the unbearable heaviness of mortgaging

femina

It's all in the title, really.

My bank and I own a two-bedroom flat in greater London. Current LTV 56%, so the bank wins, as they have the lion share. (Don't they always win?) I've just remortgaged and signed up for a full 25-year term, which I hope to reduce to 15 years or less. How? First step over the next 5 years: overpay. Second step 5-8 years from now: sell and move to an area where I could buy outright.

I am (very) single and also a parent to a delightful primary school child, so I have limited over-payment capabilities, as I'm still paying for childcare. I have a strong desire to get rid of the mortgage though, hence the diary. No more lurking other diaries, I need to stay focused on my own.

My details as of today 18-Sep-2018.

Mortgage

• current balance £216,521 (ginormous, as my child would say)
• term left 24 years 9 months
• interest rate fix 1.79% until April 2023

Income and outgoings

• income £3160
• mortgage £900
• bills £450
• child-related £450

I have no loans/credit card debt, as I decided to stop using CC plastic a while ago now... long story, that one. Also, I get an annual bonus which isn't guaranteed and is earmarked for holidaying, so I'm leaving it out for now.

This leaves me with £1260 per month for 'spending and saving':

• £960 spending - this means oyster card top-ups, food, clothes, shoes, fun, dental, traveling, beauty, etc.
• £300 savings - this could mean mortgage overpayments, savings for various purposes, or pension contributions. I'm early 40s and don't have a big pension pot, so I'm looking at increasing it.

On a different (or maybe related?) note, I have just self referred to a well-being mental health local service, to ask for support with what I think it is long term mild depression. This is a first for me but long overdue. I've always (naively) thought that I could deal with it on my own, with support from family and friends...

Please wish me strength, as I need it. Thank you.

Saving_Glut

Here’s some strength for your journey!

I’m envious of your low interest rate - I’m stuck at 5.05% for the foreseeable!

bexster1975

Good luck!

It is completely do-able on your own. Childcare costs won't be forever. Be worth investigating how much yours would sell for, and how much your " ideal place" elsewhere costs periodically as you may get to the buy outright stage sooner than you think!

Very best of luck

Bexster

the_cross_rabbit

Good luck will cheer you on from the sidelines

femina

Thank you all!

@Saving Glut: I locked in that rate earlier this year, lowest I've ever paid. It gives me peace of mind and a relatively low repayment at £900 - low for London suburb standards, rent would be more like £1,400-1,500.

@bexster75: one more school year (this one) of wraparound childcare. We're now applying for secondary schools for a Sep 2019 start. The loose plan is to stay in this area until the end of secondary school, then find a cheaper place to get rid of the mortgage beast... although it will be really tough to part with this area, we love it.

Until then, over-payments! I do my budget right after the 25th of each month, as all my bills are due to leave my bank account around the 1st of each month, +/- 3 days.

newgirly

Welcome and best of luck

zcrat41

Hello, welcome and good luck. That is an amazing interest rate!
Looking after your health both physical and mental is such a priority. I find everything else runs smoothly if those two things are in order.


ZC

gallygirl

Well done on getting such a fabulous rate :T.


Can you do a full breakdown of the £960 spending - is it all budgeted for and monitored or is that just what you spend your money on IFSWIM? There may be some savings we could suggest (e.g. you may be hiding a £500 a month beautician's bill ).


Hope the self referral brings results. I'm sure you'll find having a well controlled budget and achievable goals will help bring some calm anyway .

AnotherJoe

femina wrote: »

It's all in the title, really.

My bank and I own a two-bedroom flat in greater London.

.

You also owe your older self a pension. What are you doing about paying that debt off ?

Time will take care of the mortgage*. It wont take care of the pension,and as you may know the basic "rule "of pensions is best put the money aside earlier to give it time to grow. Its going to be a bit late, when you've overpaid your mortgage in 15 years time with money you borrowed from your 15 years older self, and are 55 to think "OK I'll start saving for a pension now".

* not just by normal payments but also inflation. Each pound you pay off your mortgage in 20 years time is likely worth 50p in todays money. Rushing to pay it off now is rushing to pay it off with expensive money and at the same time starving your elders selfs pension of 20 years worth of growth.

femina

Thank you!

@gallygirl: I'll post a breakdown of spending when I do my October budget, which is next week after I get paid (25th). I'm meeting with the pension adviser next week as well... as I want to increase my pension contributions and I'm quite ignorant about the tax implications.

For the bills I don't think I can cut anything until my Vodafone mobile contract ends, which is April 2019. I don't have a TV subscription. I only pay the TV licence and for Netflix. I've just moved my Internet from Sky to Vodafone, and it will be £20 per month for the next 18 months for fibre broadband & line rental.

I'm definitely not hiding large beautician bills, but for sure I spend way too much money on food, mostly on eating out and coffees. :-)

femina

AnotherJoe wrote: »

You also owe your older self a pension. What are you doing about paying that debt off ?

Time will take care of the mortgage*. It wont take care of the pension,and as you may know the basic "rule "of pensions is best put the money aside earlier to give it time to grow. Its going to be a bit late, when you've overpaid your mortgage in 15 years time with money you borrowed from your 15 years older self, and are 55 to think "OK I'll start saving for a pension now".

* not just by normal payments but also inflation. Each pound you pay off your mortgage in 20 years time is likely worth 50p in todays money. Rushing to pay it off now is rushing to pay it off with expensive money and at the same time starving your elders selfs pension of 20 years worth of growth.

See my earlier post. I have a meeting with the pension adviser next week. I'm already contributing about 10% to it (mix of my contribution and employers'), but I'm looking at increasing my contribution so that total is 15%. And maybe next year when I stop paying childcare, I can go to 20%. What I don't understand well is the salary sacrifice option which I'm not using at the moment...

Interesting point about inflation, I didn't think about that.