Hi All! is it possible?

lfckerry

Hello, Another newbie here:j
I have just bought my first house with my boyf.
We have a mortgage with Alliance & Leicester for 30yrs at a fixed rate of 5.39% untill June 2009.
I'd love to be able to pay off extra lump sums (i think we are allowed to pay off up to 10%) But we are just about living comfortably at the moment.
When you start up things like Gas and Electric can you change at any time or are you usually tied in for say 12 months?
We both put £600 of our wages into a joint account to pay for food and bills which just about covers things.
What is the best way of putting money away to pay off mortgage, an isa??
Any help appreciated
Kerry
x

belfastgirl23

I'd say first of all make sure you have an emergency fund for when the boiler breaks down or whatever. After that, if you have cash to spare then you should increase your normal monthly payment (direct debit) for your mortgage so that the money goes out before you see it. In the main it's better to pay the money straight off your mortgage rather than put it in an ISA unless you can find a really top rate one. This is a really useful guide from Martin http://www.moneysavingexpert.com/mortgages/mortgages-vs-savings.

I really applaud you for being so gung-ho in the first days of your mortgage but don't feel bad if you can't really make overpayments at the mo. We didn't manage to start making extra payments till very recently (2.5 years in).

And good luck in your new home

TSM_2

lfckerry wrote: »

Hello, Another newbie here:j
I have just bought my first house with my boyf.
We have a mortgage with Alliance & Leicester for 30yrs at a fixed rate of 5.39% untill June 2009.
I'd love to be able to pay off extra lump sums (i think we are allowed to pay off up to 10%) But we are just about living comfortably at the moment.
When you start up things like Gas and Electric can you change at any time or are you usually tied in for say 12 months?
We both put £600 of our wages into a joint account to pay for food and bills which just about covers things.
What is the best way of putting money away to pay off mortgage, an isa??
Any help appreciated
Kerry
x

Hello Kerry

Congratulations purchasing your first house. It is a great feeling. It was six years ago when I took the plunge with the other half. We have in that six years over paid our mortgage when ever we can. Although we started very slowly. Like you we both put money into a joint account to pay all bills. What we did do to start with was to put an extra £25 each more than what was needed. This allowed us to overpay our mortgage by £50 per month. Over time we got used to this and gradually increased this amount. We have now got to the point through the inspiration of many of the forums here that we overpay nearly 200% of what the repayment is per month, and now have very clear goals on when we shall be mortgage free.

I would definatley get a mortgage pig if I were you, it's like having another person contributing to the mortgage.

Best of luck!

TSM

sniperpenguin

whereabouts is the house etc? we are all interested here!

lfckerry

Thanx for the quick replies!:beer:
I cant see us starting anything untill the new year now though.
I dont think putting extra money into the joint account would work as i just think it would get swallowed up with extras(like lots and lots of xmas decorations!)it would be better if it went where we wouldnt spend it accidently.
this may sound daft but how do you pay extra off your mortgage?? do you just ring them up and do it over the phone or go into a branch?(im not sure there is one here actually!)
i love having my own home,its a fab feeling
with regards to an emergency fund, i have £600 in an isa and we started contributing to the joint account a month before we moved so theres an extra £500 or so in there.
Just got a new boiler, so touch wood that should be ok for a while(the seller offered to pay half as it wasnt working which was good).
We have budgeted £50 a week on food but have currently got it to around £40 so i really should seperate the leftovers and put it towards the mortgage fund!
mortgage pig?? will look into that!
Also found Quidco a few weeks ago and made £80 already so that could go too!
thanks again guys!

TSM_2

The best thing to do would be to call your mortgage providor. Usually you can overpay over the phone. Or you could ask for you mortgage account details to enable you to pay online.

lfckerry

We are just outside of liverpool! and the house is a 2 bed semi filled with me, my other half, a dalmatian puppy, a hamster and 6 baby tortoises!:rotfl:

Jonbvn

belfastgirl23 wrote: »

In the main it's better to pay the money straight off your mortgage rather than put it in an ISA unless you can find a really top rate one. This is a really useful guide from Martin http://www.moneysavingexpert.com/mortgages/mortgages-vs-savings.

Martin's article primarily compares normal savings accounts (which are taxed) vs. mortgage overpayments. As you are aware, ISA's are not taxed.

At the moment, the best paying ISA has a rate of 6.3% (will drop shortly due to BoE rate cut). This beats the OP's mortgage rate of 5.39%. Therefore, it is clear that it is definitely better to pay into such an ISA at the moment. When the OP's fixed rate finishes, she can then pay the saved money into her mtge.

Of course, if rates continue to fall (which is being predicted by some) then it would be better to pay-off the mortgage, once the ISA rate < Mtge rate.

lfckerry

Right, so as long as the isa rate is more than my interest rate, its a good idea (mortgage rate is 5.39% by the way)?

JonnyBravo

lfckerry wrote: »

Right, so as long as the isa rate is more than my interest rate, its a good idea (mortgage rate is 5.39% by the way)?

Got it in one!
:j



As for how you pay off your mortgage which you asked earlier... yep you can usually do it on the net or in the branch, depends on how your account is managed really... ask your bank/BS/loanshark!;)

Jonbvn

lfckerry wrote: »

Right, so as long as the isa rate is more than my interest rate, its a good idea (mortgage rate is 5.39% by the way)?

Even more reason to put your money in an ISA before overpaying your mtge.