Journey to a mortgage free future

kev2009

Hi,

Thanks, interesting. I'm on a 5 year fixed (running out 2020) and i thought when i make a over payment i have to choose to either reduce the term or reduce the monthly payment, didn't realise i could keep both the same. Will discuss this when i phone them next month to make a small OP. My plan now is overpay and reduce monthly figure until 2020 when i renew for 5 years and then when i overpay to then reduce the term. I'm hoping by OP between now and 2020 i can help to offset any potential interest rate rises. If the rise doesn't come then win win i hope

The figure the guy told me i could overpay, according to my spreadsheet matched a balance last November, not January hence my confusion.

I'm with Santander for the mortgage and there online portal looks to be getting a overpayment feature added but last i checked a month or 2 ago, it wasn't ready, just said coming soon. Might check again at the end of this month but I might just phone them to be sure as first time i'm overpaying.

Kev

Scottish_Twiglet

Well done ... Regarding overpaying : great idea as it becomes the equivalent of offsetting (aka Australian Mortgage) pioneered in the UK by Intelligent Finance : now part of the Lloyds Banking Group. I used the following method and it worked a treat - enabling me to clear my mortgage 7 years earlier. If it's of any help this is what I did: [Step A] Kept to interest-only mortgage with the lowest fixed-rate over the longest term available and which permitted the usual penalty-free up to 10 percent of capital repayment. Usually it's anything between 2 to 5 yr fixed rate. This meant lowest monthly mortgage payment thus left maximum cash for the other steps [Step B] Divided total money left after compulsories (tax, national insurance, council tax,mortgage, etc) by 3. [Step C] Ensured all other monthly outgoings never exceeded the two-thirds. [Step D] Saved one third and made it work hardest possible in easy-access investment/s. [Step D] At mortgage anniversary reduced the mortgage capital by half of the savings - up to the penalty-free repayment limit (leaving the other half for unexpecteds such as car repair,etc). Every year the mortgage capital (and so the monthly repayments) went down leaving more cash to divide by 3 to repeat the process. Worked a treat coz every time the fixed rate ended, I re-mortgage for the much reduced capital coz the savings usually equated to more than the standard 10% deposit towards the new mortgage ... I advised my children to do this and their mortgage payments are now as painless as going out for a meal. ... Oops : NOT EXACT A QUICK REPLY but hey hum!

kev2009

Just to update, made a small OP today, just waiting for the payment to reflect in my account and to receive letter with details of new DD but i've given given a estimate of what that will be each month.

Was easy to do, tried online but said was technical problem so did it over the phone, all easy to do.

Now to see if i can meet next years target i have in mind or how close i can come to it

Kev

John_Blaze

I havent had a holiday in 15 years and have saved up to a grand a year to be mortgage free. I probably went to far in terms of sacrifice vs living life lol

labradorlove

Scottish_Twiglet wrote: »

Well done ... Regarding overpaying : great idea as it becomes the equivalent of offsetting (aka Australian Mortgage) pioneered in the UK by Intelligent Finance : now part of the Lloyds Banking Group. I used the following method and it worked a treat - enabling me to clear my mortgage 7 years earlier. If it's of any help this is what I did: [Step A] Kept to interest-only mortgage with the lowest fixed-rate over the longest term available and which permitted the usual penalty-free up to 10 percent of capital repayment. Usually it's anything between 2 to 5 yr fixed rate. This meant lowest monthly mortgage payment thus left maximum cash for the other steps [Step B] Divided total money left after compulsories (tax, national insurance, council tax,mortgage, etc) by 3. [Step C] Ensured all other monthly outgoings never exceeded the two-thirds. [Step D] Saved one third and made it work hardest possible in easy-access investment/s. [Step D] At mortgage anniversary reduced the mortgage capital by half of the savings - up to the penalty-free repayment limit (leaving the other half for unexpecteds such as car repair,etc). Every year the mortgage capital (and so the monthly repayments) went down leaving more cash to divide by 3 to repeat the process. Worked a treat coz every time the fixed rate ended, I re-mortgage for the much reduced capital coz the savings usually equated to more than the standard 10% deposit towards the new mortgage ... I advised my children to do this and their mortgage payments are now as painless as going out for a meal. ... Oops : NOT EXACT A QUICK REPLY but hey hum!

Thank you Scottish Twiglet, that's some really good advice that I try and embed every month when I get paid, luckily I don't have to put anything aside on the car front yet as I don't have one, but I do have an emergency fund that me and my DF do put £20 a month in each, we're only on £290 at the moment but we have insurance for almost everything it's more for the excess side of things.


Congrats on clearing your mortgage 7 years earlier! :J


That's the main aim for us, not sure how much earlier we can achieve this as you never know what life will throw at you so just taking it bit by bit and doing the best we can.

labradorlove

Ok so I know I don't update on here much which makes it a pretty boring thread, but nothings been happening on the OP front the past 8-10 months, and I just want to add another update so I can keep track.


Hopefully visit more regularly as I've managed to pay off a few debts and free up some money! :eek:

Ok so first of all, the MBNA credit cards we took out for our garden to be done in May 2018, which equalled to £4,000 , we originally planned to be paying it back until Feb/March 2020. Instead we decided to smash it off with any free money, avoiding OP in the process and as of Friday just gone, the MBNA is now fully paid off, account closed and card cut up.....in just 8 months!! :j Super happy about that, which means me and DF now have an extra £300 each free from what we were paying off the CC with! :beer: As much as I would love to make us both throw £600 a month into OP's now, it's not fair for me to ask that of DF as he would like to build up his own personal savings and so would I.


2. In other news, I got the job I applied for! :T which means more ££££, I've been here 6 weeks now, still the same organisation, just higher up! And ten minutes before the interview I was uncontrollably shaking and almost had a panic attack, messaging my DF telling him I'm not going I can't do it , spoke to my line manager who gave me a few words of wisdom, took a deep breath and went in, sooo glad I did Which means I now have a better monthly income after tax, NI and over £100 pension a month, I take home £1392.....with a 2% pay rise coming up in April '19 and £600 increment rise in June '19 so looking forward to that as every penny counts! :cool:


3. Forget the car malarkey, I keep saying I'm going to get one but every time I plan to save something else comes up, so I'm not jinxing it this time, I'm just going to OP and build savings, and when it happens, it happens


4. Already started putting money away for Christmas 2019, £30 each from me and DF a month, means we'll have £720 by December, this will pay for everything, gifts for each other, his family, my family, alcohol etc. Already picked up some gifts in the January sales, boots 3 for 2 sale everything 50% off. Win!!! :money:


5. My 24 month phone contract with Vodafone finished at the beginning of Jan, didn't 'upgrade' won't fall for that trap again!! so £38 a month now down to £17 (sim only) *with 15% loyalty discount*


6. The only debt me and DF now have is the big one! (Mortgage) :eek: and the sofa we got on finance from DFS, there's £600 left to pay and it's 0% interest so no rush for that we have agreed to pay it off in June 2019.


So with my new income, it means after all my monthly outgoing, bills, shopping, gym, Christmas, emergency fund, etc. I have around £550 to play about with. Now because our fixed rate comes to an end in June 2019, and we are so close to reaching that 85% bracket, out of our February wages going to pay £450 OP each, a one off, and that will bring us to the 85% bracket to get a better interest rate for re negotiating. Then it'll be £100 a month each after that. so 100 in the OP and £450 in my savings, then at the end of the year we'll agree a sum we can match against each other to overpay, so say he has 4k savings and I have 3k, we might put 1k each into the mortgage. This is just whispers at the moment so we'll see how we stand when the time comes, but the 450 OP is a must to get us into that bracket.


So lots and lots of updates in a short few months , but it helps to write about it and reflect on where we are, so come Dec 2019 I can look back and see what happened and if I achieved what I set out to achieve.


Thanks for reading


Will try and update every payday now and see where we are.


Hope everyone elses journeys are going a little less rockier than mine!


Labradorlove x

wishingthemortgaheaway

I don't think that counts as rocky at all. I think that counts as well thought out and thorough.

Just a thought on the ltv, what are you basing it on? Original purchase price? Index linked house value prediction? Or current market value? When we first remortgaged we dropped a ltv bracket purely because the index linking valuation provided by our mortgage company said we did.

labradorlove

wishingthemortgaheaway wrote: »

I don't think that counts as rocky at all. I think that counts as well thought out and thorough.

Just a thought on the ltv, what are you basing it on? Original purchase price? Index linked house value prediction? Or current market value? When we first remortgaged we dropped a ltv bracket purely because the index linking valuation provided by our mortgage company said we did.

I am basing the LTV on original purchase price, my mortgage is with Santander is that what they base it on when you re negotiate as we had it revalued after the garden had been done by an estate agents and they valued it at 140-145k we purchased in 2017 for 135k, would it be worth going in for a remortgage do you think?

wishingthemortgaheaway

It may depend on the provider but, getting a new fixed rate on our mortgage is based on the index linking valuation. And I've never swapped providers or actual mortgage.

I guess it's worth a phonecall or popping into a branch at the right time. See what's on offer. If you can save hundreds/thousands by switching provider then it might be worth doing.

kev2009

Hi labradorlove,

Congrats on the promotion and great to hear you will be in the 85% LTV come June 2019! Must feel good! Will you being doing a new SOA now or updating your previous SOA?

Will wait to her how things come when you renew your fixed term mortgage in June! Will give me some ideas on how to do mine next year

Kev