Climbing the Mortgage Mountain step by step 17 November 2020 at 4:12PM edited 20 October 2021 at 2:39PM in Mortgage-free wannabe 359 replies 13.3K views

Me_v_The_Mortgage_Mountain

Hi All
I've returned to MSE after several years away, I was previously here under a different user name.

I have previously been mortgage free twice in my life and both times, just as things should have gotten easier, life threw me a curve ball!  This most recent time my marriage suddenly imploded and so, at the grand old age of 50, I have taken on the biggest mortgage I have ever had in my life to enable my daughter to remain in her beloved home.

The purchase went through this month, with the first payment due at the beginning of next.  I have 66% equity in the property and a mortgage of £130k for 19 years, payments are set up interest only at 1.4% fixed for 5 years and my intention is to throw as much at it as possible in that time, I am allowed to over pay by 10% of the principle each year, I chose interest only to keep the monthly payments affordable just incase anything happened to my job.  The plan is to pay £750 pm on top of the interest payments.

I am going to monitor my overpayments and my spending and money saving ideas, feel free to join me!

MvTMM 
x

FatJock

Hi and Welcome. Good luck with the MFW adventure.
I did not know interest only options where available for mortgages - something to bear in mind for the future. Thanks.

Me_v_The_Mortgage_Mountain

Hi FatJock
Yes, I don't think they advertise them too much.  I was able to access interest only through Santander due to having a good LTV.  It means my payments are currently very low, the plan is to pay off as much as possible during the fixed term to put me in the best position when rates climb.  If the worst happens I can always sell up and downsize.
MvTMM

Me_v_The_Mortgage_Mountain

Can anyone advise how I can set up a signature as I had one previously and found it useful for recording progress.
Thanks
MvTMM

LeighofMar

Welcome. It can be scary starting over or going through a new phase of life, but it seems you've got everything under control. Best wishes on your journey. 

Me_v_The_Mortgage_Mountain

Good Morning

I don't know how to set up a signature so for now I will post my goals as below, the plan is to pay £750 off of the principle each month:
Current Mortgage (Nov 20) £130,999 (Interest only)
Over payments 2020 £  /£750 (Mortgage payments only start Dec 2020)
Over payments 2021 £  /£9,000
0% credit card £3776 (Nov 2020), paying off £300pm will clear Nov 2021
Loan £5400 (Nov 2020) paying £253pm will clear Sept 2022

I am keeping a spending diary now to monitor where my cash goes as much as anything, a coffee here, couple of items in £land, it all adds up!  I save £2 for holiday spending money (due to be going in January but I don't think its going to happen) and Cashback is saved each year for Christmas.  I do have an emergency fund and will aim to continue to add to this each month.  
I am also going to set myself a clothing allowance of £250 for the year plus any birthday/Christmas money or vouchers. I have done this before and it really focuses me on only buying what I need and getting good value for money (ie good quality/classic items at sale prices).  I have plenty of clothes, both smart stuff for work and casual clothing so shouldn't really need much, my existing shoes and coats should see me through another year easily and I definitely don't need any new bags; we were due to attend three weddings this year, all of which got cancelled so I even have occasion outfits if needs be!

I'm looking forward to pay day now to make my first mortgage payment! 

MvTMM

missathome

Hi Good luck in your coming financial journey.

I was under the impression that an Interest only Mortgage means you only pay off the interest each month and the amount initially  borrowed (130K) will stay the same at the end of the term. Could you explain further how an interest only mortgage works?

thank you

missathome

ie how you plan to get the 130k reduced. thankyou

Me_v_The_Mortgage_Mountain

Hi Missathome.
Yeah, an Interest Only mortgage means you are only committed to paying the interest element each month, however, you do need to provide a plan for repaying the principle, be it an inheritance, investments, endowment etc.  I am planning on repaying the principle well within the term but did not want to be committed to the larger payments of a traditional Repayment Mortgage, just in case anything happened to my job, hence choosing this course.  If the worst happens and I cant clear the loan in the term of the mortgage I will downsize and do it that way.  You do need to have a good LTV ratio to be able to secure Interest Only.
Hope this helps

MvTMM

Jessy103

Good luck with your journey MvTMM

p.s I think you do a signature by going to edit profile and then signature settings.

Me_v_The_Mortgage_Mountain

 Hi Everyone

Jessy103 - 'p.s I think you do a signature by going to edit profile and then signature settings.' -  that's what I thought but it says that I don't have permission to use a signature?

I've got a nice long weekend coming up, so planning to sort through my wardrobe, there may even be a few things to sell, make a note of any items I desperately need although I'm not foreseeing anything to be honest.  I did need some new skinny jeans but managed to get some ex-M&S Autograph stock at £6 a pair on a website, so bought a couple pairs (they were originally around £40+).  

I'm also going to tackle the kitchen, I would love a new glossy white one but for now we are going to just brighten it up.  We already had a clear out, installed lovely new faux wood blinds and I'm going to try out some Moroccan style, wall tile stickers around the counter area, think I'll need to sugar soap the area first and then level the grout lines.  I've  been looking at the 'wraps' you can apply to cupboard doors, has anyone tried these, are they easy?

We have minimal grocery shopping to do this weekend and a £10 lidl voucher to use which will help with the bill.  I need to get back into meal planning although I do feel quite on top of this area at the moment and we hardly waste any food, we are very good at freezing any leftovers for a quick easy ready meal another day.  Having said that I have no idea what is for dinner tonight, maybe a veggie curry?

MvTMM