My husband, doggy and I moved in to our first flat in mid January. We're finding the prospect of the huge mortgage debt somewhat intimidating so have decided the best thing to reduce our anxieties is to try to do something about it!
Have been lurking on this forum now for a while, and making an occasional overpayment, so thought it was time to formalise the whole process and, hopefully, encourage me to make some more improvements.
To summarise the situation:
Bought flat for £235000 with £23500 deposit, so started with £211500 debt.
Nearly 3 months in have got that down to £209339.
Current rate is 2.29% fixed for 2 years - so will likely remortgage Jan 2021.
Hopefully will stay in this flat until my current training contract finishes in August 2023, then planning on relocating (although details of this remain unclear).
My take home pay is £2719 per month, with no real option to increase. Husband not working at present but may change. We're both in early 30s and don't like having any debt at all, but felt as though renting was an even worse financial arrangement so have taken plunge into mortgageland.
£732 for mortgage
£125 per month to my mum to pay back money for some windows due to finish March 2021.
£ 36 water
£ 82 life/critical illness cover
£48 phone bills
£38 gym memberships
£71 car insurance
£ 39 professional subscriptions
£150 longstanding debt to mother in law
£88 Ikea payment due to finish Jan 2020
£42 Doggy's insurance + health plan
??£100 council tax (not quite sure)
Which adds up to £1644. Student loan repayment and pension comes out of pay before it gets to me. Not sure when student loan will be paid but hopefully in next 3-4 years.
The rest of the money is used up on diesel (£200), Food (£280), entertaining ourselves (£?200)
and ad hoc expenses. So doesn't seem to be much left over each month, but the plan is for whatever is left over to go on the mortgage.
Plus my husband has got some ebaying to do which should go towards overpayments.
Current bank balance is £7333 (all be it with 2 weeks until payday) and we tend to leave a £4000 buffer in case of general emergencies. I think this is a reasonable buffer, but might consider reducing it in favour of an overpayment.
Also - have earmarked around £1500 for holiday (much, much needed), and new second hand car. So waiting until payday this month to see what I can overpay.
The goals are:
- Overpay as much as we can before remortgage in 2 years' time. Hopefully enough to get down to 85% LTV, which if the flat retains its value will mean overpayments on average of around £200 per month.
- Overpay enough so that when we move in around 5 years' time we can take around £60000 on to our next house. (Around £200/month at present but depends on remortgage rates, plus house value, and moving expenses!! So not much idea really)
- Be mortgage free by the time I'm 45 (13 years away!). (This may require some sort of windfall which I'm not sure where it's coming from - inheritance??!! - plus or minus a pay rise (which may be on the cards for around 5 years' time).
Any advice from seasoned mortgage overpayers would be hugely appreciated.
Hope that all makes some sort of sense.
Will try to post weekly. Hopefully posts won't be quite so dry in future but wanted to get the figures all down whilst I was concentrating.
Looking forward to it!
Starting mortgage Jan 2019: £211,500
Current mortgage October 2019: £204,906.74
Target: mortgage free by 2032