Tackling what seems like the impossible

KittyMoma

Hello,

I'm brand new to the forum and I'm so glad I found this one. How did I not find it before??

A little bit about my situation;

I bought a flat in London through the shared ownership scheme in November 2012 and stair-cased up to 100% in May 2015 so I have two mortgages - one from the first purchase and the other from the stair-cased bit.

As at March 2017, Mortgage1 balance is £70,106.06 (2.29% fixed until August 2021) and Mortgage2 balance is £164,977.73 (1.74% fixed until February 2018), making it a total of £235,083.79. Total monthly costs are currently £1,066.37.

The value of the property at the moment, based on online research, is estimated to be anything between £500k to £640k. I really have no idea what it is unless I get someone to value it properly.

In an ideal world, I'd move the flat onto a buy-to-let mortgage, move out and buy another flat to live in but I'm not sure if this is possible. I have very little cash savings at the moment. Need to do more research and until then, I will be trying to pay off as much as I can.

I've always rented the second bedroom out but as of last weekend, I don't have that anymore. I don't think I can live with anyone else, at least for a while. I'm sure I'm going to miss the extra £800. This has forced me to rework my cashflow and I think I will have to start paying attention to what I spend my money on. I might find a Monday to Friday tenant, short term let or Airbnb but until then it's just me and my two cats.

Simplified version of finances;

Monthly in - £2,861
Mortgages - £1,066.37
Monthly out - £379.69 (this is fixed - bills, insurance etc)
First Direct Regular Saver - £300 (I count this as gone money as I will be putting it all into LISAs each year when they go live)
Other monthlies - £200 (martial arts, hobbies, travel)

This leaves me with roughly £900 which I can spend, overpay my mortgage or save. Not sure how much I would spend on groceries but I know I will have to cut down on work lunches, eating out and Deliveroo

The plan is to pay off Mortgage1 asap first but since the over-payments are capped at 10% each year, any spare cash will either go towards Mortgage2 or savings.

Any tips or advice is welcome. I might not be posting every day but I will be popping by regularly

Tropically

Before getting too far into your plans, I would make sure to understand any conditions of sale on your shared ownership. I know in some circumstances, you have to sell back to the company who runs the shared ownership.

You have done so well with overpaying even without this forum! I ran an Airbnb for a bit but it was a lot of effort. If you are located in more central London you can probably get a better price.

KittyMoma

In my case, if the management company still owned some shares, I would have to sell back to them first and if in a 3 month period, there is no interest, it goes onto the market. If a person owns 100% then it can go straight on the market. That's when I checked a few years ago. I will look into it before I actually start doing anything. Thanks for the reminder. Rules change often so you never know!

For Airbnb, where are I am I can get min £40 a night easily. That's the thing - effort. Also strangers in my home for a short period of time and I have two cats. It's a small flat. I'll have to think hard about this option before I decide.

I went through my kitchen cupboard and freezer last night to see what I can bring into work for lunch. Lots of pasta lol I have a meat drawer in the freezer which is full so I'll start pulling stuff out of there to eat through. Challenge!

On the upside I only spent £11.47 this week on lunches. I could easily spend that on one lunch so I'm pleased

chelseablue

Good luck on your journey! I have a similar mortgage to you, current balance just over £224,000.


I'll be following your diary

KittyMoma

Received the water bill for the next FY. I called them to ask if my bill looked right and whether I could get a lower rate since there will only be myself living in the flat now.

The man on the phone was very helpful and suggested he send out a questionnaire form to me and when they get it back, they will assess my situation, get people out to see if they can install a water meter and it should reduce my annual bill by about £100 because what I'm paying at the moment is way too much for a single person.

He did warn me it will take about 10 days from when they receive the form back from me to assess, then they will have to book engineer to come out to me and if they get the go ahead it will take around 50 days to install and be up and running!

Will see how that goes, watch this space

KittyMoma

Omg omg omg. After trawling through the forum and reading through threads, I got the inspiration to call my bank just now and ask if it was possible to reduce the monthly direct debit amounts because I have been making overpayments.

Result?

Smaller mortgage from £334.43 down to £299.88
Bigger mortgage from £731.94 down to £675.54

In total, from £1066.37 down to £975.42!!! That's £90.95 less each month!

I should practise what I preach - If you don't ask, you don't get!

They also said it is possible to get this done by sending them a message through the online banking secure message and just say I've overpaid, please can you adjust the DD amount. This is very good news for me.

Sorry if this was common knowledge but I'm so happy right now lol

I was somewhat worried about having less disposable income from not having a flatmate but now I have the extra £90.95 to do what I want with it, be it spend, save or overpay I'm currently going through all my bills and outgoings to assess what I can do to free up more cash each month.

KittyMoma

I've been doing Shop and Scan for a few years now. Basically I do my normal shopping, scan the barcodes and transmit off to them once a week and I get points for doing that. It led onto Food on the go which is an app I do the same thing for but for food I eat outside home. That led onto Screenwise which monitors my TV and social media usage ie see if I use Tw1tter or FB or the likes whilst I'm watching TV. Anyway, doing all of this earns me about £10 a month and sometimes more but this month was the annual Screenwise pay month that's on top of the monthly points. £30 in Amazon vouchers - thank you very much

I've downloaded a budget app so I can record how much I'm spending on what. Will see how that goes.

gallygirl

KittyMoma wrote: »

Not sure how much I would spend on groceries but I know I will have to cut down on work lunches, eating out and Deliveroo

Have you worked out what your daily interest rate is? I used to think 'would I sooner have a takeaway/meal out or knock a day off the mortgage?'. Occasionally the takeaway or meal won out, but not often. I made a conscious decision to not spend money on things to make my life easier or little treats because I was working......... to pay for the little things I needed to buy to make working more palatable!

SaveSave

KittyMoma

Ahhh interesting way of thinking. Never occurred to me. No I haven't worked out what my daily interest is.

I think I was a bit spoilt for choice working where I am. By no means am I going to deprive myself of nice things, because at the end of the day, we work to live and need to enjoy life as well. Just means scaling down the £10-£25 lunches to average under £5. I'm trying that now. First week went well but will see how it goes. Some days I would have breakfast, lunch AND dinner out. Bad, I know.

gallygirl

The important thing is to make the choices that are right for you, rather than just automatically doing something without thinking. If having a £5 lunch every day for a week is more important than a day off the mortgage then that's fine (and seems a reasonable trade - though it's quite a few days over the whole year!). £25 is a whole new calculation though and I'd have thought would make most people think 'is it worth THAT much longer????'. Possibly easier for me as once the mortgages were paid off I was retiring, so a much more tangible end result. I did not one more minimum 3.5hr journey than was necessary!

KittyMoma

Ah no. Not everyday. I plan to take in lunches to work but for the days I can't/don't, I will limit my spend to £5. Yes £5 everyday is a lot! I've always tried to take in lunch but the days I didn't, I didn't really think about how much I was spending. That's the bit I'm trying to control now.

How do I work out my daily interest?