Oh how to be mortgage free...

becomingbetter

Hi, 
I’ve been reading the posts on here for several months and decided to start my own diary in the hopes it will hold me accountable and provide a bit of motivation. 
We (me and OH) bought our home last August, with a mortgage of £180000, on a new build property of £230000. 
After a year of filling our home with beautiful furniture and upgrading all our appliances, have decided that we should probably calm the spending and become more focused. 
I’m the planner in the relationship and OH is quite happy to go along with whatever I think is best, so the plan at the moment is to round our mortgage payment up every month from £776 to £900- with a direct debit set up via our provider so it goes out automatically. Over the last 2 months I have made several small overpayments that add up to £700, so it’s a start! 

We are 28 and 29, planning a wedding for 2022 and hope to start a family shortly after- it’s all sounds very expensive so far! 
Both our jobs are in the public sector and probably about the most secure out there at the moment. 
Our combined salary is approx £56000 (at some point I might do an SOA, however there isn’t really many corners left to cut) 
Currently saving for our wedding is a priority, we have £2000 so far and expect to add at least £800 a month to the budget. Whatever is left after bills plus wedding fund will go towards the mortgage. 
I aim to update this at least once every month with an update. 

Thanks for reading and any help/advice is always welcome 

becomingbetter

[font=courier new][b]Statement of Affairs and Personal Balance Sheet[/b][b]

Household Information[/b]

Number of adults in household........... 2

Number of children in household......... 0

Number of cars owned.................... 2[b]

Monthly Income Details[/b]

Monthly income after tax................ 1760

Partners monthly income after tax....... 1800

Benefits................................ 0

Other income............................ 0[b]

Total monthly income.................... 3560[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 776

Secured/HP loan repayments.............. 0

Rent.................................... 0

Management charge (leasehold property).. 0

Council tax............................. 263

Electricity............................. 47

Gas..................................... 0

Oil..................................... 0

Water rates............................. 0

Telephone (land line)................... 0

Mobile phone............................ 15

TV Licence.............................. 14

Satellite/Cable TV...................... 6

Internet Services....................... 25

Groceries etc. ......................... 185

Clothing................................ 0

Petrol/diesel........................... 300

Road tax................................ 0

Car Insurance........................... 0

Car maintenance (including MOT)......... 170

Car parking............................. 0

Other travel............................ 0

Childcare/nursery....................... 0

Other child related expenses............ 0

Medical (prescriptions, dentist etc).... 0

Pet insurance/vet bills................. 0

Buildings insurance..................... 50

Contents insurance...................... 0

Life assurance ......................... 0

Other insurance......................... 0

Presents (birthday, christmas etc)...... 50

Haircuts................................ 0

Entertainment........................... 400

Holiday................................. 0

Emergency fund.......................... 0

Gym..................................... 30[b]

Total monthly expenses.................. 2331[/b]

[b]

Assets[/b]

Cash.................................... 15000

House value (Gross)..................... 230000

Shares and bonds........................ 0

Car(s).................................. 8000

Other assets............................ 0[b]

Total Assets............................ 253000[/b]

[b]

Secured & HP Debts[/b]

Description....................Debt......Monthly...APR

Mortgage...................... 173000...(776)......2.17[b]

Total secured & HP debts...... 173000....-.........-   [/b]

[b]Unsecured Debts[/b]

Description....................Debt......Monthly...APR

Car............................5411.2....169.1.....0

Sofa...........................2296.9....58.9......0[b]

Total unsecured debts..........7708.1....228.......-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 3,560

Expenses (including HP & secured debts). 2,331

Available for debt repayments........... 1,229

Monthly UNsecured debt repayments....... 228[b]

Amount left after debt repayments....... 1,001[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 253,000

Total HP & Secured debt................. -173,000

Total Unsecured debt.................... -7,708.1[b]

Net Assets.............................. 72,291.9[/b]

Thought this might be useful, so I can use this as a reference and do another further down the line.
We use ‘Goodbudget’ app and this works really well for us, it has meant that some
of the SOA might not make sense. For example £170 for car maintenance per month- this goes into a savings envelope and pays for all things car related for 2 cars, insurance, road tax etc. over the year it mean we save £2000 for the cars. When the envelope is full then we redirect the money elsewhere, throw it at the mortgage for example.
Our entrainment budget breaks down to £200 each per month, with this we try to save £100 for things like holidays and have £100 that we spend guilt free or save if we chose- this covers clothing, hair cuts etc, that’s why those categories are £0. 
We pay electricity and gas in one payment so can’t break this down separately, similarly council tax and water rates are paid in 1 payment (we are north of the border) 

Given we have a reasonable emergency fund saved up, we aren’t so focused on adding to it just now while we have other priorities.
And the loans we have for car and sofa are 0%, there was no incentive for paying cash and we’d have the money there if ever we wanted to pay them off early, but just feel we should focus extra payments to the mortgage with it’s huge amounts of monthly interest!

Coffeekup

Best of luck to you guys.... Can't be easy with council tax like that.
Nice if you can save and overpay, have some more accounts divide the money as you do into pots like holidays. As you have done with the car account, I do however I leave the money in there as over time I can pay for a big fix of buy a new car. 
Maybe having a goal like overpaying to fit in the next LTV bracket when current fixed finishes. Then save the rest, and see how things are in a year.

Squirrelz92

Welcome to the board and the best of luck with your diary and overpayments!!!

becomingbetter

Thanks Coffeekup
Yeah the plan is to try and get below 60% LTV. We have 4 years left of our fix and so it is really doable (we’re looking at getting it under £138k to fall into that bracket) 

With the cars etc, we’re fortunate that they have been trouble free so far and well looked after- I know you never can tell though. We are planning to replace the older of the two, after we’ve saved for the wedding we plan to continue saving at that rate to pay for a new car outright. We are in a better financial position than when we bought the last and so would prefer not to get another finance arrangement. 
With the app we use I’ve maxed out the ‘envolopes’ and too tight to pay for the full version! So that’s why we don’t have separate pots for holidays and instead come from our individual savings.

Really appreciate you stopping by and your advice!

L9XSS

Keep chipping away, as my job was relatively safe, I upped my payments and decreased my term plus used the odd bonus to pay off lump sums, in the end 11 years removed from a 25 year term. Don’t forget to look at personal pension contributions too, particularly because of the tax breaks from HMRC!

becomingbetter

Wow, 11 years off you’re term? That’s good going! 
We are both fortunate to be in defined benefit pension schemes, with the age that we both started contributing we are forecast to retire on about 85% of our current salaries. We can’t really contribute more, just because of how our pensions work out. The only option is to pay extra to be able to retire 1-3 years early (depending on how much extra you contribute per month) but I have also looked at a LISA, in the hopes that we could retire early but delay taking our actual pensions (I’m probably a bit naive to pensions, but think the set up we have at the moment would lead to a very comfortable retirement, we would of course like to retire before 68! And I assume this will only get older by the time end are thinking of retirement)

becomingbetter

So this month was the first that the automatic overpayment has come out, I rounded our payment to £900. Which will equate to approx £123 overpayment each month.
After the interest, I’ve sent over another few pounds to bring the figure to a nice round number!
Last month was an expensive one, so our savings have taken a bit of a hit, but we do now have a wedding venue and plenty of time to save for that.
Probably won’t be making any other overpayments this month while we re-coup the money we spent this month (an extravagant and slightly unnecessary TV purchase- but something we’ve been looking at for the last year) In hindsight we should have budgeted/saved specifically for this, but got a good price so made sense. Anyway, it’ll all have righted itself by next payday and we’ll be back on track

becomingbetter

We’ve had a busy month of wedding planning! Our venue and all suppliers are booked with deposits paid (all from the wedding fund, which is looking a bit sad now) 
Mortgage has been paid with £140 and a couple of pence OP to bring to a round number. 
I’ve had a look at an OP calculator, a big aim would be to get down to 60% ltv by the time our fix ends in August 24. At the current overpayments we will be quite a bit off the mark, so going to try and up the OP to £225 (ish) This should see us really close, maybe with a few thousand to find nearer the time- but that shouldn’t be an issue. 
I’ve already allocated everything into our budget this month, but will try to cut back in some areas to make up this extra £100. Moving forward, we’ll take the OP out before moving our money around, I struggle to take the money back once it’s been put into a pot! 

becomingbetter

As soon as I had posted the last update, I thought how silly it was to not take the extra £100 back out of pots- I’m going to have to do it every other month!
Seeing as I don’t need to travel to work at the moment, it’s come straight out the travel fund and sent to mortgage. If I don’t have it, I can’t spend it! (And shouldn’t need to seeing as my travel to work is currently across the landing) 

rugbymadfamily

Hi @becomingbetter and welcome! I'm relatively new here as well but finding it so useful to focus the mind. Sounds like you have a great plan in place so keep up the good work! PS your food shop budget is very impressive, there are only 2 of us but I struggle to get this below £250 per month!