Getting shot of the mortgage sooner than 2049!

Sarahwithlove

That's good news about the savings. I'd have a look at a SIPP as lifetime isa would effect any potential benefits in future as its still viewed as accessible savings if you ever had to go onto UC or need care in future. 

Bluegreen143

Plan of action for when the savings come in:

Emergency fund £1,000
Electrical work to the outhouse £500 (this is a safety issue as we’ve discovered the original electrics are a bodge job done by the previous owner - Red is qualified in electrics to an extent but not fully and wants to hire an electrician to do it properly)
New rug for the living room £100
Some fun money £100 (takeaway for us plus a nice bottle of wine for me and a bit left for Red to treat himself)
New wedding ring for Red £150 (his old one doesn’t fit and he wants a wood/ceramic one now)

Everything that’s left will go in the conservatory fund for now.

Apparently he’s got to return a form/ID and we will get the cash within 5 days from then so hopefully not too long a wait 🙂

Baileys_Babe

That seems a very balanced split of the payout, a small treat (take away & wine), some essentials (emergency fund & electrics), some desirables (rug & conservatory savings) and Red's new wedding ring which could fit into any of the previous categories depending on your view. You have made that money really work for you.

As the emergency fund will be over £1k are you going to start overpaying the mortgage or would you prefer to wait until the EF is full? 

Bluegreen143

@Baileys_Babe I keep wavering between having a £1k or £2k fund. When I add in the extra £1k it’ll be at nearly £1,600 so I think I will try to get it as close to £2k as I can the next month. I am going to call this week to round up my mortgage DD from £421 to £500 to at least start overpaying though.

After I get to £2k I will focus more on the mortgage but will set a fixed amount to keep adding to the E fund as obviously once we have our next emergency it’ll go down if we don’t keep topping it up.

Sarahwithlove

After the initial 1k and debts paid off Dave Ramsey suggests focusing on a 3 to 6 month emergency fund. So if you lost both your jobs tomorrow what's the minimum you could live on. What couldn't you do without. So that's my next aim now that my cards are paid off. I think I would feel more secure knowing I have that behind me. I too like you will increasing my mortgage payments to a round number but I'm going to do it via a standing order so could stop it in emergency and then put rest towards my additional emergency fund before I overpay more. 

Baileys_Babe

Bluegreen143 said:

@Baileys_Babe I keep wavering between having a £1k or £2k fund. When I add in the extra £1k it’ll be at nearly £1,600 so I think I will try to get it as close to £2k as I can the next month. I am going to call this week to round up my mortgage DD from £421 to £500 to at least start overpaying though.

After I get to £2k I will focus more on the mortgage but will set a fixed amount to keep adding to the E fund as obviously once we have our next emergency it’ll go down if we don’t keep topping it up.

That all makes sense to me and in your position I would do the same thing 😊

Sarahwithlove said:

After the initial 1k and debts paid off Dave Ramsey suggests focusing on a 3 to 6 month emergency fund. So if you lost both your jobs tomorrow what's the minimum you could live on. What couldn't you do without. So that's my next aim now that my cards are paid off. I think I would feel more secure knowing I have that behind me. I too like you will increasing my mortgage payments to a round number but I'm going to do it via a standing order so could stop it in emergency and then put rest towards my additional emergency fund before I overpay more. 

The terms & conditions of mortgage vary greatly. On our mortgage we are able to claim back any and all overpayments without penalty. As a result we have overpaid our mortgage and continue to do so with our SHTF saving - our only income earner losing their job. Separately we have an emergency fund of about £2k this is for various things that would be an emergency for us, these savings are easily accessible.
Each household needs to plan how best to get their finances organised to suit their situation, it is not a one size fits all.

Sarahwithlove

Baileys_Babe said:

Bluegreen143 said:

@Baileys_Babe I keep wavering between having a £1k or £2k fund. When I add in the extra £1k it’ll be at nearly £1,600 so I think I will try to get it as close to £2k as I can the next month. I am going to call this week to round up my mortgage DD from £421 to £500 to at least start overpaying though.

After I get to £2k I will focus more on the mortgage but will set a fixed amount to keep adding to the E fund as obviously once we have our next emergency it’ll go down if we don’t keep topping it up.

That all makes sense to me and in your position I would do the same thing 😊

Sarahwithlove said:

After the initial 1k and debts paid off Dave Ramsey suggests focusing on a 3 to 6 month emergency fund. So if you lost both your jobs tomorrow what's the minimum you could live on. What couldn't you do without. So that's my next aim now that my cards are paid off. I think I would feel more secure knowing I have that behind me. I too like you will increasing my mortgage payments to a round number but I'm going to do it via a standing order so could stop it in emergency and then put rest towards my additional emergency fund before I overpay more. 

The terms & conditions of mortgage vary greatly. On our mortgage we are able to claim back any and all overpayments without penalty. As a result we have overpaid our mortgage and continue to do so with our SHTF saving - our only income earner losing their job. Separately we have an emergency fund of about £2k this is for various things that would be an emergency for us, these savings are easily accessible.
Each household needs to plan how best to get their finances organised to suit their situation, it is not a one size fits all.

I agree but personally I would never want to request money back from my mortgage I would rather have a 3 to 6 month emergency fund hence why I suggested it. 

Baileys_Babe

Sarahwithlove said:

Baileys_Babe said:

Bluegreen143 said:

@Baileys_Babe I keep wavering between having a £1k or £2k fund. When I add in the extra £1k it’ll be at nearly £1,600 so I think I will try to get it as close to £2k as I can the next month. I am going to call this week to round up my mortgage DD from £421 to £500 to at least start overpaying though.

After I get to £2k I will focus more on the mortgage but will set a fixed amount to keep adding to the E fund as obviously once we have our next emergency it’ll go down if we don’t keep topping it up.

That all makes sense to me and in your position I would do the same thing 😊

Sarahwithlove said:

After the initial 1k and debts paid off Dave Ramsey suggests focusing on a 3 to 6 month emergency fund. So if you lost both your jobs tomorrow what's the minimum you could live on. What couldn't you do without. So that's my next aim now that my cards are paid off. I think I would feel more secure knowing I have that behind me. I too like you will increasing my mortgage payments to a round number but I'm going to do it via a standing order so could stop it in emergency and then put rest towards my additional emergency fund before I overpay more. 

The terms & conditions of mortgage vary greatly. On our mortgage we are able to claim back any and all overpayments without penalty. As a result we have overpaid our mortgage and continue to do so with our SHTF saving - our only income earner losing their job. Separately we have an emergency fund of about £2k this is for various things that would be an emergency for us, these savings are easily accessible.
Each household needs to plan how best to get their finances organised to suit their situation, it is not a one size fits all.

I agree but personally I would never want to request money back from my mortgage I would rather have a 3 to 6 month emergency fund hence why I suggested it. 

We do have over 6 months pay (which is more than 6 months normal outgoings) in our overpayment fund in our mortgage account (paid off the mortgage) this is saving us interest on this money (no savings account we could get is paying anywhere as near the same interest rate) and we have chosen to have it there as despite it being easy to get we would have to be in dire straights before we would want to reclaim it. This way we don't fritter it or use it for something else like replacing the boiler, for us currently this money has been spent, if and only if we lost our income would we think of reclaiming it. We have separate savings for things like replacement of white goods, car, emergencies. We have no plans to touch the mortgage overpayments with the exception of the above, OH job looks very stable and looks good for the future but you never know. Once the mortgage is paid off we will look for another home for our SHTF savings. If this happened tomorrow we would probably buy premium bonds, but who knows what products will be available then, as the time gets closer we will look at the options.

Bluegreen143

Lots to think about ladies - thanks for all the input.

I think for now I’m happy enough to move my focus to mortgage OPs once I’ve got to £2k emergency fund but I will continue to fund the emergency fund at a lower rate too. We will keep reviewing where we are each month and change focus if we need to. At the moment it feels like such a huge thing to know we will have £2k in emergency savings within a couple of months as it seemed unattainable back when I wasn’t working! 

Sarahwithlove

Baileys_Babe said:

Sarahwithlove said:

Baileys_Babe said:

Bluegreen143 said:

@Baileys_Babe I keep wavering between having a £1k or £2k fund. When I add in the extra £1k it’ll be at nearly £1,600 so I think I will try to get it as close to £2k as I can the next month. I am going to call this week to round up my mortgage DD from £421 to £500 to at least start overpaying though.

After I get to £2k I will focus more on the mortgage but will set a fixed amount to keep adding to the E fund as obviously once we have our next emergency it’ll go down if we don’t keep topping it up.

That all makes sense to me and in your position I would do the same thing 😊

Sarahwithlove said:

After the initial 1k and debts paid off Dave Ramsey suggests focusing on a 3 to 6 month emergency fund. So if you lost both your jobs tomorrow what's the minimum you could live on. What couldn't you do without. So that's my next aim now that my cards are paid off. I think I would feel more secure knowing I have that behind me. I too like you will increasing my mortgage payments to a round number but I'm going to do it via a standing order so could stop it in emergency and then put rest towards my additional emergency fund before I overpay more. 

The terms & conditions of mortgage vary greatly. On our mortgage we are able to claim back any and all overpayments without penalty. As a result we have overpaid our mortgage and continue to do so with our SHTF saving - our only income earner losing their job. Separately we have an emergency fund of about £2k this is for various things that would be an emergency for us, these savings are easily accessible.
Each household needs to plan how best to get their finances organised to suit their situation, it is not a one size fits all.

I agree but personally I would never want to request money back from my mortgage I would rather have a 3 to 6 month emergency fund hence why I suggested it. 

We do have over 6 months pay (which is more than 6 months normal outgoings) in our overpayment fund in our mortgage account (paid off the mortgage) this is saving us interest on this money (no savings account we could get is paying anywhere as near the same interest rate) and we have chosen to have it there as despite it being easy to get we would have to be in dire straights before we would want to reclaim it. This way we don't fritter it or use it for something else like replacing the boiler, for us currently this money has been spent, if and only if we lost our income would we think of reclaiming it. We have separate savings for things like replacement of white goods, car, emergencies. We have no plans to touch the mortgage overpayments with the exception of the above, OH job looks very stable and looks good for the future but you never know. Once the mortgage is paid off we will look for another home for our SHTF savings. If this happened tomorrow we would probably buy premium bonds, but who knows what products will be available then, as the time gets closer we will look at the options.

Sounds like you have a good plan in place. I don't think I have that option for my mortgage tbh. I too like your other half an in a fairly secure job at the moment so can see why it might seem better if you had same option as yourself. Like you said it might then be tempting to use it for other big expenses. Do you have a fund for things like a boiler emergency? I've started adding more sinking funds myself so think for me it would be a case of if I lost my job but I would get redundancy as work for my LA and they also do 6 months sick pay full and 6 months half so fairly secure.