Time to stop (over)thinking and time to start doing!!

Throwaway1 · 27 April 2019 at 1:25PM

We have made our first OP!!

Husband phoned up and the guy on the phone said that any OP we make via online banking will automatically come off the term and not change the monthly amount. We double and triple checked with him to be certain and he said the only way the monthly amount changes is if we specifically request it or when interest rates change when we are not in a fix (but as we are currently in a 10yr fix that won't affect us).

After the phone call, we logged into online banking and paid £6,125 (to take us to an even £10,000 still allowed to be OP with ERC).

Our new balance is: £153, 936.10 with a saving of £7,064 in interest and the term reduced by 1 year 8 months!

Kittenkirst · 27 April 2019 at 2:14PM

Wow that’s so fantastic!! Well done and such a chunky figure is great to smash off the mortgage

wishingthemortgaheaway · 28 April 2019 at 8:37AM

Wow. That's some overpayment. I second what Julicorn says about YNAB it's been a revelation to me.
You have a really healthy income between you (by the sounds of it) so, just breathe a little (believe me, I get the over thinking thing - I'm an ex-teacher too for a similar reason.)

Remember, the earlier you pay your overpayments the more you will save in interest, so, if you can make a lump sum now that will save you more money than paying a monthly amount. You have a £10k emergency fund (your mum's money) so you are now saving for 'things' new car, holidays etc. A couple of house programmes I've watched recently said you should look to spend 10% of the value of your house each year on maintenance. So that could be another savings pot. (This is where YNAB is fab)
You could break the £2k a month down and allocate it to your specific savings targets.

Good luck, you are in a fabulously strong position, enjoy it.

Wish.

Brindlebabe · 28 April 2019 at 10:44AM

Really interesting diary so far.

We're a bit similar in that we've had a savings pot for a while, as well as debt to mother, and not known what to do first! However, both the savings and the debt to mother much smaller, and the outstanding mortgage much bigger in my case, but never mind...

In the end we over paid the mortgage a bit to get that kickstarted and reduced the (35 year term) by a year. I've set up a standing order to my mum over 2 years so at least there is a plan for that and she's enjoying a little boost each month and I know the debt won't be hanging over us for ever.

The savings pot is now (even more) precarious, but I'm lucky in that my job pretty secure, and I've taken out quite hefty insurance in case of illness, disability or death... So I feel that it's relatively unlikely I'll need a massive saving pot. I just like to keep enough for car trouble, vet bills, unexpected one off costs.

Good luck on the overpayments! Even if you can't OP by all 10% each year you're still going to be racing through it by the looks of things.

Have subscribed and look forward to seeing how you get on.
BB x

SuperSecretSquirrel · 28 April 2019 at 4:00PM

Hi Throwaway1

You're off to a flying start, well done! :cool:

I too would have said to repay the family loan asap, but since that's not really what your mum wants, you might as well treat it as a stooze - an interest free loan that you can leverage, and repay as and when required.

As others have said, your cautious nature as a couple reminds me of ourselves. We like to keep a reasonable amount of easy access cash on hand to help smooth out any potential bumps in the road. It might not be optimal, but the peace of mind is of great value to us.

With a spare 2k each month, I'd lock in a decent regular mortgage OP by direct debit, send some to a savings account by standing order (to cover home maintenance and car replacement etc), and consider looking into a S&S ISA for the longer term too. Also worth checking you're getting as much as you can out of your pension (especially free employer contributions)

I find sending the money away from the current account automatically each month really helps us limit our spending! As an added bonus, you'll see how low the monthly amount you really need to get by on is, it really helps with peace of mind when you realise that you have X months or years of living expenses in your easy access savings accounts - you stop worrying about "what if" once you become semi-indestructible :rotfl:

We were limited by the 10% allowance and ERCs initially, but having overpaid hundreds of pounds each month for a good while, and with a decent amount of cash in savings, we decided to reduce the term. Halving the term let us pay a huge amount off the mortgage without any ERCs. Something for you to consider a little while later maybe?

WTMA, 10% sounds a bit much... On a 200k house that would be 20k every year. So a replacement boiler and a small kitchen and bathroom refurb every single year maybe? :rotfl: 1% sounds more reasonable to me...

Best of luck Throwaway1, I've subscribed

wishingthemortgaheaway · 28 April 2019 at 4:10PM

Hmmm maybe it was 1% then. Will go back and check on the programme I was watching at some point......

Throwaway1 · 29 April 2019 at 6:12PM

Thank you everyone for your replies! We've had a rather expensive weekend for us (not counting the £6,125 haha!) It was my friend's birthday meal on Sunday, plus she recently gave birth so we had to get her a birthday present (£12 Hotel Chocolat chocs), her daugher a present (£10 outfit), birthday card and gift wrap etc. (£5) plus the meal and drink for us both (£21 - we took advantage of a good deal they were running). We also spent £7.50 on two clothes props and some pegs from Wilkos and £12 on the week's food shop (we've got a good amount of food/toiletries in the house as we were semi-preparing for a hard Brexit so we really only needed bread, milk, fresh fruit etc.). Also, £30 of Argos vouchers arrived from one of my survey sites so we got a strimmer that should have been £50 that was reduced to £33.33 and then £2 cashback on that so it cost us £1.33!! But then it rained so we haven't been able to use it yet or hang any washing out

Throwaway1 · 30 April 2019 at 9:33PM

I've finally had chance to check what our maximum OP amounts are each year without ERC.

Year 1: 16,125
Year 2: 13,733
Year 3: 11,581
Year 4: 9,644
Year 5: 7,900
Year 6: 6,331
Year 7: 4,919
Year 8: 3,649
Year 9: 2,505
Year 10: 1,475

We will be aiming to pay the maximum amount each year if possible. Those first few years look mighty tough but it should get easier... by about year 7 haha.

Throwaway1 · 11 May 2019 at 6:54PM

Another OP to report! :j We got impatient and whilst we don't know if we will be able to make the full £1666.67 we would need to pay this month to be on track to make the maximum 10% OP this year, we knew we could definitely pay £1000 and thought sooner was better than later to get that interest down. Therefore, we both paid £500 in and we will have a look how close we can get to that 666.67 after pay day in a couple of weeks.

This month is set to be an expensive one as the husband has a stag do the weekend after next. It's local so he won't need a hotel stay but he does need a suit for the day at the races, plus drinking money for two nights and train fares

We went around 10 different charity shops today hoping to drop on a bargain but they were all size 42/44 and he's a 34 :rotfl: Looks like we will have to buy a new one tomorrow. Accomodation for the actual wedding in July was an amazing bargain though as we had some Expedia points to use plus cashback on the bookings. We got 2 nights for £9 after using points and factoring in cashback!!! I already have a dress to wear so no spend needed there. Petrol will be minimum £50 and then we will need a present and drinks whilst there.

My best friend who now lives in Luxemburg has just set a date for her wedding in October this year so I'll need to pay flights for that plus hotel. Unfortunately, the date she picked isn't in the school holidays so I won't be able to attend her actual wedding on the Friday, just the party she is having the day after. It means the chance of us hitting 10% for the year is pretty much nil now which upsets me, but I do want to be at her wedding celebration. I'm also secretly hoping there won't be an abroad hen do but she did come to my wedding and hen do so it's not like I could ever not do the same (she makes waaaay money than I do I get that it's a one off). We'll also need spending money whilst there and a present.

Anyhoo... back to the OP I was so excited about before starting this post

Our new balance is: £152,936.10 with a total saving of £8,162 in interest and the term reduced by 1 year 11 months!

bouncydog1 · 12 May 2019 at 7:25AM

To make our money go further we pay everything we can on our credit card which gives us points towards vouchers (M&S) and pay it off in full each month. You could also use a cash back card. We also have a fuel account with our local supplier that discounts fuel by using the fuel card. Again paid off in full each month using the credit card therefore fuel discount and points. I keep a few linked spreadsheets and track everything so I know exactly what is where. Also shop around for maximum interest savings account. You’re in a good place financially. Good luck!

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Time to stop (over)thinking and time to start doing!!

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