Seven Year Plan

Hello this is my diary to plot the events along the way to what hopefully will become a journey to mortgage free existence . A little bit about me , I have lived in our current property for 16 years and there are 13 years left on our mortgage with a balance of £45 000 . The previous 2 years we have lived debt free other than the mortgage having being in debt to the tune of £19 000 and on a debt management plan for the 7 years before that . These debts accrued through daily life bringing 3 kids up on one income . During the time on the dmp we cut our spending back and were motivated by the balance falling and the debt free date getting ever nearer . Through the dark days , and there were many , the thoughts of what to spend the surplus money on when debt free kept us going but as of now we have found it hard to justify spending on stuff that we think we want but don't need . This means other than a new suite and decorating , and other jobs that needed doing we are reassessing our future .
We have thought of moving to a nicer area but the houses and areas we like would put us in a lot higher but manageable position and we still have 2 kids at home and want to move when the requirements are just the 2 of us so I feel the best way to pass time is to overpay on our mortgage . We currently are on a 5 year fix which finishes next leap year day , just under 3 years away . I think we can afford to overpay £200 a month but don't know how to go about this , whether to set up a standing order or just pay over the counter each month . If we can achieve this we are looking at about 7 years to becoming mortgage free and I would like to use this diary to plot the months in the same way as I used a debt free diary to get through the dmp . I apologise for the long post but wanted to give an introduction before listening to any advice and questions from anybody .
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Comments

  • LadyGnome
    LadyGnome Posts: 801
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    Welcome to MFW. Well done in sorting out your debts. Check with your bank how to make overpayments - I just transfer an amount each month manually using mobile banking. Also check how overpayments are treated. Do they reduce your monthly payment or reduce the term. Sometimes when you are on a fix they don't seem to do either until you come off the fix. If I am given the choice I would choose to keep the payments the same and reduce the term.
    MortgageStart Nov 2012 £310,000
    Oct 2022 £143,277.74
    Reduction £166,722.26
    OriginalEnd Sept 2034 / Current official end Apr 2032 (but I have a cunning plan...)
    2022 MFW #78 £10200/£12000
    MFiT-6 #28 £21,772 /£75000
  • Hi Andy! I don't have any advice, being new here myself - I've only just got a mortgage and started my own diary a couple of weeks ago, so I'm looking for tips myself too! Just wanted to say welcome :)
  • andy1886
    andy1886 Posts: 256
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    LadyGnome wrote: »
    Welcome to MFW. Well done in sorting out your debts. Check with your bank how to make overpayments - I just transfer an amount each month manually using mobile banking. Also check how overpayments are treated. Do they reduce your monthly payment or reduce the term. Sometimes when you are on a fix they don't seem to do either until you come off the fix. If I am given the choice I would choose to keep the payments the same and reduce the term.
    I called in to my local branch yesterday to ask about how to make overpayments and I can do it over the counter . I bank with the same company that the mortgage is with and to be honest I prefer doing things in person rather than online , so I came home and worked out how much I could afford to pay and made my first payment of £250 . I will now wait until next week to see if the balance has dropped and record that . I will also check how it affects my monthly payments but as it is fixed I believe it is the term that alters but whether that is straight away or at the end of the fixed term I will find out .
  • andy1886
    andy1886 Posts: 256
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    Hi Andy! I don't have any advice, being new here myself - I've only just got a mortgage and started my own diary a couple of weeks ago, so I'm looking for tips myself too! Just wanted to say welcome :)
    Thank you best of luck on your journey and I am certain we will gain loads of advice along the way , I know I did whilst on the debt free board , I wish you all the best in your new home and hope you enjoy the future living in it .
  • EatingTheElephant
    EatingTheElephant Posts: 1,373 Forumite
    Welcome to mfw and congratulations on your first OP :T

    When I was sending OPs to my last mortgage I just used to transfer the money online, I'm hoping to do the same when our new mortgage comes through too. I had the detail set up as a payee so I could just send bits over straight away without having to wait, I'm more of an online person though and will actively avoid going into town!
  • LadyGnome
    LadyGnome Posts: 801
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    Congratulations on your first OP
    MortgageStart Nov 2012 £310,000
    Oct 2022 £143,277.74
    Reduction £166,722.26
    OriginalEnd Sept 2034 / Current official end Apr 2032 (but I have a cunning plan...)
    2022 MFW #78 £10200/£12000
    MFiT-6 #28 £21,772 /£75000
  • andy1886
    andy1886 Posts: 256
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    Welcome to mfw and congratulations on your first OP :T

    When I was sending OPs to my last mortgage I just used to transfer the money online, I'm hoping to do the same when our new mortgage comes through too. I had the detail set up as a payee so I could just send bits over straight away without having to wait, I'm more of an online person though and will actively avoid going into town!
    I have had this discussion at work about online banking . I get paid and then all the direct debits come out on the 1st so anything left is mine to spend and a quick check at a cash machine tells me what I need to know . I have never seen the need for online banking to check statements and send money to various accounts . I now would like to see my mortgage balance more often than my once a year statement so I may need to look into setting it up for the future . My overpayments though will probably vary month by month so I don't want to commit to a regular standing order and luckily my branch is a 5 minute walk from home so I can pick my first day off of the month and draw out any money left over from the previous month and go in and make a payment , well that is the plan anyway .
  • Schoolworker
    Schoolworker Posts: 499
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    I make overpayments for many years and go into the branch with my paperwork so they can key in the reference number. I adjust the amount I pay in so depending on expenditure that month. I have built up a big overpayment pot which results in less being paid in interest but it does not change my term.

    When I my fixed term ends and before going onto another product I change the term at that point rather than go for the smaller payment amount. Currently we are asking for extra borrowung for an extension and think this is only possible due to me make over £20k in overpayments. Good luck
  • Kittenkirst
    Kittenkirst Posts: 2,563
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    Fantastic work on your first overpayment- £250 is a cracking amount :)
    First home- Oct’16 until June’21: £170.995- Overpayments made £13,784 (25% extra!).
    New forever home- Sep’21 £309,449 @ 2.05%. Plan to clear it before 30 years!!!!!!
  • andy1886
    andy1886 Posts: 256
    Mortgage-free Glee! First Post First Anniversary Debt-free and Proud!
    Forumite
    I make overpayments for many years and go into the branch with my paperwork so they can key in the reference number. I adjust the amount I pay in so depending on expenditure that month. I have built up a big overpayment pot which results in less being paid in interest but it does not change my term.

    When I my fixed term ends and before going onto another product I change the term at that point rather than go for the smaller payment amount. Currently we are asking for extra borrowung for an extension and think this is only possible due to me make over £20k in overpayments. Good luck
    This is exactly the situation I am hoping for and it is good to know about your experiences . It is too early to really think about what to do once the fixed term ends but my initial thought is to drop onto the lower Svr with unlimited overpayments but haven't looked into it yet . At the end of the journey hopefully the kids will have fled the nest and we will either do this place up bit by bit to suit our needs or downsize to a better area .
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