Overpay mortgage

Sazzie23

Am looking for advice if my plan is a good idea.

Current situation is BOI mortgage fixed rate 4.5% approx £19k
secure loan. Fixed rate 7.9% approx £29k
DMP. All now 0%. Approx £19k

I am currently only just paying above token payments on DMP but have a slight income increase which I will declare but think I can free an extra £50 most months which i could put towards the DMP which would make my DFD approx 2025 instead of 2031.

Or I could put this towards my mortgage which would reduce my MFD from 2020 to approx 2019

Or I could put this towards my secured loan reducing that date from approx 2024 to 2022.

The reason I'm thinking of putting it towards the mortgage is because that's the soonest date, and the sooner I clear that, the sooner I can start making better headway towards the other debts, sensible or not?

The thought of being in my current financial state for another 15 years is soul destroying, so I'm just trying to figure out a way to improve it. I already do as much overtime as I can safely manage and the chance of a higher paid job is limited.

So all comments welcome.

SueP19

Hiya and welcome to MFW.
Is your DMP with a company and how long have you been in it.

I enetered a self done DMP in May 2009, am not sure by the above exactly what you owe and what interest is on each, could you relist one per line.

It may seem weird to you or even wrong to be here but I assure you its not, I mused for a month about overpaying my mortgage but as it is my highest interest rate and my debts are managed and ticking over at 0% it made financial sense.

I do see your logic and think it would help if you posted a SOA

Luckyinlife

I dont know if this is an option or not but

could you remortgage the 29k to get it at a better rate ? then all your debt would be in 1 place aginest the house and you can overpay it on the house with a lower rate thus paying less interest

failing that i would and have payed off the highest interest things first

Sazzie23

Yeah I've thought about remortgaging but as my DMP is crippling my credit, and I can't even get a vanquis card (I only wanted one for absolute emergencies) i suspect it's unlikely to happen.

I only got the mortgage I have because (to my shame) I used the endowment money to pay some credit card bills to try to stay afloat and then couldn't pay the outstanding mortgage so my mortgage company did agree to remortgage the balance.

Whilst I can see the benefit of moving the secured loan forward, as it's the highest interest it's the time factor that completely does my head in. I currently have £2 a week 'spare money' if I was to get to the position where my mortgage was paid, which is the shortest debt, sooner I would be able hopefully to bang more onto the secured loan and the DMP.

And while I totally understand that is against the logic of pay off the highest interest longest term, I need something tangible I can hang my hopes on.

Thanks for advice, appreciate you reading.

DMP is with SC btw and budget has been picked over several times. 0% interest on all 5 DMP debts, hoping they will stay that way even if the payments increase by 40%.

getmore4less

How much is your house worth.

DMP is a very long one.

Dates do not matter highest interest first for the shortest payback on all debt..

how long are the fixes against term any change in rate.

what does the snowball give as the Debt free date for all three.

Sazzie23

My house is only worth around £85k and I might even struggle to get that as it's not in a fantastic state of repair.

That's one of the reasons I'd like to be able to free up the mortgage money sooner as I don't think the house can wait 7 years for some of the repairs.

I haven't tried snowballing the whole debt, but I'll give that a try, thanks for the suggestion

SueP19

Thanks for clarifying the debt, I was being a bit dim

Ok first things first, during the early days when debt was at it's highest the biggest thing that crippled me was having no emergency, it still has done this last year. I would save your extra £50 for the first 6 months, it's not a lot of an emergency but it should help for those silly things like washing machines.

After that I do see where you are coming from but I think you need to snowball as getmore4less says. Then decide if paying your mortgage first is worth the extra interest your secured loan will cost you. Under no circumstances consolidate. Been there done that and have several tshirts lolol
Put your debts into https://www.whatsthecost.com and see what difference it makes to each. Do not pay it towards the DMP, the trouble with DMP companies is that you end up on the poverty line for way to long and it is unsustainable from a mental point.
I still pay my debts at the rate agreed in 2009, I now take the tone that as I have paid half be grateful (most of the debt is interest now) so you can swing if you want anymore.
You need to visit the income boards, is there a hobby you can turn into a business???

Sazzie23

Hi SueP,

I tried the snowball, and adding £35 per month brings down the secured loan date to slightly after the MFD which was a bit reassuring, I just don't feel like I can keep going like this forever. Equally though I could sell up which would just cover all the debts even at a lowish sale price, but I really don't want to sell, I'm approaching the big 50 and although retirement is a long way off, getting another mortgage with my credit rating is unlikely so it'd mean renting forever and I'm not sure I'm comfortable with that as I have no family to look after me in my old age.

And The snowball brought the total DFD down to 2023, but obviously only if I then throw all the mortgage and secured loan at the DMP, which I don't plan to do, although it would be good to get rid of the millstone of debt, but some stuff in my life is just not going to last til 2023. I find looking at the facias on my house depressing, as everyone else has replaced theirs and mine just look run down, and it makes me feel run down every time I come home...

I think you are probably right, I need to rebuild the emergency fund, I had a reasonable one til earlier this when when life's reality hit and I had to cut down on my out of hours stuff, but getting myself that little cushion back will help. I had to call the emergency dentist this week, it was such a relief knowing I had the money to pay the bill, so my first £50 needs to replenish the dentist fund.

I don't really have any potential money making hobbies but it's an extra idea to think about. I'd really like to retrain as a psychologist but that's a bit of a distant chance.

I do value everyone who expresses advice or suggestions.

getmore4less

What are your current payments to each?
(guess is
Mortgage £350-£430
Secured £370-£410

if you are likely to have maintenance issues it might be an idea to save up bit to deal with the most urgent.

It is worth playing with the snowball to see what the differing payment plans will cost.

overpaying the loan will delay the mortgage finishing(not by much) but save money, if you can then reset the payment on the loan you free up money to do the maintenance and once done you will have around £800pm to clear the loan.


Quick calc
If the mortgage is clear in 4 years the secured loan will take about another 2years if you throw everything at it.

SueP19

Hi Sazzie

You deserve your house so for many reasons you hold onto it for dear life.

Just a small bit of background on me to help, first round of debt 27 years ago (lasted 5 years)OH made redundant and first child died, second round of debt 18 years ago (lasted 2 years) bought first house, third round of debt 15 years ago (lasted to self DMP 8 years) bought house in country and final round of debt last year (lasted 6 months) paid £23,00 for DDs post grad. So you can see I wasn't joking.

I am going to say this because I wished someone had to me .......you are NOT a bad person in any way

Re house mine falling down but figured it can last as it's been here for over 100 years. I do car boots, I plan what I need for a room and sell a bit then buy a bit it also does make you feel better to do a bit even if it's only stripping wallpaper and filling cracks. Wilko do a savers card and you get a free £1 for every £24 their lightweight filler is awesome.

I am 50 this year so we are similar in age

As for debts, sounds like the snowball was a good idea, 2023 sounds good to me, it's only 7 years away and let's put things in perspective the millenium was 16 years ago

So be proud you have got this far, get your emergency cushion and go for it xx

getmore4less

A lot of people replace facia when a paint is all they really need if not rotten.

I think you are probably right to keep the house you are throwing a lot of money at the secured debts so they are dropping quite quickly.