The Case of the Overwhelming Mortgage

AgathaSquirrel

Another overpayment this week. Next mortgage payment will take us into 101000s. I think we might make double figures in May, if not, definitely June.

Grabs39

Great news!

Out of interest, how do you calculate your daily interest amount?

AgathaSquirrel

I use internet banking and check the difference in amount over a series of days. It’s not an exact science but it lets me know roughly what it is.

caeler

@Grabs39 Another contributor on here told me how to work out daily interest, as follows:
To work out your daily interest you need to multiply your balance by the interest rate as a decimal and then divide by the number of days. As an example, if your balance was £100k and your interest rate was 1.5% it would be:
100,000 * 0.015 = £1,500 per year
Divide by 365 for daily interest = £4.11
Divide by 12 for monthly interest = £125

Grabs39

AgathaSquirrel said:

I use internet banking and check the difference in amount over a series of days. It’s not an exact science but it lets me know roughly what it is.

My lender is a bit old-fashioned - I get a paper statement in January.  No online facilities, sadly!

caeler said:

@Grabs39 Another contributor on here told me how to work out daily interest, as follows:
To work out your daily interest you need to multiply your balance by the interest rate as a decimal and then divide by the number of days. As an example, if your balance was £100k and your interest rate was 1.5% it would be:
100,000 * 0.015 = £1,500 per year
Divide by 365 for daily interest = £4.11
Divide by 12 for monthly interest = £125

Ah, of course, that makes sense!  I'll have to guesstimate my current balance (or ring the Building Society) but that will do fine, thanks very much!

AgathaSquirrel

Mortgage payment in, now down to 101,000s. Should manage a couple of overpayments this month and next mortgage payment will take us to 100,000s. Double figures are getting closer.

AgathaSquirrel

Interest rate down to £5.88 today. Progress.

greent

Hi Agatha - just found your diary to day - and with a title like yours I just had to read it! We've been MF on our home now since 2015 (ready for our eldest to go to uni) - I loved tracking the difference in our daily interest and projected end date I still do the same on our BTL, but it's not the same sense of achievement (and we're selling it, anyway)

Investing in pensions is always a good idea - we paid ours off without doing any other investing - a very blinkered approach - would do it differently if I had the time again - would split more between pensions and OPing

powerspowers

That’s exciting that you are so close to below £100k, great milestone 🥳🥳

AgathaSquirrel

@greent glad you like my title 😄. I am thinking more about the pension side of things. From my reading for a couple to have a comfortable retirement they need £25,000-£30,000. I know this is subjective and in a lot of ways we live a fairly simple life but we do have family members abroad and I would want to be able to visit at least every second year. I have no concerns once we are 67, the full state pension and the rest of my NHS pension will mean we will be comfortable, it is the bridge between 60-67 I need to consider and the above figure gives me a focus. I estimate I will have about £12,000 in my 95 pension and a £36,000 lump sum which we will live off. Once the mortgage is paid off when we are 53 we will save £500 a month for the next 7 years to give us an extra £6000 a year of savings to use (there will obviously be some interest to add to this too). We still have a shortfall so need to increase my small stakeholder pension from the current £600 a year to £2000 a year and my husband’s predicted £4000 a year at 65 to £4000 a year at 60. I at least know this is where we need to focus money but in order to stay on track with the mortgage the money can’t be moved from there. Short term we will need to add any pay rises to pension, longer term, if I manage to secure any permanent hours we can think about pensions too. I feel happier with a plan. It may not work our exact and a lot can happen in the next 15 years but it all feels in control and that makes me happy.

In other news mortgage interest rate is down to £5.86.