Alion's Mortgage Reduction Diary

Alion

We're going to Australia - OH's family are out there and they were unable to come to our wedding as his grandad was ill. We're going out to visit and to have a holiday on our own as well

Alion

Well, the spreadsheet says it's overpayment day. It's funny how excited I get about that!!!

Another £500 wiped off my mortgage

evab_2

brilliant, do you know how much interest you'll save on that £500?

setmefree2

Alion Well done:T:T:T

Alion

evab wrote: »

brilliant, do you know how much interest you'll save on that £500?

Using current interest rate (4.88%) and remaining term of loan (284 months) I get an interest saving of £577.47 just from that overpayment (can that be right?)

Alion

Last month of the year and sixth overpayment has been paid. 100% on track with the plan. Let's see the spreadsheet to see how much difference that's made...

Without overpayments our mortgage would be at £192,069, but with them it's £186,875. We've overpaid £5,000 but it's reduced (at this stage) by £5,194. So that £194 is just interest saved in under 2 years...

Our current completion date is November 2030 compared to January 2032 with no overpayments - a saving of 14 months!!!

And our projected spend over the full course of the mortgage (assuming 5% interest rate for the full term - a good average, I think) used to be £354,181 but has reduced to £342,755 - a saving of £11,426 - less the £5k invested, that's £6,426

and all that in 2 years it really is - can't think of any other investment that would give us a 229% return over the last two years

And just imagine where we'll be in 2 years time - as of January our plan gets a little more hardcore with 8 overpayments a year (4 in year 1 and 6 in year 2) as well as the big cash injection in January

And the holiday was amazing. We didn't spend stupid amounts and benefitted from staying with family and we had a really wonderful time we'll never forget

And I saw a manta ray!!!

allIcouldwishfor

Well done! I'm enjoying reading your diary - you are a whiz with the spreadsheets!

'Scuse me for being thick, but what's the difference between overpaying on your mortgage and taking one out over a shorter term? We remortgage every 2 years to take advantage of the deals and at remortgage time, I always knock an extra year off the term, so although we started our 25year mortgage 6 years ago, we're now down to 16 years remaining. I do this because OH is not really onside and would never be disciplined enough to put money aside to overpay. :rolleyes:

Alion

I'd say no difference - just a different approach.

When we overpay, we ask them to reduce the term of the mortgage rather than the overpayments - so we take it off the end rather than spreading what we're paying more thinly.

I think your approach is a good one - and one I've talked about with my husband, but we're scared that we'd get stuck if a little surprise decided to join our little family so we take every month as it comes

allIcouldwishfor

Thanks Alion - you are obviously very good with figures and it's great your OH is working with you on this. Up until recently, my OH thought we were starting another 25 year term every time I remortgaged, bless him!!

It's astounding how much money you are saving over the life of the loan. Keep it up!

setmefree2

Well Done:T