Project Mortgage Neutral Begins

ajmoney

2 and a half hours on the phone to the mortgage advisor.  To say I have taken a different approach is an understatement but for the first time ever I have decided to take a slightly more cautious approach with the mortgage as I have fixed both mortgages for the next 5 years but I have kept the payments roughly the same as I am paying now and reduced the term by a year.  The mortgage is now due to end in April 2040.  I doubt I will be able to make the max 10% OPs to both mortgages but I am in the process of coming up with a plan for the mortgage and savings for the rest of the year and will see how it goes.  Once I have got a better idea of what these plans are I will put it down here.

It is crazy busy here. In the next 15 mins I have a friend picking up the extra washing machine that has been sitting in my garage since I moved in.  I have an online conference at 2pm, am waiting for the heating engineer to ring with the quote from the visit they did before lockdown and also have another coming out to give me a quote tomorrow evening.  Hopefully if the conference is finished early enough I am going swimming to unwind from today.

ajmoney

What am I going to do from next month when I don't have to track my daily interest anymore?

savingholmes

You are certainly clearing all your to do list

ajmoney

savingholmes said:

You are certainly clearing all your to do list

Still plenty to do but I am getting there.

I have worked out that each £250 a month OP on the larger mortgage from next month takes a month off the term.  I need to work out what the minimum is to do that and what I would need to OP to knock two months off.  I have managed to secure 1.34% over 5 years so now I just need to find some savings accounts that will make me some money...I suspect I could be waiting a few years!

savingholmes

That's a nice rate.

ajmoney

Based on my scrap paper calculations of only OPing by £250 a month during the 5 years my mortgage should be down to around £56K, I guess the challenge is to hit £50K.  My savings are currently at £28353, the question is...how close can I bring that level to the mortgage balance in the same time frame?  It would be some challenge but I wonder if I can hit mortgage neutral in 5 years.

OMG I have just looked at this based on saving £350 a month and there would be around a £7k difference, I am currently saving £450 a month and assuming no rate of interest. This could actually be possible!!!!!!!!

Suffolk_lass

ajmoney said:

savingholmes said:

You are certainly clearing all your to do list

Still plenty to do but I am getting there.

I have worked out that each £250 a month OP on the larger mortgage from next month takes a month off the term.  I need to work out what the minimum is to do that and what I would need to OP to knock two months off.  I have managed to secure 1.34% over 5 years so now I just need to find some savings accounts that will make me some money...I suspect I could be waiting a few years!

Very good rate. The more you overpay earlier, the bigger the impact on your compound interest that accrues, and the faster the magic snowball rolls

ajmoney

Suffolk_lass said:

ajmoney said:

savingholmes said:

You are certainly clearing all your to do list

Still plenty to do but I am getting there.

I have worked out that each £250 a month OP on the larger mortgage from next month takes a month off the term.  I need to work out what the minimum is to do that and what I would need to OP to knock two months off.  I have managed to secure 1.34% over 5 years so now I just need to find some savings accounts that will make me some money...I suspect I could be waiting a few years!

Very good rate. The more you overpay earlier, the bigger the impact on your compound interest that accrues, and the faster the magic snowball rolls

I am estimating the monthly interest to be around £75 for the larger mortgage and £29 for the smaller one so the £250 a month is a good amount over.  Now the interest rates are the same on both mortgages I am undecided what to do with the smaller one.  I could OP £30 a month or account tidy into that mortgage.  £30 doesn't look like it does much on my spreadsheet but it would be covering the interest and I guess every little helps. 

ajmoney

I spent far too long on the phone to someone about life insurance/serious illness cover yesterday.  I was looking into how much it would cost for serious illness cover, I have got him down quite a way from where he started.  The quote is currently at £25 a month but I am not sure I am prepared to pay this much but I am not sure what my top figure would be to give him someone to work to.  I guess I am a little tight with my money when it comes to this.

Today looks to be a much quieter day thankfully, I have some jobs on my list but none of them should take too long so I might get a little time in the garden.

Suffolk_lass

We had critical illness cover when our Son was small - DH's policy would have kicked in for about three quarters fo his salary after a month - mine was for about half take home salary, after a year which was when I would have dropped down at work. The killer for us was the inflation of the subscriptions that were arbitrarily set at a percentage that became unrealistic after a few years (compound interest and all that) and the corresponding percentage by which the benefits were increasing. If you are considering going for it, make sure you do some modelling