One down, Four to go

jimjames
jimjames Posts: 17,581 Forumite
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edited 18 June 2021 at 5:34PM in Mortgage-free wannabe
Just had notification from the bank that this month's payment will clear one of our mortgages. Over the last 10 years we've taken out 4 further advances in addition to the main mortgage. I've not really been bothered about overpayment of mortgage before as any spare cash was channelled into S&S ISAs but once the outstanding balance dropped it seemed a good point to try to clear.

Fortunately Nationwide allow 10% of the original balance to be paid off without penalty unlike some that set it as 10% of outstanding balance so we've been paying the max allowed for the last couple of years. This mortgage was due to clear in Oct after previous overpayments (originally was 2025) but just done another chunk to get it to under the monthly payment so DD will clear it this month.

From my detailed spreadsheet we should be clear of the remaining ones by the end of next year. The balance outstanding isn't too high but it would grate with me to pay early payment charges when I don't need to so am sticking to the max allowed until then. Is that the right thing to do? Or just bite the bullet and clear the rest? One rate is due to expire at the end of Nov so will switch that to a new fix, maybe pointless as it will have under 12 months to go but this is MSE so every reduction is good, right?

Hopefully with all the spare money by the end of next year we might actually be able to spend it on travelling again!
Remember the saying: if it looks too good to be true it almost certainly is.

Comments

  • jimjames
    jimjames Posts: 17,581 Forumite
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    edited 2 July 2021 at 8:13AM
    So the first one has now gone, for some reason the balance was left as 5p despite the final payment at the end of June so did a 5p bank transfer yesterday and today it's disappeared from online banking!

    Had another good result yesterday as one of the other mortgages was a fixed rate due to expire in November but Nationwide allow you to apply to switch 5 months before expiry. Done that and the new rate takes effect from Sept so it's now at 1.24% for the next 2 years although it should be cleared well before then. No fees to switch so easy win. Who'd have ever thought you'd get a mortgage at 1.24%!
    Remember the saying: if it looks too good to be true it almost certainly is.
  • LadyGnome
    LadyGnome Posts: 801 Forumite
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    You sound like you have a good plan.  You may need to check if you will be hit by an ERC if you clear that mortgage early.  Would it be better to taper your payments over 2 years as you have such a low interest rate and focus on reducing the other balances?  So you would clear it at the end of 2 years and be further on with clearing the other advances.
    MortgageStart Nov 2012 £310,000
    Oct 2022 £143,277.74
    Reduction £166,722.26
    OriginalEnd Sept 2034 / Current official end Apr 2032 (but I have a cunning plan...)
    2022 MFW #78 £10200/£12000
    MFiT-6 #28 £21,772 /£75000
  • jimjames
    jimjames Posts: 17,581 Forumite
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    edited 2 July 2021 at 11:40AM
    LadyGnome said:
    You sound like you have a good plan.  You may need to check if you will be hit by an ERC if you clear that mortgage early.  Would it be better to taper your payments over 2 years as you have such a low interest rate and focus on reducing the other balances?  So you would clear it at the end of 2 years and be further on with clearing the other advances.
    Thanks, fortunately the payments are all in the allowed 10% as I don't want to pay ERC if I can avoid it. Luckily as the mortgage has been running since 2006 the 10% is quite a high amount in relation to balance. I'm only making lump sum payments on the permitted annual dates to keep within the allowed overpayment amounts as it's easier to track but also then gives maximum benefit as the full payment is made at earliest date.
    Remember the saying: if it looks too good to be true it almost certainly is.
  • jimjames
    jimjames Posts: 17,581 Forumite
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    edited 17 August 2021 at 11:01AM
    Mortgage was all sorted and switch arranged but Nationwide mailing system must be somewhat slow to catch up as had letter warning us that fixed rate was ending and that we could now switch to a better deal. Frustratingly the rate being offered on the new letter was 1.14% whereas the rate from last month was 1.24%.

    I was looking into whether I could change the rate over but it appear you need to cancel the switch and redo it by calling them. Before going ahead I looked at the numbers and I calculated for 0.1% lower rate over the 12 months before the mortgage is paid off I'd save somewhere between £4 and £8 by swapping to the lower rate. It pains me to say it but for all my MSE mantra I'm not sure it's worth the bother for £4!
    Remember the saying: if it looks too good to be true it almost certainly is.
  • LadyWithAPlan
    LadyWithAPlan Posts: 2,183 Forumite
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    Wow well done on your focus, paying off your mortgage  and having the end in sight with the others.
    As  a newbie it is so great to see MFW in action.
    There will always be a (beautiful stilettoed) foot in fabulous in LaPlan's life.
    I am choosing to be fabulously frugal to support some wonderful life changing and affirming financial goals including buying a London home I love.

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    No seriously, just don’t buy things. 99% of our success with our savings rate is attributed to the fact that we don’t buy things. You can’t really hack your way to frugal. You can and should take advantage of discounts, coupons, rewards points, and the like. But at the end of the day, the only way to truly save money is to not buy stuff.    Money doesn’t walk out of your wallet on its own accord.

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    https://forums.moneysavingexpert.com/discussion/6289577/future-proofing-my-life-deposit-saving-then-mfw-journey-in-under-13-years#latest
  • jimjames
    jimjames Posts: 17,581 Forumite
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    When checking that the new mortgage rate had gone through today I realised I'd still got a little headroom on overpayments on one mortgage this year so was able to pay another £250 off. That brings the date it will be cleared down to April 2022 which is a bonus!
    Remember the saying: if it looks too good to be true it almost certainly is.
  • jimjames
    jimjames Posts: 17,581 Forumite
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    2022, the year when it all happens! One mortgage has updated with the overpayment made in December and is now showing as being paid off in July. The others have overpayments due in different months before then which should mean they're all cleared by the autumn - exciting stuff!
    Remember the saying: if it looks too good to be true it almost certainly is.
  • jimjames
    jimjames Posts: 17,581 Forumite
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    Mortgage has now hit 4 figures so it's heading to the final furlong!
    Remember the saying: if it looks too good to be true it almost certainly is.
  • LadyGnome
    LadyGnome Posts: 801 Forumite
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    Congratulations - the end is well and truly nigh
    MortgageStart Nov 2012 £310,000
    Oct 2022 £143,277.74
    Reduction £166,722.26
    OriginalEnd Sept 2034 / Current official end Apr 2032 (but I have a cunning plan...)
    2022 MFW #78 £10200/£12000
    MFiT-6 #28 £21,772 /£75000
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