FinancialBliss: My mortgage free journey…

Little_Mama

chunky79 wrote: »

My partner is the main wage earner, a sortware developer like yourself and me i earn a little bit part time (cleaning) as we have 4 children. BUT. My Partner is now contracting, although the return can be much higher whilst the contract lasts, i was wondering whether it would be better to pay off a lump sum each year rather than each month? Just to be on the safe side at them minute we don't have a safety net but that is now being built on a monthly basis.

Thanks x

Hi Chunky79,

It's a good idea to have up to 6 months emergency fund behind you as, just by the very nature of contracting, you can never be too sure. Once you've got that then you can throw whatever you want at the mortgage but you know that if the market is quiet you can survive for a bit.

FB, nice to see you are having a little play time too!

LM

Kaz2904

Well we've had a very spendy weekend. I think I may have virtually spent my grocery budget for April already. I need to get my receipts together.
I was in a lucky position of being able to pick up some birthday and Christmas presents when we went shopping on Friday. DH thought I was nuts but I hate going into town and only do it when he drags me so I thought I'd best make the most of it!
Got a couple of little stocking fillers ready for the kids too.
I'm hoping to keep the rest of the month low spends and think I should be able to manage it as I've got massive stock in my freezer. I just need to keep my reigns pulled in!
I need to get on and book my tickets for the tunnel so I can get to France for my holiday! I hope the price hasn't gone up too much though!

financialbliss

chunky79 wrote: »

Hope you don't mind me jumping in.

Hi chunky79 – always nice to see another new name.

chunky79 wrote: »

The thought of being mortgage free for us is now what we would like to aim for. Having followed this thread on and off it makes it seem far more realistic rather than just a dream. Certainly has given me the motivation to get on with researching what would be the best options for us.

Thanks for that compliment. Part of the reason for dong this diary was for self motivation – I certainly don’t think it’s a walk in the park, but I do genuinely believe in myself - despite currently being a single income household, I’m determined to have a good go at 12/12/12. It’s perhaps going to be a bit of a stretch, but if life was easy, it would be boring!

So in response to your question – there’s probably no right answer – it depends a lot on your own circumstances, eg mortgage product and personal goals, but I'll jot out some thoughts and you may be able to draw on some of them.

Question: Overpay mortgage each month or annually?

Each month:

• immediate “hit” – you get to see mortgage dropping month on month
• income tax status – greater benefit from paying down mortgage

Annually:

• terms of mortgage may only allow one overpayment per year
• may be able to get a better savings rate than mortgage rate

That’s just a few of each I quickly thought up…

Does anyone have any numbers to prove financially that one way is better than another. A quick thought on the matter would initially suggest that monthly would be better, ie, compound effect of interest reducing month on month, but there again, it depends on the savings rate you’ve got if you’re accumulating cash for an annual overpayment

It’s probably not black and white. Still, I’m in the overpay each month camp.

My own reasons:

• I like to see mortgage debt going down each month
• I can overpay up to 500 on my fixed rate mortgage
• I know I can borrow back the overpayment reserve
• If I’ve not got the money, I’m less inclined to fritter it away on “stuff”

You could perhaps build up a safety net over the course of a year, then use some as a one off payment, then repeat again, or switch to monthly overpayments depending on how the cash flow is going. Oh - I'd also compare your loan and mortgage rates to see which you'd be better paying off first?

Don’t know if any of that helps?

FB.

financialbliss

Took mortgage out in March 2004. It’s now March 2008, so I’ve had the mortgage roughly 4 years.

I’ve a spreadsheet showing the breakdown of the mortgage in 5% chunks – each 5% is 4,750. My next payment in April will see me pay off 30% of the mortgage or in other words, the balance will reduce to under 66,500.

It’s took me roughly 4 years to clear 30%, or again, quite roughly, I’ve been paying off 5% every 8 months.

To achieve the 12/12/12 goal, I must now clear the remaining 70% in about 56 months. This means I’ll have to double my efforts and pay off a 5% chunk every 4 months.

FB.

financialbliss

Hi,

Catching a quick 30 minutes to myself, so I thought I’d better put in an appearance!

GT5P. Got my pre-order of Gran Turismo 5 Prologue on Friday – the day of it’s release. As I’d done some price searching and ordered on-line, with quidco, I wasn’t sure I’d get it on the release date, but was pleasantly surprised.

Quidco. Got 4.19 this week cash back from quidco. Purchase was Christmas presents, so I was going to be buying them anyway – always nice to get a little cash back.

Cash flow. It’s quite serious at present. I’ve had to scratch around from savings to make sure I’ve got enough to pay the mortgage and planned overpayment next week. Cash flow been seriously dented this month due to a large credit card bill from previous month – daughters bedroom furniture.

Holiday. It was 3 weeks last Friday until we’re off to the Lake district. Mrs bliss is well organised there – she’s made all sorts of lists from food to potential stop offs on the way there and lists of potential days out. Looking forward to a break from the daily grind.

Shower. Stepped out of the shower yesterday morning to the screams of mrs bliss telling me there’s water coming through the ceiling. Never good :eek: The seal has gone around the base of the shower tray. We’ve re-sealed it before, but I’ve my doubts about the effectiveness this time around. The tile are fastened to a stud wall – however you can push these and they give a little. Basically I think the wall has seen better days.

We’ve discussed possible options, and our initial thought is to try re-sealing it. However if this doesn’t work, we may have to take the tiles off and inspect the wall. If we were to do that, we would probably want new tiles (our luck would be we'd break one) and if we’re doing that, we may as well put in a new en-suite. It’s the original from when the house was built in 1991.

This could be a major expense and while we have some rainy day savings, this could eat up a major chunk of what’s left. Done some re-grouting this morning and am going to re-seal it tomorrow evening.

FB.

setmefree2

Oh my - that all sounds abit worrying:o....good luck;)

financialbliss

Quick round up.

Pension. In a final salary pension scheme. Got a letter today indicating my payments to my pension fund are being upped from 6.0% to 6.8% as of 1st April. Guess this is good news, although I’ll have less in my take home pay.

Flexi. There’s a flexi scheme in operation where I work, but previously there’s been core hours where I need to attend. Outside of these core bands, there’s flexible bands where I can alter my start and end times to suit. Well, from 1st April, these core bands are being abolished in a revision to the flexi scheme.

As long as I work between the hours of 07:30 and 18:30, I can now pretty much please myself. Sounds good eh? Well, it’s not quite as straight forward as that – I still need to put in my hours over the course of a month and in any one day, I must put in a minimum of 5 hours, unless I'm taking holidays and if I’m doing a 6 hour day or more, I’m required to take a 30 minute “lunch” break after 6 hours.

Pay award. These are normally effective from 1st April each year. I’ve just had my April 2007 award – a disappointing 2.475% award paid last December,

Trouble is that central government are dictating a maximum of 2% pay rise for local government employees. I understand we’ve been offered 2.2%, but in light of retail price index around the 4% mark, this is a bit of an insult. I’m not holding my breath for a swift resolution this year either.

Q. If you’ve recently had a pay award, what percentage increase did you get?

Mortgage Interest. Well it’s 31st March – that’s a quarter of the year up already. I’ve checked my mortgage interest and it’s today 800.94

This can be broken down as follows:

• January 279.86 – 9.03 per day
• February 249.23 – 8.90 per day
• March 271.85 – 8.77 per day

Note: I’ve divided February by 28 and not 29 as there was no mortgage interest charged on 29th February.
Good news is that the interest is coming down :j

I’m going to take a first stab at my mortgage interest for the year of 3,031.34. I’ve based this on the monthly reduction in interest, plus my theoretical 1,250.00 mortgage payment. I’ll review again in June, September and see how close I was come December.

Overpayment. Need to pay some cash into Nationwide tomorrow, so while I’m there I’ll do my 351.97 overpayment to make my monthly amount up to 1,250.00 Stats and graph update to follow once the mortgage payments have cleared.

FB.

taka

Hi FB

I work at an university and we have a 3 yr cost of living pay deal at the moment which started in 2006. It is as follows...
Aug 06 - the greater of 3% or £515
Feb 06 - 1%
Aug 07 - 3%
May 08 - the greater of 3% or £420
Oct 08 - the greater of 2.5% or RPI

Its a bit random but it makes a change from the 3% we got every year before that! :rolleyes:

We also get an increment increase each year in Aug (unless you are at the top of your grade). It means this year is quite pleasant for me... sorry

financialbliss

Hi,

Quick moan about Nationwide. I happen to have both my current account and mortgage with Nationwide.

Was in a branch on Tuesday 1st April and made an overpayment to the mortgage account of 351.97 – think this was done as a cash withdrawal from the current account and applied to the mortgage account.

Standard mortgage direct debit was also collected on Tuesday 1st of value 898.03.

Both have showed up as leaving my current account on 1st April – overpayment as a “Branch or cash machine withdrawal” and the standard payment as a “internal transfer”.

But… clicking on my mortgage account only shows payments in April as 351.97, ie the overpayment.

It’s 22.35 on 3rd April – so Nationwide have got my standard monthly mortgage payment of 898.03 in limbo somewhere. Presumably they’re benefiting from this – I’m certainly not!

If I can transfer funds immediately between a current account and an e-savings account, why should this take so long to hit my mortgage account?

I’ve fired off a secure communication via their site to query the time taken for payments to reach my mortgage account.

FB.

poppyoscar_3

i have always wondered where money goes to in between accounts too....isn't the whole point of electronic that it's instant???????

POxx