My 5 year plan

JoJoC

Great to have a goal towards Rab - a family holiday would be lovely and certainly deserved after all your work on getting yourselves on the financial straight and narrow. Memories with the kids are so important.

jwil

Holiday sounds like a great idea. Hope you don't have to wait too long for the funds tomorrow.

Have you thought about a tracker mortgage? We can make unlimited overpayments with ours. I appreciate you are at the mercy of interest rates and they are only going to go one way, but could that be offset with the fact you can pay as much as you want?

fatrab

I've never been much of a gambler, I've always preferred to have things regimented so a 5 year fix with the opportunity to overpay and be cleared by the end of the 5 years would normally be right up my street.

But with the chance to have this paid off sooner I wonder if it's worth taking the risk. It would only backfire if my circumstances were to change. That's the downside to working in the construction industry, things can and do change drastically overnight sometimes.

Egon76

Wow, I just read the thread over the last hour. You are on a fab way!
I like to follow your journey and I have described.

fatrab

Egon76 wrote: »

Wow, I just read the thread over the last hour. You are on a fab way!
I like to follow your journey and I have described.

Thanks for taking the time to read through my diary

jwil

fatrab wrote: »

I've never been much of a gambler, I've always preferred to have things regimented so a 5 year fix with the opportunity to overpay and be cleared by the end of the 5 years would normally be right up my street.

But with the chance to have this paid off sooner I wonder if it's worth taking the risk. It would only backfire if my circumstances were to change. That's the downside to working in the construction industry, things can and do change drastically overnight sometimes.

Maybe it's worth having a word with your adviser. I don't know how tracker rates compare with fixed rates, but if they are lower then it would give you a sort of buffer between what you are paying on a tracker and what you would be paying with a fixed if interest rates rise.

I'd never have chosen a tracker, but we went onto it when our fix ended. Because rates have been so low we've really benefited and I didn't consider getting another fix. I love the thought that I could clear the mortgage any day without penalty, so I'd definitely go for one again, unless I thought rates would go up significantly and quickly. My plan is to stay on this until interest rates reach around 2.5% then fix. I'm hoping that's a while away yet.

Whilst it is inevitable that rates will go up, they don't sound like they will be going up at a rapid pace, so if you've only got the 5 years left, you might be able to miss a lot of it, especially if you've got the ability to overpay.

I appreciate the job risks though, and definitely think that through first and get professional advice and do the sums properly.

fatrab

The funds have arrived in my account! Now that the physical cash is in my hand, so to speak, I need to be absolutely sure that paying the loan off is the right thing to do.

I've been thinking about this all day.

Pros:
Another whole debt cleared
Incresed montly surplus

Cons:
The loan is not the debt with the highest interest rate. My current mortgage is.
I would be leaving myself with an emergency fund of only £1000.

I'm going to sleep on it

jwil

Yay to car funds :T

fatrab

Loan Paid - 17/05/18

fatrab

So after a lot of deliberation I decided to transfer the money to my loan

The plan going forwards looks like this:

On payday each month:
Transfer 10% of earnings into emergency fund
Everything over £2000 remaining in current account will be paid off the mortgage

Mrs fatrab's house will be on the market by Monday so hopefully it sells quickly then we can focus on getting everything else tidied up financially.

By the end of the year we should be solely focussed on overpaying the mortgage.