Think I might have a plan? 12 April 2016 at 8:31AM edited 30 November -1 at 1:00AM in Mortgage-Free Wannabe 13 replies 1.6K views

freedomfighter15

I have 2 mortgages on my house. I ported the 1 across from my old house because it was a good interest. The second is the extra I had to put to fund the house.

Mortgage 1 £50,500 @ 1.5%

Mortgage 2 £22,000 @ 5.2% (fixed for 2 more years)

My plan is to pay off mortgage 2 at the end of the fixed term.
So far I have £7500 towards it. I will add a further £625 per month, giving me a total of £22,000 at the end of the 2 year fixed term. If that leaves me with any spare cash (I will still be paying the normal mortgage amount on top for 2 years) I will put it to mortgage 1. I will then carry on paying £625 + the monthly amount i'll be saving from not having to pay mortgage 2. I will save these in high interest accounts and then pay 10% each year.
That's my plan. It sounds good I just hope I can stick to it!

Luckyinlife

Great balance

Are you allowed to pay 10% off a year ? off the 22k one ? if so once you maxed this out as you say great plan :]

freedomfighter15

Thanks for the reply luckinlife.
Yes I can pay 10% off both mortgages with no penalties and after august 2018 I can pay off both mortgages also with no penalties. Obviously i'm going to target the higher interest rate one first.
I never even thought of paying the 10% a year off, That will be my first overpayment to do! Thanks for that tip. I'm new to money saving i'm just too used to spending it instead.

ourcornercottage

great plan. Ask what is the maximum you can pay without incurring any charges and pay it! That'll teach them!

freedomfighter15

Thanks for replying ourcornercottage.
The maximum is 10% a year.
So far i've got the 10% sitting in a Tesco account earning 3% but as my mortgage is charging 5.2% I may as well pay it off there giving me less to pay back and less to pay interest on!
I could really get into money saving, just wished I would have done it years ago.

freedomfighter15

My tax return happens to be the same amount as the 10% maximum over payment so when that comes through it's going straight to the mortgage company.
The £625 a month I need to save is going into a new account which I will paying in weekly so I can see it grow quickly and help keep me motivated.
I have just made my first weekly payment of £156.25.

Luckyinlife

Great job

by paying off the 10% in one lump now will save you on interest also so this months interest the next months interest you pay you'll see it drops down and more of your normal payment will come from the mortgage it self so there is no negative to Overpaying your mortgage only positive.

Still enjoy yourself tho and save its all about balance :]

JustinWayne

Great plan, totally agree with Luckyinlife

freedomfighter15

I'm lucky to have the tax return really. The way I look at it is that I never had that money so I wont miss it. I'll still save the monthly payments rather than rely on the future tax returns and if I do need to dip into it then I can as it'll still be in my account. I do need to adjust to the whole balance of finance as i'm used to just spend, spend, spend.

freedomfighter15

Which S.O.A do people use on this forum. I can only seem to find the less detailed budget planner from the main site?
Thanks.

Edit...The one I have found is budgetbrain planner. It doesn't have the section on savings you already have or other assets you have which calculates your net worth. Am I missing something?

User1489

SueP pointed me in the direction of this calculator - seems to be the one people on here use;

http://www.stoozing.com/calculator/soa.php