. For arguments sake lets say it all works out at the same rate. 25 years IO (you'll make capital repayments as and when). There are loads of BTL 5 year fixed rate mortgages (for security) out there, but realistically you need less than 80% LTV to get one. On a 155k purchase that would be say 120k (77.4% LTV). Use those criteria on here:
http://www.moneysupermarket.com/mortgages/search/results/?ltv=77.4&goal=MOR_BTL
to get some sample names you can quote.

Let's say you go for aldermore 5 year fix at 3.99% and for arguments sake the deposit from the remortgage is also at 3.99%. Your monthly repayments would be £515 a month, £6,180 a year.

Rent = £7,500

Less 10% allowance for voids -£750
Less agents fees, let's say 10% -£750
Less repairs, let's say 10% -£750
Less mortgage -£6,180
Total Costs £8,130

Annual Cost £630. You are not prepared to subsidise this. And that is before any proposed changes to tax relief on mortgage interest on BTL's which would give an even bigger loss.

Quote the numbers like you know what you're talking about and you should be fine .

diamondsonly

Thanks GG thats so kind and helpful. I wonder how long I can wait before I call up to reschedule my mortgage appointment. I am tempted to call later today.

The rate they are offering is 1.59% for 2 year fixed compared to my 2.79% tracker

Lexi-lu

Hello diamondsonly,

Sorry to hear that the remortgage call didn't go as planned, hope you get it sorted soon. It all seems a bit ridiculous of the provider to me but sounds as though gallygirl has provided some really useful info which is great.

Good luck with getting onto the new lower rate soon.

LL

diamondsonly

Hi all,

I can't believe its been 2 weeks since my last post, although i've been reading everyone's diaries before bed I haven't posted...must try harder. I'm not sure if I will be thrown out of the MFW club but I've decided to save hard for the next 3-5 years to ensure I have the required funds for schooling come secondary school in 2023 for DD and 2025 for DS. This does mean that MF will take a back seat but I will be using all the skills I've developed to be money savvy and ensure my money works for me and not the bank.

I'd still like to stay on the forum and cheer you all on and the MF target will be converted to school fund target instead. So I still aim to save £24000 instead of reducing mortgage balance by £24000.

Many people have and will question our decision on schooling but for us its the right thing for our little ones. If I manage to save more than target each year I may use it as an OP but i'll see when and if I get to that point.
I am currently in the process of remortgaging to a 5 year fixed instead of the 2 year I'd originally been planning. This should give us a safety net.

When I started my diary last July I had been hoping to be MF by Dec 2022 and my 40th birthday, then I changed it to Dec 2020 and further increasing the challenge by saying Dec 2018.

Now I am not sure at all if we will be MF before our 2035 mortgage end date, however we have reduced the mortgage significantly since last year so are in a much better position to save hard.


Knowing how quickly things change in my world I suspect i'll be back here in a few months aying our goals have changed again...watch this space..

Now the quest to save £165,000 by September 2023 begins :eek:

diamonds xxx

newbie2013

diamondsonly wrote: »

Hi all,


Now the quest to save £165,000 by September 2023 begins :eek:

diamonds xxx

wow - that's way forward planning!
I can only manage 3 years ahead max!

diamondsonly

hi Newbie, my spreadsheet goes up to 2023 :rotfl:

I need to save £24000 a year to meet my goal... that is £2000 a month and the only way I can do that is by stopping the regular OPs.

I was going to use Quidco and other tilly tidy money for OP but i think i'll use it for fun things like christmas etc


xx