The Piano Diary

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  • glass_half_full
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    Busy_Mee1 wrote: »
    Much depends on what sort of mortgage deal you currently have, what interest are you paying and does it allow overpayments. Remortgaging sometimes attracts fees which will need to be factored in.

    Shortening your term will mean that you lose flexibility around payments but will have the certainty that the mortgage will be paid earlier. Keeping the same term but overpaying will give you control over how much you pay but requires discipline to ensure that you pay the mortgage off and you will need to check the product to see what overpayments it allows. Some only allow 10% a year.

    Thanks Busy Mee. I have been thinking about this a lot over the last 24 hours and reached some conclusions which I am putting in the post below, very much along the lines you raise here.
    Aiming to early retire in April 2025 - DC pension currently £350k 
  • glass_half_full
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    Good morning diary and all,

    I’m feeling really motivated at the moment to get started on this. I remember feeling like this at the beginning of the debt free journey, figuring out the goal and how I was going to get there. On the mortgage front, several years ago when I changed career, I had to (chose to) extend the mortgage term to make the transition to a lower income more manageable. At the time, I extended it to when I am 65. Now I am debt free and also with a pay rise coming in August, I am ready to tackle this next phase of the journey.

    I played with some numbers yesterday on a spreadsheet or two. I found that if I go for a 7 year term, then with 10% overpayments each year I can clear the mortgage in 5 years. This feels like a really motivating goal as it is close enough to make it feel real. It also means I will be 56 which means I hopefully get to achieve my early retirement goal sooner. I had also forgotten, don’t ask me how, that the overpayments will fall through the 5 years since the 10% of the outstanding balance will also fall. This new mortgage will be affordable and will allow me to also make my additional pension contributions and also put some money into savings for emergencies and a replacement car. And yet will not be so onerous as to compromise our quality of life. There is a balance here to achieve I think. Too much reliance on overpayments risks not achieving the goal since it is not essential to use the money for that purpose, so runs the risk that over time the focus drifts and the money leaks away to other purposes. On the other hand, too short a term would compromise life in the near term. I feel like this is about the right compromise for me.

    Affordability calculation
    We have more money available for mortgage payments since becoming debt free. Over the period of the debt repayment, we paid approximately £560 per month in debt repayments. In addition, the payrise will be worth £180 per month net after I have given 50% to the pension. This means I have £740 available for additional mortgage payments. If I add this to the current mortgage payment of £640 I get to £1,380. The mortgage payment for a 7 year term will be approximately £1,080 so should be affordable and give a little bit of fat in the budget.

    As I know the day my mortgage goes out, then I have an actual target date of July 21st 2023!
    Aiming to early retire in April 2025 - DC pension currently £350k 
  • JonW1984
    JonW1984 Posts: 37 Forumite
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    Hi, great title and certainly caught my attention. Good luck with your goals. I am still in the debt busting phase but hopefully once those are cleared in the next 16-17 months my goal will then be to clear the mortgage. Our figures are similar to yours (except for house value!) and I would love to pay it off the £80k balance in 4/5 years by which point my OH and I will be about 38. The idea of being mortgage free is seriously exciting!

    Good luck, will check in from time to time
    [STRIKE]18/06/18 - £16,189.29
    18/07/18 - £15,384.34[/STRIKE]
    22/12/19 - £11,209.95
  • Busy_Mee1
    Busy_Mee1 Posts: 1,015 Forumite
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    This sounds like a good balance GHF .....I love a good target and looking forward to seeing how you get on.
  • glass_half_full
    glass_half_full Posts: 580 Forumite
    First Anniversary First Post Name Dropper Debt-free and Proud!
    edited 2 July 2018 at 9:09AM
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    Dear diary and all,

    I think I am in the honeymoon period of MFW, please forgive my enthusiasm!
    Yesterday I called my mortgage provider to ask how to reduce the mortgage term to 7 years. This is a mortgage application so I need to go through some affordability checks with them. I have organised a call back for today because that part of the bank was not in yesterday. I also found out that I can move to a new deal on 14th July. I think I will go for a 5 year fixed rate. That would mean that my mortgage payments are known for all that period. I have always liked the security of knowing my payments. Also, I think rates will increase of the coming months /years. Of course, these increases will have been baked into the fixed rate to some extent.

    I went through my budget over the weekend and found some costs that had crept back in and I found £80 of monthly savings as follows:

    Spotify Premium £9.99
    Audible £7.99
    National Lottery £8
    Daily coffee on way to work (given this up before but started again) £46
    Cancel mobile SIM for tablet £7.45
    Total savings - £80

    I put this £80 online as a regular overpayment on my mortgage. I modelled this using the MSE overpayment calculator and it said Overpaying would save you £2,836 in interest alone, and mean you pay the debt off in full 1 years & 9 months earlier. This is really motivating and makes me want to find more savings!

    On a piano related front, today my Grade 3 music arrives and on Friday will go through it with my piano teacher to start to choose the pieces, looking forward to it.
    Have a great day all!
    Aiming to early retire in April 2025 - DC pension currently £350k 
  • beanielou
    beanielou Posts: 90,696 Ambassador
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    Sounds like you have made the right decision for you.
    I am a Forum Ambassador and I support the Forum Team on Mortgage Free Wannabe & Local Money Saving Scotland & Disability Money Matters. If you need any help on those boards, do let me know.Please note that Ambassadors are not moderators. Any post you spot in breach of the Forum Rules should be reported via the report button , or by emailing forumteam@moneysavingexpert.com. All views are my own & not the official line of Money Saving Expert.

    Lou~ Debt free Wanabe No 55 DF 03/14.**Credit card debt free 30/06/10~** MFW. Finally mortgage free O2/ 2021****
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  • glass_half_full
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    Thanks Beanie!

    Dear diary and all,

    Ive woken up with the birdsong and struggled to get back to sleep so I thought I would gather my thoughts in my diary!

    This week I called my mortgage provider and requested the reduction in term from 13 years to 7. For them this is a contract variation, and we went through the affordability checks which we passed – hooray! So I have to send them copies of mine and OHs payslips and a month of bank statements. Then if the underwriter is ok they will send us out the mortgage contract for us to sign. I will feel more settled when this process is complete so looking forward to getting this out of the way. With Ops we will get this paid off in 5 years, that is the goal.

    Were going to collect the car from the garage this morning. Its passed its MOT and had a fairly big maintenance job done on the rear axle/drive shaft. This car is 14 years old and has done 147,000 miles. Im aiming to keep it running for as long as I can without pouring too much money into it. At a minimum I want it to run for another year whilst we save up enough money to buy a replacement car outright. I am not buying a car on any kind of finance, having got debt free. Not sure what the bill will be exactly but I am expecting £350 to £400.

    Im taking DS mountain biking on Sunday so looking forward to that, we will travel about an hour to a forest to do that, should be a fun day.
    Next week on Monday myself and OH are off for a few days to a static caravan on the coast. Finally we are getting away from it all! I am leaving behind the laptop, going to be offline for a few days. Planning to relax, read and enjoy the sunshine.

    Have a great day all!
    Aiming to early retire in April 2025 - DC pension currently £350k 
  • Dimps_123
    Dimps_123 Posts: 94 Forumite
    First Anniversary
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    Have a fab weekend and week away :-) Ooh that's going to be a week away from piano practice, that can take time to catch back up:rotfl:
    DIMPS
    Working towards being debt free :rotfl:June 2022
  • glass_half_full
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    Dimps_123 wrote: »
    Have a fab weekend and week away :-) Ooh that's going to be a week away from piano practice, that can take time to catch back up:rotfl:

    Thanks Dimps! We had a great few days away. I need to get back into the regular piano practice now!
    Aiming to early retire in April 2025 - DC pension currently £350k 
  • glass_half_full
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    Good morning diary and all,
    We had a lovely few days on the coast, enjoyed the weather, did some walking, ate nice food etc. I have one more week at work and then we are both off for a couple of weeks. The car repairs cost £350 but hopefully that will get us a few more months of motoring without having to spend too much.

    On the mortgage front, the application to reduce the term from 13 years to 7 years has been approved, and we have signed the forms and sent them off so that should go through in the next few days. The payment has gone up by about the amount we were making in debt repayments each month, so I feel really good that the money is going to a good cause as it were. Once that is done, I am going to switch to a 5 year fixed deal. Weird thinking that might be the last ever mortgage deal we have if all goes to plan! I am tweaking the budget to take account of this change and to manage various summer expenses. I have loosened the purse strings since becoming debt free and I need to ensure that we stay within our earnings!

    Going out this afternoon with DS on a mountain bike ride at a nearby set of hills so looking forward to that.
    Had a good piano lesson yesterday, steady progress is being made. May think about starting on Grade 3 pieces soon.

    Have a great day all.
    Aiming to early retire in April 2025 - DC pension currently £350k 
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