Z's MFW journey

Zerforax

As I've been watching the MFW forum for a while, I thought it would be good to start my own thread.

We bought our current house in summer 2022 and owe £126,000 on the mortgage. Hoping to pay this off before 2028 as we'll be 40 then. We're on a 2 year fixed deal until Sept 2024 at 2.64% on a 30 year term. Obviously a bit of regret that we didn't fix for 5 years now! We can make a 10% overpayment each calendar year so the current focus is on working out how much of the £12,500 overpayment we can do before 31 December!

It's me, my better half and our 2 kids who are primary school and nursery age. Back in 2017, we bought what we thought might be our forever home in Hertfordshire for £450,000. It took 6 months to renovate the house and then we moved in with our eldest. It was all going swimmingly and we were doing well to reduce our mortgage as we had borrowed £334,000 and also spent £30-40k on rennovations.

I changed jobs in 2020, we had our 2nd kid and then covid hit. It had a huge impact as we didn't have our family network nearby, my new job was way more stressful/long hours than I expected. After a year, I quit the job without a real plan. We also decided to sell up and move up north to be closer to family. We did well from the house prices increasing as we sold for £650,000. Thankfully houses can be a bit cheaper up north (but once we bought a detatched house in a good catchment area, it wasn't as cheap as we thought it would be!) so we've now got a much smaller mortgage obligation. I'm currently working part-time but still on a good salary. Debating going back to full time as that would allow to pay off the mortgage quicker but on the other hand, I'm enjoying having more free time to spend with the kids.

Budgeting at the moment is a little difficult as there is still outlay on one-off house moving related items. Hoping this will settle down by the end of the month.

Goal 1: Pay as much can towards the £12,500 overpayment before 31 December 2022.

savingholmes

Good luck on your journey. 

Zerforax

Had been hoping to finish one-off spending back in October but it's continued into December! We're still within our "house move" budget but during Black Friday sales, we bought a Ring alarm system + doorbell.

Decided to make a £9,000 overpayment for this calendar year. Part of me wanted to hit the 10% max limit (£12.5k) but then logically didn't see the need to overstretch ourselves, especially when it hasn't been a calendar year that we've been at the house!

Decided to have the monthly repayments come down and leave the mortgage term (so still 29+ years left). Perhaps doesn't make a huge difference as the saving interest rate and the mortgage rate are very similar at the moment but I feel better that we've paid off a good 7% of the principal amount!

savingholmes

A lovely amount - well done.

Zerforax

We all got very sick with the flu over Xmas for like 2 weeks so our spend for the holidays was a lot lower than forecasted.

I was a little surprised our January spend was so high but I haven't had a chance to drill into why. Mrs Z does most of the spending so hard for me to keep track. 

For February we seem to be back on track even though we had to buy a new tablet (bought Amazon Fire for Kids when it was on sale) as the little one broke the old tablet! She turned 3 today so we've had to budget for a small birthday party and presents.

Our 10% maximum overpayment for the calendar year to 31 December is £11,606.34, which works out as £967.20 per month. I'm not sure if we will manage that so currently I'm putting away what we can into our saving pot and then I'll probably decide in a few months if we're spending it on the mortgage overpayment or a holiday in the summer.. we haven't had a proper trip in years!

My boss had also said he would sort out a permanent contract at work but that was back in like October/November! Still not had any update on that front.

Zerforax

Still getting itchy figures on trying to save and wait until December to pay the overpayment limit amount. Would be happier paying it off monthly but rates continue to climb so it makes sense to wait.

We really are feeling the pinch of all the rising costs of everything. Not being able to save as much as I want but we've also had some unfortunate extra expenses I wasn't expecting. We had some car issues which cost like £500 and I had to buy a new laptop as mine had packed in.

I did ask my boss for a pay rise so let's see where we get to on that. Fingers crossed!

Zerforax

Well it has taken 3 months but I've managed to secure the pay rise. I've also agreed to do an extra half day so put together it's a substantial increase (around 35%). That should give us a lot more breathing space from this month.

The summer was fairly expensive with all the activities and trips we did with the kids. We've also decided to give our eldest child a full class party this year so another big expense but she will be happy.

We look to be on track to have the 10% overpayment amount before December but I've decided we will save everything until the current mortgage deal expires in Sept 2024 and then pay it all down then.

killerpeaty

Massive congratulations on getting the raise! That's an incredible amount!

Sounds like a good plan on the over paying, best of luck!

savingholmes

Fantastic news on the payrise.

Zerforax

The paperwork for the pay rise came through too slowly so even though effective pay rise date was 1st September, I didn't see any of it until end of October payslip but it was quite nice to have the increased amount from 2 months into one payslip. Shame it can't be like this every month! On the plus side, the amount going into savings this month in way higher than we've managed before.

Pleased that we've saved the 10% overpayment amount for the year by the end of October (so 2 months early). However as my mortgage rate is ~2% lower than current saving rates, we won't overpay until the mortgage deal expires in September 2024.

Slightly annoying as if I could do the overpayments now, we have enough saved up to bring the total mortgage down below £100k - which would feel like a milestone.

Zerforax

Feels weird not overpaying the 10% annual allowance before the end of the calendar year but we've stuck to our guns. Earning a decent amount of interest in the savings account so it's fine.

Since the payrise, we've managed to save so much more money every month (even more than just the salary increase). Been fortunate to save more money in the last 3 months than we did in the first 9 months of this calendar year!

Our mortgage deal doesn't expire until September 2024 so we've got another 9 months of saving to do but I think today we could make a £20k overpayment.

I need to find out if there is a mortgage product that we can take which has no early repayment charge or a higher allowance over 10%.. Will ask the broker when I speak to him around Easter time.