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Fast-approaching deadline for Interest Only BTL mortgages.

edited 31 December 2018 at 9:32AM in Mortgage-Free Wannabe
97 replies 10.7K views
Saving_GlutSaving_Glut Forumite
212 posts
✭✭
edited 31 December 2018 at 9:32AM in Mortgage-Free Wannabe
Hi all

Recently inspired by reading the very absorbing and impressive debt-free wannabe posts titled: 'I don't need another latte', I decided to grasp the nettle and log my own story to being mortgage-free.

My posts will focus on paying down two buy-to-let properties. Both of which are on Interest Only mortgages and the capital of which must be repaid in the next 8 years approx. And here's where it gets interesting - both are in negative equity!

I am a contractor which means my monthly income can change based on the number of work days each month and the number of holidays I take.

I currently deposit a fixed amount of my salary to a joint account. My OH is very organised and efficient on money matters, so for the purposes of this exercise, I am just going to focus on the surplus I have after paying my contribution to joint mortgage and monthly bills. We don't have kids (but do have pets which require regular and expensive visits to the vets!).

BTL1 Property:
Value: £78k
Mortgage Balance: £97,279.47
Negative Equity: £19,279.47
Mortgage Rate: 5.04%
Mortgage Payment: £450 (£411.42 plus overpayment £38.58 (paid into offset-style mortgage)).


BTL2 Property:
Value: £68k
Mortgage Balance: £104,277.87
Negative Equity: £29,279.47
Mortgage Rate: 5.04%
Mortgage Payment: £450 (£437.96 plus overpayment: £12.04 (paid into offset-style mortgage)).

I have two other BTL mortgages which generate an income, some of which I will use to pay down BTL1 & BTL2.

I appreciate I am in a very lucky position, but that doesn’t detract from the fact that I must pay down BTL1 & BTL2 capitals in the next 8 years. I’m hoping with some MSE focus I will stop wasting money each month and get these mortgages down so that I can retire early.

I have spent the last two months improving my finance situation MSE-style. I paid down the capital of my PCP car payment (4.5%) and plan to pay down balloon payment on 14th September (6 months early). Although, I will be debt-free, I will also be savings-free!

Monthly SOA*:
Ltd Company income before tax and after contribution to joint mortgage and household bills: £4,500
Total Rental Income: £2,398
Total BTL Mortgages: £1,200
BTL1 Overpayment: £1,000
Property Agent Fee: £25
Corporation Tax: £1,000
PAYE: £100
Accountancy fees: £76.30
Savings: £170 (direct debit setup within my NatWest current account)
Petrol: £140
EE Mobile Phone Contract: £33
Joint Health Care with Vitality: £159
Spends: £340

Total income: £6,898
Total Outgoings: £4,243 (this does not include property fees and costs).
Variance: £2,654.7

*Some figures are approximates and will be refined with time :)

As I jiggled some mortgages around this summer, I intend to overpay BTL1 by £1,000 from September with rental income from BTL3.

As my BTL1 & BTL2 mortgages are in negative equity, I must stick with NRAM until the mortgages are 75% LTV. My aim is to pay down BTL1 to 75% LTV (£56k), after which I can negotiate a better mortgage rate. I will then focus on doing the same with BTL2 (75% LTV is £51k). The values of these properties is increasing by approximately 3% per annum, but the rental potential will remain static for the forseeable future. I have no repayment limitations.

Next steps:
1. Set target overpayment for BTL1 for end of 2018. Completed: Target £89,999.00
2. Investigate penalties for overpaying BTL1 mortgage above £1,000 per month. Completed - there are none. :)
3. Determine how much extra savings I can put aside for emergencies (I always prefer to put extra funds toward mortgages, but I do need an emergency fund). Completed: Target: Extra £130 on top of current target of £170.
4. Document adhoc fees which occur throughout the year including, but not limited to: rental property maintenance services, physical property maintenance and gardening fees, non-UK property taxes, communal electricity bills. Work in progress.
5. Breakdown current monthly spend to smaller categories e.g. hairdresser, dentist, clothing, sports hobby, socialising, lunch and some food) to determine if it is accurate. Work in progress.
6. List items for sale on eBay and/or Facebook marketplace. Completed for 2018: I have sold approximately £900 worth of goods online.
7. Calculate utility bills owed to me from tenants. This job always lingers on the bottom of my list and costs me money. And annoyingly, it is not difficult but can yield a tidy sum! Completed. :)
8. Learn how to update my MSE signature and use emojis! Completed! :j

Although my posts will focus on paying down BTL mortgages, I expect the approach taken to save money will be similar to others here. Ultimately, I hope posting on this forum will help me focus on paying less interest to the banks!

Thanks for reading this far – this exercise itself has helped clarify my expenditure! Comments are welcome. :)
IO BTL1 Mortgage was £97,693.54 on 09/08/18; £83,140 on 31/12/19.:D
Sealed Pot Challenge 12: #078: £150.36
Save £12k in 2020;
«13456710

Replies

  • greentgreent Forumite
    8.8K posts
    Part of the Furniture 1,000 Posts Photogenic Home Insurance Hacker!
    ✭✭✭✭
    Good luck! I'm currently paying down a IO BTL too - and have 4y, 4months to go on mine. Not sure I'll achieve it, but I'm giving it a go and all progress is good :D

    Look forward to following your journey :)
    I am the master of my fate; I am the captain of my soul
    Repaid mtge early :)(orig 11/25) 01/09 £124616 01/11 £89873 01/13 £52546 01/15 £12133 07/15 £NIL
    BTL Mtge 12/16 £69786 12/19 £48986 2020 OPs (#18) £2975/6K
    Net sales 2020 £414.22/£500 Decluttering: 1250/2020
  • edited 9 September 2018 at 5:22AM
    Saving_GlutSaving_Glut Forumite
    212 posts
    ✭✭
    edited 9 September 2018 at 5:22AM
    Thank you greent. It seems you have made excellent progress on two mortgages already and are within touching distance of being mortgage-free!

    I was very MSE this week:

    - Spent £9 less than weekly spend budget.-Availed of 30% discount on hair colour. Still came to £73. Must investigate the local competitors.
    - Joined Quidco. As I am not in a spending mood (for the moment at least!) this may not be very fruitful in the immediate term, but happy it’s setup for when I need it.
    - Went to shopping mall to avail of eyebrow threading voucher I had and spent £0! This is a first! Also made sure I left within the hour to avoid parking fee bumping up from £1.70 to £4. Also a first at this shopping centre for me!
    - Think I may have inadvertently got a daily rate increase of £40 per day at work. I just asked my recruitment agency what my rate might increase to in January, he ignored me and asked my boss anyway! Will find out next week if I get an increase and if it will commence in October!
    - Began logging annual bills. 3 big ones are to be paid in September. Opened a Billhop account to pay HMRC PAYE bill. Paying this way will earn me £35 (5%) on my AMEX card. I will be charged 2.95% by Billhop, but can claim back on expenses. I can also avail of this benefit in the future.
    Will also pay N.I. property rates (£775) and property maintnenance service (£500) on AMEX in September.
    - My workplace has a fund-matching programme. I must raise £240 to earn a place on a charity ride bike in October. I will donate £125 bonus I earn on AMEX to the charity and have asked my workplace to match it. I will receive a new cycling jersey from the charity which is a nice perk! I was able to register for ride at 50% discount too. :)
    I overpaid £2k on the mortgage today. It felt good!
    It brings the BTL1 balance to around £95,275. I plan to speak with NRAM on Monday to learn the frequency they charge interest and to ensure my overpayment is allocated to capital repayment and to reducing the term.


    Happy MSEing everyone!
    IO BTL1 Mortgage was £97,693.54 on 09/08/18; £83,140 on 31/12/19.:D
    Sealed Pot Challenge 12: #078: £150.36
    Save £12k in 2020;
  • edited 11 September 2018 at 7:38AM
    Saving_GlutSaving_Glut Forumite
    212 posts
    ✭✭
    edited 11 September 2018 at 7:38AM
    Morning all.

    Some updates from me:

    Confirmed my BTL1 & BTL2 mortgage rates are charged at the end of each month. Will plan to make any overpayments before then.

    OH confirmed we have joint savings of £5k which is news to me!! This will be for home repairs etc, not a flush fund for me if I mismanage my own funds!

    I spent a lot this summer training for a UK coast to coast cycle. Gear, bicycle servicing, sportives all added up. And although I don’t regret it, I will try to spend smarter on this hobby. Starting this week!

    Went on a self-guided sportive with bff on Sunday, fuelled only by pre-prepared peanut butter sandwiches which we supplemented with fresh blackberries we picked along the route.

    Evans Cycles were doing a 24-hour 20% reduction yesterday (on top of their sale). I purchased cycling shoes I needed and a cycling jersey, neck buff and socks I didn’t need but had resisted all summer for about £90.

    As the shoes normally retail at £95, I am only feeling a little guilt this morning! I processed payment through Quidco (a first for me), earning (I think!) £2.51 and paid with AMEX earning £4.50 bonus. Total RRP spend was approx £196, which just cost me £83, equivalent to a 64% saving. :)

    Best get up now to have time to prepare a lunch for work as today and tomorrow must be NSD!
    IO BTL1 Mortgage was £97,693.54 on 09/08/18; £83,140 on 31/12/19.:D
    Sealed Pot Challenge 12: #078: £150.36
    Save £12k in 2020;
  • edited 11 September 2018 at 7:57PM
    Saving_GlutSaving_Glut Forumite
    212 posts
    ✭✭
    edited 11 September 2018 at 7:57PM
    Hi MSE world!

    Today was a NSD day, although today’s NSD day did result in a nutrition free day. Must start planning meals!


    My recruitment agent agreed to a £300 increase per month before tax from October. He also gave me a strong indication that my employer will also give me a similar increase when my contract is renewed in January as I am currently paid less than the market rate. That was a pleasant surprise and will help toward chipping away at BTL1! I worked harder today as a result!


    I was more organised than usual as I collected euro from Post Office today as I’m going on holidays on Thursday. I know it’s not the most competitive approach, but I used to hurriedly withdraw currency at the airport which is pricey as all you MSErs will know! One day I will apply for the Halifax card...one day!

    Learnt how to save on petrol costs today: drive OH’s car to work! :beer:


    BFN!
    IO BTL1 Mortgage was £97,693.54 on 09/08/18; £83,140 on 31/12/19.:D
    Sealed Pot Challenge 12: #078: £150.36
    Save £12k in 2020;
  • Saving_GlutSaving_Glut Forumite
    212 posts
    ✭✭
    Greetings from Sicily!

    Day two of hols and I’ve spent less than £20 as holiday spends are coming from joint account!

    Did buy OH a surprise pair of designer sunglasses on Ea5yjet flight to replace the exact pair I had given her earlier this year but which got mislaid. Glasses rrped at £90 on high street were advertised for £70 in inflight magazine, but flight was doing 20% reduction. Paid with AMEX too for 5% cash back which meant the glasses cost me £53.20. :)

    Recruitment agent said my employer wouldn’t increase my salary mid-contract (I had never asked/expected them to!), but will do in the New Year. But recruitment agency did increase my day rate by £15 per day which equates to £3,300 per annum before tax.

    Meanwhile I am investigating other opportunities but must consider the impact of IR35 if my salary increases.

    In other MSE news, I plan to pay off my car PCP balloon payment on Monday. As I know I cannot pay by credit card, I hope to pay via Billhop, which would earn me £282!

    Thanks to all the MSErs who are learning me to maximise the earning power of my money! ;)

    Ciao for now!
    IO BTL1 Mortgage was £97,693.54 on 09/08/18; £83,140 on 31/12/19.:D
    Sealed Pot Challenge 12: #078: £150.36
    Save £12k in 2020;
  • Saving_GlutSaving_Glut Forumite
    212 posts
    ✭✭
    Hello all

    Only MSE activity to report today (well, I am on holidays!), is that I have RSVPed for eBoy offer I saw mentioned on this site: £1 max final value fee on up to 100 listings and no insertion fees.

    I have very limited experience advertising/selling on eBay, but as offer expires at midnight on Monday night, I hope the looming deadline encourages me to get listing!

    SG
    IO BTL1 Mortgage was £97,693.54 on 09/08/18; £83,140 on 31/12/19.:D
    Sealed Pot Challenge 12: #078: £150.36
    Save £12k in 2020;
  • jodles16jodles16 Forumite
    1.5K posts
    Car Insurance Carver!
    ✭✭✭
    Great news on the pay rise and fingers crossed employer will follow suit!

    Hope you are having a wonderful holiday, I am sure OH will be super pleased with the sunglasses, especially for a great price!

    Best of luck!

    Jodles :D
    MFW2020 #115 250/3000 J-250
    1% challenge- /1525
    Save 1k in 2020- /3000

    Joining in UberFrugalMonthChallenge set up by the Frugalwoods!
  • Saving_GlutSaving_Glut Forumite
    212 posts
    ✭✭
    Thanks for following my ramblings Jodles! Sunglasses were well received! Back from hols now and just calculated I have £7 left in weekly budget until midnight Thursday!

    Today’s MSEs activities:
    Paid mobile bill before DD was due by, guess what -AM3X! Earned £1.67 cashback.
    Gently convinced OH to open AM3X card. Refer-a-friend scheme should earn me £20 in 10 weeks and her £10.
    Treated small infestation and inflammation in one of my hen’s legs with products I had at home earlier this week. She is now in good shape! This saved on a vet visit, of which we have had quite a few this year with our elderly, but much loved pooch and two other hens. As hens seem to be the target of many pests and predators, the more issues I can deal with promptly and effectively, the better!

    I am beginning to think I should have named this thread something like “Be mortgage-free with AM3X’ and just saved everyone a lot of reading! It works for now, I will try to be more imaginative as this diary progresses!
    IO BTL1 Mortgage was £97,693.54 on 09/08/18; £83,140 on 31/12/19.:D
    Sealed Pot Challenge 12: #078: £150.36
    Save £12k in 2020;
  • edited 3 October 2018 at 9:44PM
    Saving_GlutSaving_Glut Forumite
    212 posts
    ✭✭
    edited 3 October 2018 at 9:44PM
    Quick update before brekkie:

    Paid off my car PCP yesterday. Prioritising on my finances for about two months has helped me pay it off much sooner thanI had hoped. The slog is worth it!

    Advertised 7 items on FB Mesgr. 3 items sold, interest in a fourth. Although, while there, I did purchase my favourite brand of eye shadows. RRPs at £35, bought on FBM for £9 total. Discovering new items for sale on FBM, means I can enjoy my favourite brands for far less! Love it! Proceeds to joint account.

    Advertised 3 items on eBoy and drafted another 3; in-laws may be interested in 2 of the largest items. Proceeds to joint account.

    Cancelled LinkdN monthly promo.

    Availed of £1.99 MCDonld offer: post-work comfort food!

    Have surpassed my target goal of £120 AMX cash rewards which means I meet my charity goal for cycling sportive. Must wait for 9 months to receive bonus, which is fine.

    Have a good day MFWs!
    IO BTL1 Mortgage was £97,693.54 on 09/08/18; £83,140 on 31/12/19.:D
    Sealed Pot Challenge 12: #078: £150.36
    Save £12k in 2020;
  • greentgreent Forumite
    8.8K posts
    Part of the Furniture 1,000 Posts Photogenic Home Insurance Hacker!
    ✭✭✭✭
    Well done on clearing the car! :T - we cleared one slightly early earlier this year and put most of the monthly payment then into a S&S ISA and the rest into building up a cash buffer, so don't feel any better off! :D
    I am the master of my fate; I am the captain of my soul
    Repaid mtge early :)(orig 11/25) 01/09 £124616 01/11 £89873 01/13 £52546 01/15 £12133 07/15 £NIL
    BTL Mtge 12/16 £69786 12/19 £48986 2020 OPs (#18) £2975/6K
    Net sales 2020 £414.22/£500 Decluttering: 1250/2020
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