Worth going for?

shewhoguards

Okay.

Mortgage newbie here:-) I bought my first house last August, with a bit of help from my mum. It's a sweet little two-bedroomed terraced, for which I owe my mum £20000 and the bank £40000 (well, not exactly, but those are the rough amounts)

I'm on a flexible mortgage, thanks to some good advice from my financial advisor (good because I bought when rates were pretty much at their highest). Wages are roughly £16000 per year at present, though that gets reviewed every six months (I love my contract)

I'm on a 40 year mortgage which looks horrifically long, although I should have a significant wage rise within two years, and I'm planning to remortgage so as to pay back mum's loan within five.

On this current income, is it worth trying to sock more away to get the mortgage down sooner, or is the amount I make too small to make a real difference?

poppyoscar_3

i actually think that overpaying regularly is worth it, even if it's only £10 a month - I don't know exactly how you're fixed with other bills etc, but your income is similar to mine. granted, my mortgage is a lot smaller, but even £10 a month extra can knock a few years off the term, and a few £1000's off the interest - that's got to be a good thing! Put it in a mortgage calculator and see the difference it will make!

why don't you join the 2008 newbies challenge, even if your target is only a small one? it all adds up to money that will be yours in the long term, not interest for the bank!!

Good luck anyway,

PO xx

LindsayO

Its always worth it.
we never know what is around the corner, interests rates could go up as well as down. Inflation could take off. The economy could take a downturn, who knows. Of course it could go the other way, but the more you have paid of your mortgage the more insulated you are from these things. And the more you pay off, the less you pay in interest too.

There are lots of great suggestions on these boards
good luck and concrats on the new home

JonnyBravo

shewhoguards wrote: »

On this current income, is it worth trying to sock more away to get the mortgage down sooner, or is the amount I make too small to make a real difference?

As previously stated.... anything is worthwhile. And all the more so towards the start of your mortgage.
Get those extra tenners in and they'll soon start to build up.

getmore4less

The most productive thing most can do to improve their financial future is spend less.

If you do that you can reduce the debt.

setmefree2

Have you got rainy day savings in an ISA? Have you got a pension?

Capricorn_One

Hi Shewhoguards.

A good place to start for inspiration is a mortgage overpayment calculator:
http://new.egg.com/visitor/0,2388,3_54988--View_1028,00.html

Here's an even better one:
http://www.jeacle.ie/mortgage/

Best wishes,
Ed.

shewhoguards

setmefree2 wrote: »

Have you got rainy day savings in an ISA? Have you got a pension?

No pension yet. I wasn't actually originally intending to stay with my current company, but the promotion chance of a lifetime came up, so I went for it and much to my surprise got it. Unfortunately, they have the rule that you can only apply for a company pension within either the first few months with the company or after four years, so as it's a decent one I'm waiting to get to apply.

Do have £800 in a rainyday ISA - it was an 18th birthday present I took £1000 from once for my current happy little car and have otherwise left. Also have a Flexisaver account with Darlington Building Society which I have to stick at least £10 a month in, currently around £250 (bank book is at my mum's as I pay in when home for the weekend so I'd need to double-check the amount.)

shewhoguards

poppyoscar wrote: »

i actually think that overpaying regularly is worth it, even if it's only £10 a month - I don't know exactly how you're fixed with other bills etc, but your income is similar to mine. granted, my mortgage is a lot smaller, but even £10 a month extra can knock a few years off the term, and a few £1000's off the interest - that's got to be a good thing! Put it in a mortgage calculator and see the difference it will make!

why don't you join the 2008 newbies challenge, even if your target is only a small one? it all adds up to money that will be yours in the long term, not interest for the bank!!

Good luck anyway,

PO xx

One of the big things I wanted to ask - is it worth stowing the money straight into the mortage overpayment, or is it better to save in and put it into a taxfree savings account and then use that as one big overpayment off the whole? It would all go off the same thing in the end anyway, but I wasn't sure which would be the better way to do it.

Bills I'm doing pretty well on - partly because I seem to be away on training courses a good quarter of the time so I don't use the gas and electric so much! I need to arrange to get a man out to get my water put on a meter because I reckon that living alone I could make a saving there, but other than that my biggest expenses are council tax (can't really be helped as I'm already on the lowest band) and fuel (again, can't really be helped as I'm living in the middle of the country here and public transport is less of an option).

Not that I'm going to whine too much about that, mind you. I moved from a grotty kind of estate to a little country village. I live opposite a FARM and there is a field facing my house with goats and chickens. My world is such a happy place :-)

ailuro2

If you can get a higher interest rate for your savings (after tax, or in an ISA) then it is a better place to put your money than your mortgage as long as you are good at keeping your mitts off it when you see something you really want for the house/car etc.;)

I do prefer to pay off the mortgage though, because psychologically it's a debt, and I want rid of ALL my debts!

setmefree2

shewhoguards wrote: »

Do have £800 in a rainyday ISA - it was an 18th birthday present I took £1000 from once for my current happy little car and have otherwise left. Also have a Flexisaver account with Darlington Building Society which I have to stick at least £10 a month in, currently around £250 (bank book is at my mum's as I pay in when home for the weekend so I'd need to double-check the amount.)

Hi

Most people seem to use the rule of thumb to have at least 3 months salary as rainy day money. Everyones circumstances are different though, so you have to be the judge of that.:D

All the Best

SMF2