Quest for (mortgage) freedom

South_coast

That's a whopping saving! Excellent work 👍!

eat_that_frog

Thanks @South_coast!

When I see it written down like that, it becomes really noticeable how 18 or so months worth of OPs are starting to pay off now.

So I'd always heard about the snowball effect but I'd never really understood it, probably because I never had a tangible real life example of it in action before. The savings on interest paid is one example of the snowball effect in action.

Another example is when I looked through my OPs across the last 18 months. I keep track of all my monthly OPs and corresponding balance after in a notebook (I'm old school). At the beginning of my mortgage free challenge, when my mortgage was in the £240k region, a £1.5k overpayment coupled with my regular monthly payment meant my total outstanding balance was going down every month by around £2.2k or so. Now I'm in the £190k bracket it's going down by £2.4k or so every month, even with the same level of overpayment and monthly payment. So I'm hitting milestones (like dropping down a digit) faster now.

It's amazing to see the snowball effect in action. I'm still not convinced I totally understand it though!

eat_that_frog

I think I will need to revise my mortgage OP aim/forecast for 2022 after today's announcement. Will look to do a reforecast of my monthly budget too to understand impact of energy prices + NI increase in April. That's before food shop increases etc but I can't work out how to translate that into my monthly budget.

The interest rate rise doesn't impact me yet as my mortgage is fixed, but the fixed period ends next year so not sure what things will look like then.

badmemory

Do you really want to know if so you will need a calculator or a spreadsheet.

Find a payslip & multiply the current NI figure by 1.125 & that will give you your new NI figure.  This is wrong amended to follow.  Although I believe they are supposed to be showing it separately.

Energy, do you have your annual usage?  If so there is a table giving the SVR for all the different regions.  Work out your annual bill as at Nov 21 from that.  Then multiply that figure by 1.54 & that will give you how much it will cost when you go onto the new SVR in April this year.

Then go & lie down in a darkened room.  Unless of course you are lucky enough to be with a supplier that isn't going to go kaput & are on a fixed rate for the next 2 years.  I closed my eyes when the report I was reading said what the increase was likely to be in October.  I am definitely into official fuel poverty since Nov.  From £142 with my old supplier to £345/m on the new SVR in April.  That £150 is going to go a long way, I don't think.

At least I can cope with it there are a lot of people that won't be able to.

eat_that_frog

Thanks @badmemory I'm going to go and do that.

Yeah my supplier went bust late last year so am on SVR with my new supplier, so thanks I'll go away and calculate the changes.

Agree with you, I can cope but feel for others.

badmemory

Sorry about the incorrect figures - the correct figure if below annual £50270 is multiply by 1.104.  It's more complicated if you earn more than that as some is at 2% not 12%.

Sweetie83

eat_that_frog said:

Thanks @Sweetie83 and well done for hitting the £259k mark yourself! So from reading your signature, is that around £100k you've paid off in nearly 3 years? If so that's amazing!!!

thanks very much!

that’s a great saving on your daily interest well done 

Sweetie83

eat_that_frog said:

Thanks @South_coast!

When I see it written down like that, it becomes really noticeable how 18 or so months worth of OPs are starting to pay off now.

So I'd always heard about the snowball effect but I'd never really understood it, probably because I never had a tangible real life example of it in action before. The savings on interest paid is one example of the snowball effect in action.

Another example is when I looked through my OPs across the last 18 months. I keep track of all my monthly OPs and corresponding balance after in a notebook (I'm old school). At the beginning of my mortgage free challenge, when my mortgage was in the £240k region, a £1.5k overpayment coupled with my regular monthly payment meant my total outstanding balance was going down every month by around £2.2k or so. Now I'm in the £190k bracket it's going down by £2.4k or so every month, even with the same level of overpayment and monthly payment. So I'm hitting milestones (like dropping down a digit) faster now.

It's amazing to see the snowball effect in action. I'm still not convinced I totally understand it though!

That’s a great achievement and it is good when you start to see snowball taking shape.

eat_that_frog

Another month nearly passed by in a flash. Don't know about anyone else but I could swear Jan and Feb have passed by much quicker this year, maybe because we're not in lockdown unlike last year. Also I cannot remember work being as busy as it has been recently, that's also likely why the time is flying.

In terms of my progress this month, I've put £200 into savings, which means I've so far saved £1,300 towards my target goal of £3,000 for the year.

I've also overpaid £1,500 off the mortgage, taking my outstanding total down to £194,800. I am delighted to be below the £195k mark and within a couple of months should be in the £189k bracket. I love the numbers ticking down.

More generally, we had an email from our energy supplier this week. Our standing charge has doubled! Hmmm

Also we recently celebrated 3 years of owning our house!

eat_that_frog

I made a £1,500 overpayment on the mortgage yesterday, bringing the outstanding balance down to the £193k mark.

We use oil to heat our house. By luck rather than judgement we filled up our tank to the top at the end of January before prices started to spike. Hoping that prices will drop in the summer when we will need more again, but without a crystal ball who knows frankly. Must say I've found the advice from Martin Lewis and the regular MSE emails to be really useful these last few weeks. Trying to tighten our belts a bit generally too, avoiding unnecessary car journeys etc. We have noticed increasing food prices in the last few shops to be sure.

Feels odd writing about mortgage overpayments and increasing bills when there are clearly bigger things going on right now.