Five Year Fix, Five Year Plan

Merlin's_Beard

Starting to eye up savings interest and wonder if directly overpaying is the best option for me at the minute.

Fixed term savers probably aren't a good match for me right now - I don't have the spare capital to lock up for that length of time.

But... the regular savers are starting to creep up again. I used to have a whole bunch of them running when you could get them at a decent rate so perfectly happy with the money shuffles needed to meet the requirements. First Direct is the highest fixed one currently at 3.5%. If I put £200 a month into that, then paid off as a lump sum in 12 months, it would put me £15 closer to mortgage free compared to paying off the mortgage directly, and unlike investing etc is a definite guarantee.

Or do I hang on a month or two to see if rates increase?

Moneyfordreams

Hi Merlin's_Beard - nice to meet you

I wanted to add to the garden discussion. - Our garden looks a similar style to our - south facing patio - east - west directions. 
Our shed is where you have placed your shed and if I had the choice I would put it in the opposite SW corner rather than SE corner. Our is brick and came with our 100yo semi - needs a new roof but cute. The sun sets beautifully over the garden and this corner is the last to see the pleasure - on the shed roof the SW corner is a little more dull by comparison and it would be better suited there.    
  
Congrats on buying your house - I hope things continue to go smoothly for you.

savingholmes

Hi Merlin 

I'm putting my £ into savings (and pension) with only a £20 token OP direct to the mortgage. This is because the savings rates far out strip the mortgage interest (I now can get B 5% deal vs 1.84% mortgage). I also think the key risk to losing your house is if your income dries up and you don't have enough cashflow for the mortgage. Therefore as I had a low almost non existent EF when I got my current mortgage post divorce it has also been more important to save a decent EF. 

Good luck whatever you decide. 

Merlin's_Beard

@Moneyfordreams - thanks for the thoughts! In an ideal world I might have looked at that corner to put a shed in. Unfortunately it's a curved wall on that side that rather than a 90 degree angle, and with such a small garden I'm loathe to waste any space if I can tuck the shed into an actual corner. Thankfully because of the layout the last bit of sun hits more towards the house (where I might put a table and chairs).!

@savingholmes - it was a lot simpler a month ago when the only real way to outstrip the mortgage rate was to invest! I think I'm going to have to do what makes sense mathematically at this point.

Merlin's_Beard

Bleugh. Food shopping completely thrown by being ill over the weekend and my weekday off. Lots going around work at the minute (both covid and colds) so just thankful that my lateral flows are staying negative and I've only needed 1 day off. Especially because I only get 4 days sick pay a year!

I normally batch cook on my day off to see me through the longer working days, though, so the knock on effect is that I am not prepared for the rest of the week. I normally have a frozen dahl tucked into the corner of the freezer but I've not got around to doing that in the new house yet - so as well as using a day's sick pay it's also going to be expensive just scrabbling to keep up. Hopefully by the weekend I'll be feeling well enough to screw my head back on and sort my meal plan out.

savingholmes

Sorry you're unwell. Hope you feel better soon. 

Doesn't sound a great sick pay scheme either.

Merlin's_Beard

Somewhere between 1 week and 1 month is industry standard unfortunately @savingholmes. I think the hope was that once there were more corporates it might improve because bigger infrastructure, but even the big corporate employers only offer 1-2 weeks for clinical staff so the small independents have no reason to change.

That's why I need a big emergency fund and income protection!

savingholmes

Making me count my blessings. Well done for putting the right steps in place to protect yourself.

Merlin's_Beard

Cancelled the standing order to OP the mortgage,  which psychologically feels a bit rubbish, but a Spanish bank esaver opened at 2.75% which outstrips the mortgage rate so even that by itself is better than an OP. The 5% savers are a bit hoop jumpy at the minute for what I have so I'll hold off on them.

As far as regular savers go, I'll see what happens over the next couple of months before diving into them. I do wonder if 3.5% might be bettered after the next base rate decision.

Will still keep assigning money to the mortgage OP budget line in YNAB to remind myself that it's not to be used for other things. Side effect of making me feel productive about the whole thing.

Food budget has fallen off the cliff but I got home from work at midnight so I refuse to feel bad about the takeaway.

Dandytf

I'm seriously considering reducing Investments to free up almost 100 pounds per month.
This barring any higher Interest rates, could help make this 5 yr Fix plan work.
Thankfully I've 3.4% fix , could be worth it to potentially set 5 yr timeline.
Is there any mser's reduced savings to help with MF date.