Best plan for moving home and things to consider

BMTH

Hi All, need some advice. Moved into our first home last summer and as much as we love it, we know it's not our forever home. We got a mortgage 5 year fixed for 4.7%. The plan is to upsize by the time this is up so 2028. I'm just wondering whether it's worth overpaying on the mortage where possible or using 4% instant access (required) savings account. Also any other things to consider or plan ahead for now ? We were going to pay for a new driveway but thinking we should avoid this now?

EDIT: Forgot to mention , not sure the right place to ask but my achilles heel at the moment is car finance £240 p/m... only saving grace is it's 0% however balloon payment due 2026 of £15k.

BMTH

.Gentle bump

EssexHebridean

Ok - dealing with the car finance first then. Have you worked out whether your current car will be worth the balloon payment or whether you would be better handing it back and replacing with something second hand at that point - assuming your deal allows for this of course, if it is worth the balloon payment, then you need to work out whether that £15k is even achievable in the timescale - how much do you already have saved towards it and how much more would you need to save each month. Can you actually manage those savings? If not, then the answer is immediately that you need to hand back the current car and replace with second hand. So again, how much do you already have saved, and then again, how much will you need to set aside to get to the £5k/£8k or whatever you need for a decent reliable vehicle. That needs to be your priority ahead of OP’ing the mortgage because it is a known quantity.
remember that the way car finance works is to get you used to having a certain standard of vehicle, and the to make it impractical for most folk to simply keep that car at the relevant point because the finance payments mean it’s impossible to afford the balloon. Thus your only option is to take out another deal. It’s a treadmill that means people part with a lot of money and never actually have a real asset in a lot of cases - but it makes the finance houses lots of money! 

Is the driveway a need or a want? If it’s just improving the kerb appeal then back-burner it for now. If it’s a safety issue then it maybe you need to factor it in. 

As for OP’ing -  very easy way to make a start on that which will have an impact is to just increase your monthly payment up to the next £10, £20 or £50 increment. Little enough that you barely notice the difference, but it makes a difference over the term even if thst is all you do. Then think about where you can make odd payments too - if you pay your council tax over 10 months then there are two months of the year where no payment goes out so shift those straight to the mortgage. 

I take it you already have a decent emergency fund in place? If not, then that needs building before any of the above are addressed! 

BMTH

EssexHebridean said:

Ok - dealing with the car finance first then. Have you worked out whether your current car will be worth the balloon payment or whether you would be better handing it back and replacing with something second hand at that point - assuming your deal allows for this of course, if it is worth the balloon payment, then you need to work out whether that £15k is even achievable in the timescale - how much do you already have saved towards it and how much more would you need to save each month. Can you actually manage those savings? If not, then the answer is immediately that you need to hand back the current car and replace with second hand. So again, how much do you already have saved, and then again, how much will you need to set aside to get to the £5k/£8k or whatever you need for a decent reliable vehicle. That needs to be your priority ahead of OP’ing the mortgage because it is a known quantity.
remember that the way car finance works is to get you used to having a certain standard of vehicle, and the to make it impractical for most folk to simply keep that car at the relevant point because the finance payments mean it’s impossible to afford the balloon. Thus your only option is to take out another deal. It’s a treadmill that means people part with a lot of money and never actually have a real asset in a lot of cases - but it makes the finance houses lots of money! 

Is the driveway a need or a want? If it’s just improving the kerb appeal then back-burner it for now. If it’s a safety issue then it maybe you need to factor it in. 

As for OP’ing -  very easy way to make a start on that which will have an impact is to just increase your monthly payment up to the next £10, £20 or £50 increment. Little enough that you barely notice the difference, but it makes a difference over the term even if thst is all you do. Then think about where you can make odd payments too - if you pay your council tax over 10 months then there are two months of the year where no payment goes out so shift those straight to the mortgage. 

I take it you already have a decent emergency fund in place? If not, then that needs building before any of the above are addressed! 

Hey, thanks for this much appreciated.

Re the car finance , touch wood if nothing happens involving paying out alot of money I would have enough money for the balloon from stocks and shares , but then that would likely leave me with nothing. I still have until 1.5 years away. I would hope / predict the car will be worth more than balloon come that time as it'll only be 2 years old and not have much milage on.

Driveway is 100% a want . At the moment you can only park 1 car behind the other so we have to swap cars alot when one of wants to go out, having the driveway done would mitigate this and just save us on convienence.

I have a £10k overpayment limit per year , I assume I can just make as many bank transfer payments as I wish to this? For example 1 a month of say £10 extra?

I only have a £2k emergency fund , my partner has about £8k , would we combine in this instance or should I create my own emergency fund?

EssexHebridean

Entirely depends what suits you on the emergency fund, but I would suggest having at least some joint funds for things like a new boiler or whatever. Nobody wants to be freezing their bits off in mind winter while you work out whose expense it is! 

 Heck what you mortgage provider says about the way you can OP. Mine allows me to just transfer whatever I want whenever I want via faster payment, but other lenders may have different terms.