FinancialBliss: My mortgage free journey…

financialbliss

With a new chapter in the mortgage starting next month by paying into savings rather than overpaying, I thought I’d attempt to create a sheet that reflects the mortgage plus the savings.

New sheet entitled ‘The final push’ now linked from post #1, plus I’ll add to my signature once I’ve done some shuffling around.

I’ll also link here, since I’m talking about it:
https://spreadsheets.google.com/pub?hl=en_GB&hl=en_GB&key=0AnhcWfGMRVgddG92TG9wNkxmVnYtRWxuYTNmMUUtOGc&output=html

The more interesting columns are the BoE base rate, the mortgage rate and the monthly interest. Anything marked out in green is a known number or fact, eg I know the base rate will still be 0.5% in April, thus the mortgage rate is 2.5%

I’ve stepped the mortgage rate up by 8.33% each month starting from the 2.5% in April, thus the rate increases by 0.25% in July 2011 to 2.75% - this is likely to be a reasonable estimate of what the base rate / mortgage rate could do.

The monthly mortgage interest can change slightly as my calculations must differ slightly compared to Nationwide, so once I know the interest for the month, I’ll add in.

As well as showing an ending monthly mortgage balance, I’ve got two columns for savings – the monthly amount and the cumulative value, with the mortgage and savings combining via the effective mortgage column.

As each month progresses, I update the relevant parts and become a month closer to being mortgage free.

Two important points:

• I estimate to be mortgage free in Stepember 2013
• I’m short of my 12/12/12 target by about £9,000

Throughout this challenge, I’ve never expected it to be an easy one – in fact one of my very early posts from 2007 suggested that I’d be short by about £6k, so being short by £9k now isn’t too bad, although it’s going in the wrong direction.

However, I’ve not gave up just yet and I’ve got a few contingency plans to try and shore up the £9k defecit.

Financial Bliss.

curlygirl1971

Perhaps I've go an overactive imagination but as I 'Clicked' to open I had Europe singing 'It's the final countdown!!!!' in my head. (Showing my age )

Great spreadsheet - bit like mine but mine is bit 'clunky' - it was originally created by someone else and I've done things to it so it's a bit of a beast. I've also built in some interest rate rises - just to try and reduce nasty shocks and it will hopefully be nice to over-write them some months.

My monthly interest also differs between spreadsheet and reality - this is because my spreadsheet can only work out monthly interest whereas in real life daily interest is applied to my mortgage debt - so its always a couple of £ out.

I do a pretend offset against my savings. I'm on SVR of 3.5% so its not worth my while to open any savings and divert OP's there.

Thanks for sharing as always FB! Very interesting and very inspiring

JonnyBravo

financialbliss wrote: »

One part of me says I should ask Nationwide to revert the term back to a 2029 completion and save the difference, ie £887.41 - £176.09, ie £711.31 – in addition to the £300 I’m hoping to save each month, ie bank £1,000 each month, but I believe there is now a charge to alter the term. Haven’t done any detailed calculations to see how much better off I would be by saving the difference.

Some very rough fag packet calculations show that if you saved £1k a month for 2 years and earned interest at 0.5% (the difference between your mortgage at 2.5% and a savings account at 3%) shows that you would earn c.£115 over those 24 months.

Not worth the hassle in my book but others may disagree I guess.

curlygirl1971

JonnyBravo wrote: »

Some very rough fag packet calculations show that if you saved £1k a month for 2 years and earned interest at 0.5% (the difference between your mortgage at 2.5% and a savings account at 3%) shows that you would earn c.£115 over those 24 months.

Not worth the hassle in my book but others may disagree I guess.

The £115 would be further erroded if the savings rate didn't go up at the same time as the SVR (Can't remember which savings product you went for but I don't think it tracks BOE does it)

However I believe about 25% of my OP's come from being bothered to do the pedantic bits.

financialbliss

JonnyBravo wrote: »

Some very rough fag packet calculations show that if you saved £1k a month for 2 years and earned interest at 0.5% (the difference between your mortgage at 2.5% and a savings account at 3%) shows that you would earn c.£115 over those 24 months.

Not worth the hassle in my book but others may disagree I guess.

Fair point JB.

Mortgage will be 2.5% while savings will be 3.1% with NO tax taken off (ISAs), so that's just a 0.6% gain. Not that much unless the sums involved are huge, which our soon-to-be-sub-£30k mortgage next month, won't be!

I also pondered this for a good while, but thought why not. Should I decide it's not working, I'll revert to paying back into the mortgage. I just completed two online application forms, which took a handful of minutes each. No branch staff to speak to!

The two ISAs are with Nationwide and I can transfer instantly to (and presumably from) the ISAs, so should I want the cash in a hurry, it's just a case of logging onto the internet banking and doing a transfer.

We're also building up savings again, as I've put quite a bit of savings towards the mortgage, what with the savings rates being low, but even if I make a very modest "profit" via saving instead of overpaying, then I'll be happy.

I'll also monitor the situation month by month - running the base rate challenge helps there too, and I'm prepared to change tack to suit the circumstances at the time.

FB.

financialbliss

financialbliss wrote: »

• Estimate I should owe £30,675 at March 31st

I posted the above on 26th January 2011. Tomorrow sees the last day on the rate of 4.79%

Bizarrely, this is the only rate we've had for this mortgage - first a two year fix at 4.79% then a five year fix, also at 4.79%

So, I'd estimated that I'd be in the region of £30,675 on 31st March. Today, we owe £30,672.38 and tomorrow we should owe £30,676.39, so I wasn't too far out.

We're currently running at £4.01 per day in interest (March) and April should see about £2.08 per day in interest, so roughly half the current value.

Not much else to report this evening.

FB.

JonnyBravo

financialbliss wrote: »

I also pondered this for a good while, but thought why not.

Fair enough. As I said, I guess it depends on an individuals view of the hassle. Now I'm MF I guess I'm a bit more lackadaisical!

financialbliss wrote: »

I'll also monitor the situation month by month - running the base rate challenge helps there too, and I'm prepared to change tack to suit the circumstances at the time.

Yep. Just don't jump at decisions. As mentioned by cg1971, something to think about is savings rates tend to go up a few days/weeks later than mortgage rates go up. ie.You may withdraw your money to pay the mortgage to find the savings rate then go up.
Either way, as you say, with the sums involved it won't be disastrous, no matter what.

financialbliss

Right. Last day of the month, which means mortgage stats. I'm a bit later in the day than planned, but still, here goes:

Opening Balance: 33,304.75

Overpayments in Blue.
Interest in Red.
Balance in Green.

Month: Payment (Std / OP) / Interest (day) / Net reduction / Balance

January: 1,000.00 (929.33 / 70.67) / 131.57 (4.24) / 868.43 / 32,436.32
February: 1,000.00 (929.33 / 70.67) / 115.64 (4.13) / 884.52 / 31,551.96
March: 1,000.00 (929.33 / 70.67) / 124.43 (4.01) / 875.57 / 30,676.39

Totals: Payment / Interest / Net reduction.

Minimum: 1,000.00 / 115.64 / 868.43
Maximum: 1,000.00 / 131.57 / 884.36
Average: 1,000.00 / 123.88 / 876.12
Grand Total: 3,000.00 / 371.64 / 2,628.36

Balance outstanding: 30,676.39


It occured to me that I could be posting any numbers I felt like as far as the mortgage was concerned - there again with the detail behind the charts and graphs, I guess it would be more difficult to exagerate or fudge the numbers.

So, today to co-incide with the last day at 4.79%, I took a screen shot of the mortgage account:



MFWs who have a Nationwide mortgage will recognise the format, and yes, I guess I could also photoshop this image to fudge the numbers here too, but you'll just have to take my word for it that I've not.

Note that Nationwide roll the interest up to one amount - grabbing it monthly allows me to post more detail as per above.

Funds in place for mortgage payment tomorrow, plus payments to ISAs. Should see an immediate drop in interest, but I think I'll turn in before midnight, so I'll just have to check tomorrow.

FB.

financialbliss

Good news. Nationwide true to their word - I have indeed dropped onto their 2.5% base mortgage rate:



Interest has gone from 371.64 to 373.73, ie an increase of £2.09 from yesterday.

FB.

abouttimetoo

Hi FB

As usual a great update and congratulations on all your success so far, you're definately on the home staight now :j

BTW, apologies, complete nosiness on my part but... ages ago I remember you hadn't told Mrs FB about your MFW stuff and then you did and then I think you hadn't got round to telling her about the MFiT T2, so... is she in on it all now and how does she feel about your great progress and the support you give to us all on here?

Regards
ATT