SLLM (Single Lady Large Mortgage)

Friday1989

@Latana I definitely think a few treats are on the cards after all your hard work saving that deposit. 
I'm overpaying both lump sums and a little each month but theoretically keeping the term the same. I'm not sure if I could ask them to reduce the term instead, but this way my monthly payment decreases so if I ever was a bit strapped for cash, it would be more manageable. There will reach a point where I can clear the remaining balance without exceeding the penalty free overpayment allowance (10% of original loan in my case) and then there is no mortgage left, hopefully many years early! 
I like playing around with this overpayment calculator. I find it motivating seeing what an extra £100 can knock off the interest and term in the long run https://www.moneysavingexpert.com/mortgages/mortgage-overpayment-calculator/

Merlin's_Beard

Friday1989 said:

@Latana I definitely think a few treats are on the cards after all your hard work saving that deposit. 
I'm overpaying both lump sums and a little each month but theoretically keeping the term the same. I'm not sure if I could ask them to reduce the term instead, but this way my monthly payment decreases so if I ever was a bit strapped for cash, it would be more manageable. There will reach a point where I can clear the remaining balance without exceeding the penalty free overpayment allowance (10% of original loan in my case) and then there is no mortgage left, hopefully many years early! 
I like playing around with this overpayment calculator. I find it motivating seeing what an extra £100 can knock off the interest and term in the long run https://www.moneysavingexpert.com/mortgages/mortgage-overpayment-calculator/

That's a generous overpayment allowance!

Am waiting for my mortgage to be approved right now, but my overpayment policy will be 10% of the remaining loan, but it will recalculate annually. It won't make a difference to start with (because I'm not going to get near 10% overpayment) but towards the end of the loan it absolutely will. So I'll be making sure my overpayments reduce the term.

RachP87

Hi @latana
My mortgage is with NatWest and I overpay each month, I personally don't want my monthly repayments to be recalculated as I am trying to pay as much of the principle now as I can and would rather reduce the term so I am mortgage free by 40 (wishful thinking maybe lol) With NatWest as long as you pay under 1K, and any previous payments have cleared, they wont lower your monthly payment so will reduce the term overall. I haven't noticed them reducing the term at the minute but I assume when I come to re-mortgage I will just re-mortgage for 11 years instead of 13, and keep doing this until I have nothing left. I have seen the interest reduce each month though so I am happy my payments are helping.

I defo prefer overpaying each month so I can see the balance and interest come down too @Friday1989


@SuseOrm I already use my S&S ISA allowance so not really ideal for me to save up a lump sum in it for my mortgage, to pay off in one go. I could use my ISA balance to pay more off my mortgage but I'd rather have the money in my account! Something about seeing that balance grow makes me not want to touch it lol That's a good interest rate though, mine isn't that low but I plan to make as many overpayments as possible so I can get a Lower rate on my re-mortgage and focus on investments more.


@Sistergold you are doing so well! I know I don't post much but I do read your posts religiously, I was actually going to comment last week because I hadn't seen your mortgage update and was wondering if you were ok! You should reach your Building Fund goal easily at this rate I have heard that building materials/shortages etc should level out by next year so hopefully you can get some works started before the planning permission expires.

Friday1989

Merlin's_Beard said:

Am waiting for my mortgage to be approved right now, but my overpayment policy will be 10% of the remaining loan, but it will recalculate annually. It won't make a difference to start with (because I'm not going to get near 10% overpayment) but towards the end of the loan it absolutely will. So I'll be making sure my overpayments reduce the term.

I love when they ask if I want to know how much more of my overpayment allowance I have left. I literally laughed down the phone the first time because I don't even earn enough to overpay that much and pay the mortgage each month, even if I didn't eat or have any bills 

lantanna

Thanks all. Can’t wait to officially join the overpayment club! 

Friday1989

I just want to say thank you to you all. You really spur me on, make me properly look at my spending and, most importantly, make me believe I can do this! Being a single lady (well...few people would call me a lady ), I kind of thought I'd be stuck with a mortgage until I was six feet under but now I feel on a roll and can envisage the day when my flat is all mine! 

Sistergold

@Friday1989, @lantanna, @SuseOrm, @RachP87, @merlin’s_beard, good morning all. Thank you ladies for all these posts, it helps to keep our eyes on the ⚽️! 

What an interesting conversation we are having about overpayments and as woman too?🦾 I feel so empowered and encouraged by all our discussion it feels like paying off my mortgage will be “a walk in the park”. 👣

So many different contracts and approaches  we all have with regards to how much overpayment allowance we each have?

 The product I have now does not even allow me to overpay 10% of anything, I am only allowed to pay £999.99 per month or else I attract early repayment charges. 😤 but in all honesty it’s highly unlikely that I would be able to afford paying 10% of my original loan anyway if I also want to funnel money into other pots. Also it is good to have money elsewhere for that rainy day or for renovations.
 

We are all really doing it well and understanding our money and mortgage products, the conclusions here are the right conclusions as at the end of the day even if the product is reducing monthly payments or term you can at each remortgage stage reduce term further. You can also at each remortgage stage pump in a very large overpayment if you had not been able to pay in as much as you wanted all along due to restrictions. 

I think as single people it is really important just to make sure your balance or monthly payment is initially reduced to a very reasonable “walk in the park” monthly payment before focusing on reducing term. Yes I know you get the most interest savings by reducing term but initially it’s best not to focus on this I think? This advice is especially for those of us who stretched ourselves initially. If your mortgage was never a stretch and the monthly repayments is something you can pay if you suddenly went on minimum wage then yes by all means reduce term. 

This is just my thinking as this process is a long slog and with what we have seen with covid and war it can be that one will just benefit from having a reduced monthly repayment amount?

I can see some of you are already adopting this strategy of reducing monthly payments in case of a rainy day. At some point reducing term will then be the thing to do. 

At start I was paying £2202, now I am paying £1942 despite the rate increases. The plan is to continue having the repayment reduced to £900 or less then I will start reducing term. With the reduction overtime just wiping off the mortgage will be easy as the balance will be so reduced. 

With this in mind for those getting a mortgage it’s also best to get the longest term available to you this again guarantees that your obligation is the least they will allow you. You can then increase your payments by overpaying as your finances permit. Again this is in light of what we are going through with all these inflations and uncertainties. It’s good to always be able to pay very little for the roof over our heads. 

Let’s keep encouraging each other! 💋   

Merlin's_Beard

Excellent points, @Sistergold

To expand, I'm (hopefully) going to have a large (for me) 34 year £240,000 mortgage approved at some point in the next few weeks (don't ask, the broker is earning his keep trying to get me the max allowance!), but am planning to OP by £200 a month once my emergency fund (6 months outgoings) is back up to scratch. That will mean I'm basically paying like it's a 25 year mortgage.

I'm also planning to increase overall pension contributions from 17% to 22% (have a basic NEST workplace pension and a SIPP), and put £100 a month into an S&S ISA - diversified savings are best I think when you're a single income! Also have income protection because I'm a single income person - I need to review this once I know how much the new house will cost to run (costs me £42 a month at the minute but would pay out in an inflation-linked way to retirement if I needed it).

The plan is, to take my £240,000 mortgage down to under £200,000 by the end of the 5 year fix. At the current house price that will mean I'm at 62% LTV. If house prices have gone up, I might be able to squeak in a new fix at 60% LTV rates. If house prices have gone down and interest rates have rocketed, hopefully I'll be safely away from negative equity and falling out of the 75% LTV bracket.

Hopefully I'll also be able to take that new reduced-term fix to keep my mandatory monthly payments the same (ie just reduce the term by whatever I've saved).

Obviously this may all fall to pieces for so many reasons (get made redundant, costs spiral upwards, etc). And somewhere in all that I need to acquire all the bits and pieces I want for the new house as well. But we'll see.

lantanna

Great post Sistergold thank you. I’ve went for 26 years which was the longest I could get. I think you make a really good point about reducing the amount initially, with everything going on I agree.  

My mortgage payment will start at £604 per month, yes I’ll be overpaying but I’d love to get the contracted amount down to about £500 in case anything happens.   I love the phrase walk in the park payment. That’s exactly where I want to get to no one knows what’s round the corner.

Marlins beard I also plan to overpay £200 approx every month and I’ve also went for a five year fix. I had an offer with Nationwide but have moved to Nat West.  Offer is approved subject to valuation so I’m just waiting for that to come through. 

Your pension saving is amazing, currently I only put 6 per cent in myself which is an overpay on my obligatory 4 per cent.

Merlin's_Beard

@lantanna I didn't start until I was 30 so I have some catching up to do. I'm an employee so 3% is employers and 5% is money I never see, and I crept up the SIPP payments - £100 a month to start then 50% of any pay rise - so it doesn't feel so bad.

Good luck for the mortgage application!