My Mortgage Reduction and Savings Diary

SuiDreams

Dithering_Dad wrote: »

While it is nice to see 100% accurate figures, if your mortgage provider doesn't have that facility then it's just as valid to set something up in MS Money or MS Excel to give a rough guide. When you're talking about 10's of thousands of pounds, if you're a few quid out here or there, it's not the end of the world.

You'll get the same thrill when you see those figures dropping, no matter whether they're 100% or 80% accurate .

Think I'm going to have to have a play with MS Money again tonight. I've had a lot of fun forecasting my savings with it.

SuiDreams

Well, I getting there apparently my current balance is approximately £25,300 and my 10% per year overpayments need to be made before 30th November each year. Plus I've got Bank details now to send over payments to, but apparently I have to write a letter before each payment to state that its an overpayment on the mortgage.

Dithering_Dad

Check with your mortgage provider about your overpayments. Some providers allow you to have payment holidays up to the value of your overpayments. So if your monthly payments were £230 per month and you'd made £1380 in overpayments, if times were hard, you could take a 6 month payment holiday (i.e. £230 x 6 = £1380).

Something else to factor into your emergency planning - though I'd make sure it was a last resort!!

SuiDreams

Dithering_Dad wrote: »

Check with your mortgage provider about your overpayments. Some providers allow you to have payment holidays up to the value of your overpayments. So if your monthly payments were £230 per month and you'd made £1380 in overpayments, if times were hard, you could take a 6 month payment holiday (i.e. £230 x 6 = £1380).

Something else to factor into your emergency planning - though I'd make sure it was a last resort!!

I know the orginal mortgage product allowed Payment Holidays, i'll have to check the new documents to see if it still allows them. That would be great as I could then make extra payments out of my emergency cash. I get £250 overdraft at 0% with First Direct (this is for all customers), should I include this in my emergency plans? I was thinking of keeping 1 months bills plus ins premium in easy access accounts and the rest would be going into my regular savers (I would be able to close these down and spend the money, but lose interest if necessary).

Dithering_Dad

I wouldn't include credit or payment holidays in your 'immediate' emergency plans as getting into debt could just make the emergency worse and after all that hard work in making overpayment, you wouldn't want to go backwards by taking payment holidays just because your car broke down and you needed money to get it fixed.

Rather, I was thinking of more long-term planning For example, I have 6 month's worth of outgoings saved up which should be enough but I also know that I have a lot of payment holidays in my mortgage overpayments and could use credit if needed. This means that I could feasibly last 12 months before I 'go under'. Certainly plenty of time to either get another job, train for another industry or to downsize to a smaller home and release equity.

SuiDreams

I can have payment holidays of upto 6 months per 12 months, as long as it doesn't take the mortgage above 95%. Works sickness benefit would cover all bills if needed (but wouldn't be able to save). Going to have a play with MS Money tonight.

SuiDreams

Well not much I can do now for another month (except not spending any money). Going to aim to have a lump sum to pay off mortgage by 1 November (this years overpayments have to be paid by 30th November). Will hopefully be able to put more into savings from next months salary as will have paid 0% credit card off by then.

SuiDreams

Good new a letter from BS rate is being reduced to 5.45% as of 1 May and if they keep my payment the same as agreed my £15 a month overpayment will increase to £19. I know its only £4 but every little helps

StuartGMC

SuiDreams wrote: »

I get £250 overdraft at 0% with First Direct (this is for all customers), should I include this in my emergency plans? I was thinking of keeping 1 months bills plus ins premium in easy access accounts and the rest would be going into my regular savers (I would be able to close these down and spend the money, but lose interest if necessary).

Thankfully the last time I was made redundant was in 1992 due to a company closure, but, remember you need to tell your bank of the changed circumstances; at that time, the free overdraft limit then vanished as you no longer have the income to cover it.... it may be worth checking with FD about this before you put it in your emergency planning as attitudes may have changed (but I think if anything it may now be tighter than say a year ago).

You also noted the 3 months notice period; do remember this applies where individuals are made redundant (and take it as pay in lieu of notice, it'll then be closer to 4 months net pay, don't work the period - caveat here, can anyone comment on the tax situation these days for this), if the company goes bust it is unlikely to have money to pay you anything other than the last pay cheque (I suffered this as I didn't get my 3months notice either!).

I don't mean to be negative, just trying to ensure you are looking at the complete " worse case" scenario!

As DitheringDad notes, get your savings in hand first. With good knowledge of your expenditure per month and annual items (insurance for example) you can gain confidence in what cushion you need and thus what over-payment you can then put against the mortgage.

One question; you note the idea of saving and then paying in a lump sum annually. I assume you've looked at the difference it would make if paid in per month in terms of reducing mortgage interest payment vs the interest earned in the savings?

Good luck - and I think I need to add a signature having posted to this forum a few times and own up to my plans to be mortgage free etc...

SuiDreams

Luckily I work for a very large mutinational, who are doing very well at the moment, and I believe my Job is quite secure at least for the next few years (no one else knoes how to do my Job at the moment). Currently make very small over payments at the moment, don't realy have much in the way in savings at the moment which is why most of my overpayments will be a lump sum. Hopefully I'll be in a better position to increase over payments next year, really hate having a mortgage.