Journey to a mortgage free future

labradorlove · 12 July 2018 at 11:28AM

Update: STILL not made any overpayments! And don't plan to at the moment either, going to throw all my excess income at getting my car, so far I stand with £700, payday Monday will bring it up to £1,000 .... I'm hoping to have £4,600 by July next year by putting £300 aside a month which means I can buy the car I want outright without tying myself into any finance and pay my insurance up front for the year!

I'm hoping this works out as planned, I've been putting £30 a month away for Christmas so that won't don't any excess money this year. Me and DF don't have any holidays booked atm but that could change next year so the £300 monthly savings might be amended during this time but who knows what the future holds

That's the new plan of action, overpaying is being put on hold so I probably won't be updating my thread for a while unless I get a new bright idea to generate extra income :j

Thanks for reading x

labradorlove · 12 July 2018 at 11:31AM

I do have pension payments I pay around £94 a month into a workplace pension but I had already taken that out before my take home pay

kev2009 · 16 July 2018 at 1:44PM

Hi labradorlove

Hope you manage to save what you need to buy the car you want. I'm currently working on the idea of paying off £2k of my mortgage this year. I know its not a huge amount and probably wont make much difference but i'm hoping to be able to pay off more next year as I have already setup some regular saver accounts which i'm hoping I wont need to touch and can use the money from those, fingers crossed. I've also been looking at my spreadsheet recently and I IF (big IF) i have worked it out right, paying 2k this year followed by a larger payment next year and the following year before my 5 year fixed is up, I'm hoping will make a good dent in ensuring any interest rate rises will mean my monthly payments wont go over what i'm currently paying. Plan is for now to reduce monthly payment each month and keep term the same, then when i re-fix my mortgage, I'm hoping to then overpay and then keep my monthly figure the same and reduce the term as I think this will work out ok for me, all being well.

Good luck! Be sure to let me know how you get on when you come to re-fixing your mortgage as i'm keen to understand the process more as will be my first time in 2020, interested to see what they want to know (if anything) if you remain with the same provider, assuming they still competitive of course.

Kev

jodles16 · 6 September 2018 at 7:10PM

Hi Labradorlove!

I think its so important to remember this is a MF journey and that making OP's is great, but so is the other stuff! We recently took a break from OPing the mortgage as we had hit the 80%LTV and it meant that we could get a good new deal which we were happy with and we could focus on other things for a little while! I will find the balance someday!haha.

Saving for a car etc is a great idea, much better than having to pay for a loan! And great news on the payrise! I do love the idea of Cuba, its definately on my todo list!

Jodles

labradorlove · 11 September 2018 at 7:35AM

jodles16 wrote: »

Hi Labradorlove!

I think its so important to remember this is a MF journey and that making OP's is great, but so is the other stuff! We recently took a break from OPing the mortgage as we had hit the 80%LTV and it meant that we could get a good new deal which we were happy with and we could focus on other things for a little while! I will find the balance someday!haha.

Saving for a car etc is a great idea, much better than having to pay for a loan! And great news on the payrise! I do love the idea of Cuba, its definately on my todo list!

Jodles

Hi Jodles! :j

You know what, you're absolutely right! I've missed updating this thread and it's all part of the journey so I'm going to start again as there's been some changes now anyhow!

Updates to follow

Congratulations on hitting your 80% LTV that's a big achievement :T :T :T

labradorlove · 11 September 2018 at 8:06AM

Hi all

Ok so I put the thread on hold because I had to put the overpayments on hold. But I will no longer be paying for the MBNA card for as long as I thought :eek:

Just a list of things that have changed recently

1. DF has a new car as of the weekend just gone, is now finance free, and has agreed that we're going to pay off the MBNA card by Feb 2019 instead of original end date being January 2020. By paying this off sooner, it means that once funds are freed up in Feb, we can go back to overpaying!! :T so excited for this.

It means instead of paying £100 each a month we'll be paying £300 each off the card. Bye bye credit card debt.....

2. With DF new car, I'm now on the insurance with him to gain confidence in my driving skills. Also means I'm now not in a rush to buy a car myself. Also applied internally for a higher position which will be located in the city centre. If all goes well I won't need a car as parking is expensive there so I'll continue using public transport.

3. Pay rise went well. Monthly income after tax is now £1,306. Once all outgoings are set aside including my monthly spending moneys, I have £429. £300 of that goes straight to MBNA and then I'll have £129. I get paid Friday but we're going for a weekend away with the dog the first week in October so I'm using the spare £129 for that weekend. This means savings are on hold but looking good at £1,200 and haven't dipped in to them yet. :T

4. Had my first cash out from OnePoll, at £30, so building that up again now, I also won a FB competition they had going so I was credited £10 to my account which gave me a boost! Set up a prolific account and cashed out a total of £22 so far. Have just been spending these as they come not sure exactly what on

I'm thinking maybe I should start a spending diary as me and DF get a bit silly on a weekend, mainly with takeaways and meals out!! But also bits and bats like scratch cards, chocolate, new (expensive) toys for the dog when he's more than happy with a £2 charity shop teddy :doh:

Anyway. I can't wait to get the MBNA card GONE!! To focus on hacking away on the biggest chunk of our outgoings and looking for more ways to generate income as prolific seems to have forgotten about me and haven't had a survey for over a week hmmm.

Hope everyone is well

feels good to be posting again and not just lurking...

kev2009 · 22 September 2018 at 12:38PM

Congrats on the pay rise, hope the new position materialises

If you get it and wont be needing a car any time soon, would you be keeping the cash for emergency or using that towards your MBNA card which would reduce the time to pay it off, assuming your signature figures are up to day

Look forward to the new updates to your post.

I haven't paid any over payments yet, looking to hopefully do that next month, all things being well. Need to go to the bank and with draw some money and then pay it into another account as with 1 bank i only have a book account and they don't allow me to transfer money to different accounts online

Fingers crossed for next month when i figure out what I need to do to make the OPment

Kev

lhoney · 20 November 2018 at 3:17PM

Hello, just wanted to add my name to this since it's something I've been thinking far more seriously about over the last few months.

I got the mortgage in 2014 with my husband for a £115,000 property value (three bedroom semi-detached in the East Midlands) with 10% deposit and 30 year term. Until this summer, I never really understand what overpayments were, I think because my initial appointments with the bank were quite confusing and they seemed to be trying to put me off even considering doing it (which I understand now, since it's better for them if you don't) so I always thought of it as "a bad thing". Thanks to this forum and reading all your encouraging posts I've learned a lot more about how mortgages work and what the various terms mean.

I think realistically we can pay our mortgage off within the next 12 years, so cutting nearly 14 years off the term. Neither of us are on high salaries (our combined income before tax is around £32,000), but we don't have children or a car or credit cards, so we can afford to do what we like plus put savings away every month. (I've never really understood why people compare incomes as if it means anything anyway since people's lifestyles are so different and everyone has different priorities. People I work with who earn much more than me, including my manager who is on four times my salary, always seem to be complaining that they have no money!) For the last few years we'd just been putting savings into our ISAs every month since we didn't really know what else to do with it, but thankfully we know better now.

My annual overpayment "resets" in January and I can overpay by 10% of the remaining mortgage every year. I by £5000 in August to make up for the missing months, then £400 in September, £600 in October and next week hope to pay £250 (my roof needed some work, plus outgoings were higher with Christmas coming up). I think I'm better off just calculating an amount at the end the month from what's left over instead of committing to an exact amount, since what's left after outgoings can vary quite a bit and we both want to put away some cash savings every month too.

kev2009 · 22 November 2018 at 9:09PM

Hi lhoney,

When you make your overpayment(s) do you pay it off the capital? if so, do you then reduce the term or reduce your monthly payments?

I'm inquired on my Mortgage a month or so ago and i was told the total i coudl overpay (whcih was more than i thought as i thought it was 10% of what i owed a the tie i made the payment but look more into it, it seems maybe its 10% at the anniversary of the accountor Jan eachyear).

As you may of read above, I've only had my mortgage since 2015 so I've not over paid anything at all yet, just been making the monthly payments but I plan to make a relatively small (in comparison to the 10% i could pay) over payment in December and keep my term the same and reduce my monthly payments. Reason being my 5 year fixed term is up in 2020 and if predictions of interest rate rises are true then having a longer term will help keep my monthly payments down. So my plan is to overpay small this year, overpay as much as I can next year and in 2020 to reduce the mortgage still reducing monthly payments. Then once I re-fix for 5 years, i then plan to overpay what I can and have it reduce the term. Then all being well at the end of that 5 years (making 10 years overall) I should be in a much better place in terms of the mortgage and owe much less so in that respect hopefully any interest rate rises wont have the high impact they would have at the moment.

Kev

lhoney · 23 November 2018 at 12:17PM

Yes, we pay it off the capital, but our term length and monthly payments are the same as before we started overpaying. The monthly payments will only change next time a recalculation is done (e.g. when there's an interest change or we go onto another fixed deal). Overpaying saves money by reducing the amount of interest paid. I don't want to reduce the term just yet because that would mean a higher monthly payment, so I wouldn't be able to overpay as much. I'm not currently on a fixed term deal, but will be getting another one soon.

Most banks seem to work the maximum amount you can overpay before fees as 10% of the total remaining in the January of the year you're overpaying. E.g. if you owed £95,500 on the 1st of January, you can overpay by £9,550 until the following January.

Journey to a mortgage free future

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