FinancialBliss: My mortgage free journey…

setmefree2

Kaz2904 wrote: »

Most certainly is my birthday tomorrow you genius!
I will be 30 .

HAPPY BIRTHDAY TO KAZ:beer::beer::beer::beer::beer::j:j:j:T:T:T:T:T

gillybean73

setmefree2 wrote: »

Gillybean - you should start a diary so we can watch you get more and more addicted.:D

I've started to keep a diary yesterday not sure if I'm brave enough to post it on the web yet or not.:o

setmefree2

gillybean73 wrote: »

I've started to keep a diary yesterday not sure if I'm brave enough to post it on the web yet or not.:o

Yeah be brave. I love diaries.;)

financialbliss

gillybean73 wrote: »

Hi really enjoyed reading through your mfw diary.
I'm feeling inspired, before coming onto MSE i never thought of mortgage as debt.

Hi gillybean:hello:

Did spot your post yesterday. Welcome onboard.

It's a mindset thing - as you say - many people are happy to trundle along with their mortgages being dictated to at their lenders terms.

If you can overpay, no matter how much you do this by, you will almost certainly reduce your term and save mortgage interest.

Just make sure if you mortgage payments get reviewed after an overpayment, you opt to reduce the term rather than your monthly amount. Reducing your monthly amount just means you're pre-paying your mortgage rather than overpaying.

Looking forward to more posts from you - as setmefree2 says be a bit brave. How about adding a signature as a starter, if you're not up for a diary?

Regards,
FB.

jfox22

Hey Financialbliss, i've been lurking on this board for a couple of weeks and thought it was time that i introduced myself. I've learnt a lot from this thread. I am with Nationwide too, my first solo mortgage and have 23 years remaining and as the way things are going, can afford those £500 over payments. However i am paying an interest rate of 4.76% on the mortgage and can get a higher rate in a regular savings account right now, so surely its better not to start overpaying until i can't better the rate on my mortgage? Would you agree?

gillybean73

financialbliss wrote: »

Looking forward to more posts from you - as setmefree2 says be a bit brave. How about adding a signature as a starter, if you're not up for a diary?

Regards,
FB.

Okay I've added a signature. Hope it works. Paid my first amount off today it seems so small but even that small amount regularly will reduce my term and I hope to up it as we up our income.
Thanks for the welcome

abouttimetoo

Hi Gillybean

Welcome and well done :T :T I also made my first overpayment this month (albeit I managed to put £50 of it in the wrong account:o )

It's a great feeling isn't it - can't wait for my next monthly OP fix

Regards
Abouttimetoo

abouttimetoo

Hi Financial Bliss

Hope you had a great break. Good to see you online again. I made my very first overpayment last week and I'm still feeling pleased with myself:j
The only problem is that no-one warned me I would get a bit antsy because I have to wait another month for my OP hit:rolleyes:
Regards

financialbliss

Hi jfox22 :hello:

Another warm welcome to a new starter. Seem to be attracting a fair share of new people. Good stuff – the more the merrier and we can sound ideas off each other!


We’ve built up a savings reserve and we’ve also trying to get the best rates through various savings accounts, although we're not actively feeding this reserve - just moving around. Our best rate is mrs bliss's 8% lloyds tsb monthly saver with no tax, so that’s the full 8%

Our mortgage rate is currently 4.79% until March 2011 - so according to the MSE calculator, I’d need 6+% in a savings account in order to out grow the saving made by way of overpaying on the mortgage.

Looks like a no brainer – pay into a 6+% savings account until March 2011 and then offload to mortgage account perhaps?

Save until March 2011. Rough calculation of 350 per month – what I’m typically overpaying by currently. Could save around 10k by March 2011.

What happens if I stay with Nationwide and then get a 2 year fix in 2011 – then left with ~10k that I can only drip feed to mortgage at 500.00 per month until I come off fix.

What happens if, say, the BoE decide we’re heading for a crash and drop the base rate, or base rate is reduced in steps until I’m loosing on savings compared to mortgage?


If I overpay on mortgage, I can guarantee that:

• I’m reducing my mortgage debt and shortening mortgage term
• Reducing interest charged on mortgage
• Increasing my equity compared to liability, increasing changes of securing a better mortgage deal in the future, should I need one

Ok, perhaps I could gain a few hundred pounds by saving, then overpaying in future - but you have to be disciplined enough to not dip into the savings pot too.

It also depends on your mortgage product – I can borrow the overpayments back – I’ve got over 17k in overpayments I can borrow back.

I believe overpayments are at least currently the way to go for me. I find there’s something satisfying watching your mortgage reduce month on month.


Finally, as I’ve rambled on enough, to answer your question – I guess you could get a better savings rate, but you’ve not mentioned if you’re a basic / higher rate tax payer. What’s your 3 or 5 year goal – clear mortgage outright – do you have rainy day saving, any high cost issues coming along – new car, wedding, kids etc.

You must be on a fixed rate - Nationwide SVR is currently 6.49% What's your loan to value and when does your fix end.

Note: No need to answer any of these, but I'd be thinking about all of those factors that can influence this save / overpay decision and I’m sure we could discuss this all day!!!

I'd certainly recommend building up a rainy day buffer, then depending on the best rate you can achieve, then decide to either overpay or save until some future date, eg when you come off your fix.

Finally, finally. There's probably no right or wrong decision either. Just one you're comfortable with as you know your own situation best.

@ anyone else who is over paying rather than saving:

What tipped the balance to make you overpay and what benefits do you feel you’re getting from overpaying?

May start an interesting post or two!

FB.

gallygirl

financialbliss wrote: »

Hi jfox22 :hello:


@ anyone else who is over paying rather than saving:

What tipped the balance to make you overpay and what benefits do you feel you’re getting from overpaying?

May start an interesting post or two!

FB.

Ok, with me it was seeing how 'doable' it was when I played with the figures, so goal is to clear by the time I'm 50 :eek: . Benefits - increased sense of puropse, feeling I'm achieving something. Also get to play with a groovy spreadsheet with graphs & changing cell colours . & don't forget our party in 2 years :T