The Mortgage Free in Three - Take 5 challenge (MFiT-T5)

tattycath

Hi. I know I’m late to the party. Please can I join this challenge?
My mortgage is £136,850.30 and I’d like to reduce it to £100,000.

Suffolk_lass

Cheery_Daff wrote: »

Darn it, I was convinced I'd subscribed to this thread but apparently not!

Will fill in the form when I get out of bed :rotfl:

Not going to be pretty though. Or new mortgage fix had kicked in - 2.26% rather than the previous 1.8% so not tooooo bad but doesn't help. And we've had building work done on the house so all extra money at the minute is going back towards rebuilding the savings pot back to an acceptable level.

Hoping to be back making over payments before the next check in though, even if they're only small :j in fact I might consider adjusting the monthly payment a bit so SOMETHING is going off at least.

And congratulations Radish!! I remember when we paid our previous mortgage off (not early, Mr Cheery had just been paying it for 25 years :rotfl: ) - I expected a fanfare too but I guess it's no celebration for the bank :rotfl:

I was hoping that was all it was - I "see" you all over the place and did consider a PM nudge but so glad you are here now under your own steam!

trix-a-belle

Cheery
Don't worry, marathon not a sprint remember

tattycath wrote: »

Hi. I know I’m late to the party. Please can I join this challenge?
My mortgage is £136,850.30 and I’d like to reduce it to £100,000.

Definitely lovely, drop a joining form through and i'll get you added in later xx

Cheery_Daff

Suffolk_lass wrote: »

I was hoping that was all it was - I "see" you all over the place and did consider a PM nudge but so glad you are here now under your own steam!

:rotfl: :rotfl: Yes I do rather get all over the place :rotfl: :rotfl: (well, a small number of places, but I tend to be quite waffly :rotfl: )

trix-a-belle wrote: »

Cheery
Don't worry, marathon not a sprint remember

Thank you :j :j

Update submitted :j :j Not sure how I've done but it's definitely lower than it was at the start of the year :rotfl: Mortgage free date (According to my own spreadsheet) has actually got FURTHER AWAY though :eek: but that's because I've put in the new interest rate etc

Do you all have spreadsheets? Do you put in the fixed rate for the appropriate number of years, and then the SVR or whatever, or do you keep the fixed rate going to the end of the spreadsheet and hope for the best?

Does that even make any sense?! :rotfl:

Suffolk_lass

I've got one spreadsheet with my running total of debt against mortgage, and I just add in the payments I make so the totals match the online account. Then another worksheet tells me how much interest I am paying by amount and how much I am saving with each OP - my percentage has been the same for ages as I am on a base rate tracker so I don't separately record that except in the comments on another budgeting spreadsheet.

And then I also have a debt tracker worksheet which is a bit pointless now as we only have the mortgage debt but it used to track all of them and still does because we have not cleared it yet!

I love a nice spreadsheet and use them for lists, checklists, accounting, shopping and all money things. It's my 21st century version of stationery I think

lindez

Hi all just catching up on posts. I have completed the form and not to sure if I have done it correctly. Apologies I am late. I need to sort out a spreadsheet but I am hopeless
Well done everyone.

DiscountDuck

Can I pick people’s brains please, as there is something I can’t work out? Does it save me more money to make an overpayment in one lump in January (the date my mortgage started and my allowance to overpay for the year begins) or on a monthly basis? Does it make any difference?

julicorn

JEdwards wrote: »

Can I pick people’s brains please, as there is something I can’t work out? Does it save me more money to make an overpayment in one lump in January (the date my mortgage started and my allowance to overpay for the year begins) or on a monthly basis? Does it make any difference?

You generally start saving interest as soon as you pay the money, so if the earliest you can overpay is January 1st and you've got your full allowance saved up already, then you'd save the most interest by paying it all on January 1st.
So:
- pay as early as you can/are allowed to
- lump sum overpayment at the start of the payment period = best choice
- monthly payments as and when you can = not quite as good as the lump sum at the start, but absolutely fine if you don't have all the money to hand yet
- saving it all up and paying a lump sum at the end of the year = worst (UNLESS you can get a better rate than your mortgage interest rate through (for example) savings accounts, but that's a whole different conversation on the pros and cons of overpaying your mortgage...)

Suffolk_lass

JEdwards wrote: »

Can I pick people’s brains please, as there is something I can’t work out? Does it save me more money to make an overpayment in one lump in January (the date my mortgage started and my allowance to overpay for the year begins) or on a monthly basis? Does it make any difference?

julicorn wrote: »

You generally start saving interest as soon as you pay the money, so if the earliest you can overpay is January 1st and you've got your full allowance saved up already, then you'd save the most interest by paying it all on January 1st.
So:
- pay as early as you can/are allowed to
- lump sum overpayment at the start of the payment period = best choice
- monthly payments as and when you can = not quite as good as the lump sum at the start, but absolutely fine if you don't have all the money to hand yet
- saving it all up and paying a lump sum at the end of the year = worst (UNLESS you can get a better rate than your mortgage interest rate through (for example) savings accounts, but that's a whole different conversation on the pros and cons of overpaying your mortgage...)

That is a really clear and straightforward explanation julicorn.

The only other thing is that after a year or few, the limit you can overpay your mortgage drops out and in this case the paying down as you go is best, rather than waiting for the anniversary.

Also - re the savings offset - be aware of how much interest you are actually paying per month and make sure your savings total exceeds this, not just the rate they are giving you

julicorn

Suffolk_lass wrote: »

Also - re the savings offset - be aware of how much interest you are actually paying per month and make sure your savings total exceeds this, not just the rate they are giving you

Not 100% sure if I'm reading this bit right?
It should be a relatively straightforward comparison between the annual interest rate of the mortgage and the annual interest rate of your savings account.
Although the mortgage interest you pay each month may seem very high, the amount of interest you save is only the interest charged on the amount you overpay, rather than on the total balance if that makes sense?
So say you overpay £10,000 on the first of January, and have an interest rate of 1.5%, that would save you £150 of interest in that year.
If you just put that money into a savings account with a 1.5% interest rate at the start of the year, that also gives you around £150 interest in that year.
In the following year, say you can pay extra £10,000 off the mortgage, you'd have saved £302.25 in interest that year (based on your £10k from this year, plus £10k from the previous year, plus £150 you made in the previous year, at an interest rate of 1.5%). This is the same as the interest you would have gotten had you just added your £10k to what was already sitting in your savings account.
(Figures are not 100% accurate, because you also get interest on your interest, but that should be relatively minimal in this example, and also equivalent between the two scenarios).

Let me know if I either misread your comments, or have got the wrong end of the stick with the maths here - I'm not claiming to be an expert whatsoever, this is just my understanding of mortgage interest vs savings interest.