Seven Year Plan

andy1886

Well first month completed and despite having a week off work I have managed to end the month with enough money left over to make an overpayment next month . Although it will be tight I learnt when clearing my debts that if I stick to my plan no matter what and tick off each month at a time and start fresh each month it is doable . Therefore I shall be overpaying another £250 in June . Discipline works for me , if I have not got the money then spend nothing .It has been a hard month but worth it now and will definitely be worth it when I see the balance drop .

allmannerofthings

Well done on the overpayment. It's a great feeling isn't it? You did so well paying off your debt, I'm sure the mortgage will come down in no time.

Did you find out if your overpayments are reducing the term? I am on a 5 year fix and my overpayments reduce the term, rather than the monthly payment going down. I just had to request it. Also, I can see my balance online at any time, I don't know if you have this facility, but I really like to watch the numbers go down

andy1886

allmannerofthings wrote: »

Well done on the overpayment. It's a great feeling isn't it? You did so well paying off your debt, I'm sure the mortgage will come down in no time.

Did you find out if your overpayments are reducing the term? I am on a 5 year fix and my overpayments reduce the term, rather than the monthly payment going down. I just had to request it. Also, I can see my balance online at any time, I don't know if you have this facility, but I really like to watch the numbers go down

No I have not found anything out , I need to enter the world of online banking but don't know how to set it up . I will investigate it this month . With the debt repayment it was great watching the balance drop each month and if I can do this for the mortgage it will focus me to keep going .

System

Investing in a s&s isa will nearly always outperform mortgage overpayment long term...

andy1886

MatthewAinsworth wrote: »

Investing in a s&s isa will nearly always outperform mortgage overpayment long term...

Is this stocks and shares ? I may be naive here but I am after the security of owning my home by paying off the mortgage , I am not looking to invest a monthly amount to get the greatest return on it with the risk of losing money if the markets crash . I have a fixed term mortgage at the time of lowest interest rates in history which shows you how adverse to risk I am . I am really not looking for any investment nor do I think I will be in future , I feel I work too hard for my money and struggle to just get by to be able to gamble any spare money . If I am of the wrong mindset for this then please educate me because I am open to be taught about it .

Tilly_MFW_in_6_YRS

Morning, firstly huge congratulations on clearing your previous debt. The weight that lifted once you were finished must have been incredible.

I can see why OPing your mortgage is attractive and the security that brings. I read the comment about s&s but it really does depend on mind set. For us, all I wanted was not to owe anyone anything.

Regards the fix, I'd recommend chatting to the bank again and asking how you OP but without changing the standard monthly payment. Years ago when with Santander I used to send our OP in with a letter requesting no changes to monthly payment. They never made it easy

If you search this site for Locoblade (Someone will no doubt correct me if I've got the wrong name) he has a calculator which is excellent. It allows for variables, different OPs per month etc. May be worth downloading it and checking the impact of your OPs.

You could also Tilly Tidy your pennies - not online I understand but any loose change at home could be OPd each month too

Best wishes Tilly

SuperSecretSquirrel

andy1886 wrote: »

Is this stocks and shares ? I may be naive here but I am after the security of owning my home by paying off the mortgage , I am not looking to invest a monthly amount to get the greatest return on it with the risk of losing money if the markets crash . I have a fixed term mortgage at the time of lowest interest rates in history which shows you how adverse to risk I am . I am really not looking for any investment nor do I think I will be in future , I feel I work too hard for my money and struggle to just get by to be able to gamble any spare money . If I am of the wrong mindset for this then please educate me because I am open to be taught about it .

Hi Andy, I've been reading along and have subscribed

I hear you on the security and caution thing. I too have a long term fixed rate mortgage at the time of the lowest interest rates in history. Thought I was doing the right thing at the time

It took me a while to open a S&S ISA, analysis paralysis I guess, but I'm so glad I did. Yes the value can and will drop in a crash (or even every other day for no discernable reason whatsoever), but the chances of you never recouping those losses are infinitesimally small if you have the strength to stay invested.

Enjoying the certainty of every penny working in your favour and paying down the mortgage is totally understandable, but there is the downside of this not necessarily seeing your money work as hard as possible for you. I'm a good one to talk as I've so far avoided p2p which should by all accounts be more lucrative than cash savings, but I'll get round to it eventually I'm sure!

The thing to remember is that it doesn't have to be all or nothing. I started my S&S ISA with a £50pm regular investment, this was the amount I was happy to "gamble" with at the time. The rest of my savings continued to accumulate in cash accounts and spent on mortgage overpayments. Over time I've shifted more towards S&S both in the ISA and pension. There's no way I'd be investing at my current level had I not first dipped a £50pm toe in the water.

The other thing to consider is pension provision. It can be incredibly lucrative to increase pension contribution, though they do have their downsides (low liquidity and political/regulatory risk mainly).

If you decide to focus 100% on clearing the mortgage, because that is what works for you, excellent. You are putting your money to good use and wisely taking care of one of your family's greatest needs.

If you decide to take a wider view on things, pay down the mortgage and invest in stocks and shares alongside, even better. There's is nothing wrong with sticking to the absolute certainty of mortgage OPs if that's what works for you though. The biggest question is how would you deal with "paper losses" when investing. Handle this situation the wrong way and you would have been better off sticking to mortgage OPs only.

If you are interested in investing, I recommend reading the beginner articles on the monevator blog. Good luck on the journey, whatever you decide!

andy1886

Having spent 7 years learning about debt and the effects it has on you financially and emotionally , and now spending the next several years learning about the best way to overpay mortgages , I think trying to learn about investments is beyond me at the moment . I have never had anything to invest and whilst open to learn about it I feel it will at the end of the mortgage not at the moment , but thanks for the advice anyway .

Kittenkirst

Thanks for posting SuperSecretSquirrel as I'm a cautious person too but your thoughts on stocks & shares Isa and the reference to the monevator blog has inspired me to look into it further rather than just dismissing it

andy1886

I went down to my local branch of my mortgage provider yesterday and transferred £250 from my bill account to my mortgage account so total overpayments now stand at £500 .
I have also got some information about how to access my statements online so I will set this up this week and then be able to have real figures to see the effect of the overpayments , see the balance and have goals of the balance dropping .