Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • turtlemoose
    • By turtlemoose 13th Mar 14, 12:36 PM
    • 1,527Posts
    • 4,446Thanks
    turtlemoose
    MF x 2 by 42
    • #1
    • 13th Mar 14, 12:36 PM
    MF x 2 by 42 13th Mar 14 at 12:36 PM
    Hello

    I've been overpaying but with no real consistency or effort put in to it, for a while now.

    After getting locoblade's spreadsheet I realised how much I could be saving, so I want to give this my attention.

    Ideally, I'd like to be MF twice by 42. I'm 29 this year (OH is 38 this year). I did once upon a time dream of this being by 40 but times change and I think 42 is more realistic. I am currently NOT on target for this! So there's some hard slog ahead. Sharing the goal will hopefully mean I have to keep trying, as now I know I have to come and update here....

    I have 2 mortgages, both residential, one with consent to let.

    M1: Initially a 50% shared ownership on a refurbished ex-LA house (not a newbuild), bought for 47500 on a 100% mortgage in Nov 2007, fixed rate at 6.49% - at the time that was a good deal on a shared ownership! Then pretty much soon as I signed on the dotted line, rates plummeted and I was kicking myself!!!! But I was still paying less with paying mortgage+rent than I had been with just renting.

    The house was never really worth 95k full price, that was over-inflated by the HA selling it. I was young (21) and stupid, and didn't think to question it. Fast forward to 2010, the price had plummeted so I decided to look at buying the other 50%. The HA sent an "independent" surveyor out who valued it at 85k.....massively over what similar properties were selling for locally. After a very lengthy complaints process with the HA being awkward at every turn, I eventually got them to agree to using a GENUINELY independent valuation. I used a local firm (office around 2 miles from the house) who provided a very detailed comparison in their report and valued it at 65k - that's more like it!! The HA accepted this, and despite having set the ball rolling in May 2010, eventually it completed in Nov 2011. I bought the second half and the freehold for 32500. As interest rates were now much lower, this new mortgage for the 100% of the house was lower than the previous mortgage on 50% plus monthly rent.

    This house is in a really rough area - hence the low price for a 3 bed end terrace. After 4 years living there, I'd sort of got used to it, but I wasn't happy and I didn't feel safe.

    In the midst of this, along came a little surprise... 2 blue lines on a pregnancy test, whoops!

    There was no way I was going to bring up my child in that area, I didn't feel safe as it was, I couldn't have my child living there. My OH lived in a very small rented flat so there was no space for baby and I, plus he has an older son who he has 3/4 nights a week. So we rented a 3 bed house together.

    I explored my options on the mortgaged house - basically in order to sell it I'd need to find 5k - simply didn't have it, nor the means to get it. So after researching renting it out, I approached my lender, got consent to let, and then advertised the house via the LA for people going down the 'homeless' route. The LA offer a bond scheme where they stump up the deposit if the tenant does something they shouldn't. The rental income is very low as I set the rent at the housing benefit levels - no point being higher than that. So it ticked over, mostly, with me subbing it around 50 a month, sometimes higher if there were repairs etc.

    Our rental house developed a quite serious roof leak, our landlord and agent refused to do anything about it, it eventually rendered 2 of the 3 bedroom completely unusable so at the end of our fixed term (luckily only a year), we scarpered out of there.

    With me having been on maternity leave for a year (I'm the main wage earner), my savings were now non existent and I had some CC debt. We moved to another rental. We decided we wanted to buy, but thought it wouldn't be for a good few years yet, probably not until the baby was in school. We viewed a few properties in the summer of 2013 - not to buy, but to get an idea of what we wanted, what price range we were looking at....when we accidentally found THE ONE.

    It was a s**thole!!!! We later found out the house had been empty for at least 12 years, possibly more. However as we walked around this filthy, dated, dark and dingy house, I could practically hear it singing to me about how good it could be. We got in the car after the viewing, looked at each other, and both blurted out that we loved it. After some frantic rejigging of finances and exploring all the options with my mortgage advisor, we realised we could *just* get it. We offered low, they haggled, we ended up at 114500 with a 10% deposit. We completed November 2013 and moved in to the dump!! This is M2.

    Thankfully, most of the work is just cosmetic and also compensating for it being neglected for so long. Despite it being empty for so long, the previous owners had a gas boiler and central heating in stalled in 2003 - as it has been unused it is in great condition, and double glazing installed in 2010. However the kitchen was totally unusable - the actual carcasses were rotting - but luckily my Dad is a carpenter so we got a new kitchen from Wickes for fairly cheap, and zero labour costs apart from a few dinners, thanks Dad!! Unfortunately he lives abroad so we can't set him to work on the rest of the jobs that need doing

    So, we are chipping away bit by bit at the work that needs doing. The top 3 big jobs that need doing are - bathroom full replacement, downstairs loo replacement, and the flat roof on the brick store needs replacing. All of those are on hold as we had to use a CC to pay for the kitchen - so we are just having to put up with those for now.




    My what an essay! I don't blame you if you didn't read it all, but thought I'd explain it just in case anyone wants to know!
Page 1
    • misscousinitt
    • By misscousinitt 13th Mar 14, 12:50 PM
    • 3,613 Posts
    • 20,875 Thanks
    misscousinitt
    • #2
    • 13th Mar 14, 12:50 PM
    • #2
    • 13th Mar 14, 12:50 PM
    Wow what a story...

    Wishing you the best of luck with moving forward.

    MCI
    Mortgage Free x 1 03.11.2012 - House rented out Feb 2016
    Mortgage No 2: 89, 489.14 (20.06.2018)
    OP's to Date 6000

    Renovation Fund:736.95;
    Nectar Points Balance: approx 2.50 (after microwave purchase
    • turtlemoose
    • By turtlemoose 13th Mar 14, 1:03 PM
    • 1,527 Posts
    • 4,446 Thanks
    turtlemoose
    • #3
    • 13th Mar 14, 1:03 PM
    • #3
    • 13th Mar 14, 1:03 PM
    Both mortgages are in my sole name, OH has terrible credit history and 8k of debt that he is mostly ignoring. That's a whole other story! No interest on his debt though so at least it isn't increasing.



    On to the numbers then:

    M1 Rental house:

    IN: Rent 500
    OUT: Mortgage 263.77
    OP M1 45.23
    OP M2 120.00
    Surplus: 71

    The surplus stays in the M1's bank account. I already have 600 in there that I pretend doesn't exist - this is for the tax man, landlord insurance, gas service and repairs/improvements etc - the 71 adds to this pot each month.

    M2 Home:

    Joint account:

    IN: OH 940 + ME 1580 = 2520 plus childcare voucher of 243

    OUT: a lot......

    Mortgage: 593.23
    Council tax: 95.41
    Water: 20.40
    Gas&Elec: 156 (will reduce soon but high as new supplier)
    Virgin Media: 91.24 (I know this is awful, but we don't go out)
    TV Licence: 12.12
    Mobile x 2: 21.99
    Groceries: 200 (includes nappies, cleaning, the cat etc)
    Personal Loan: 187.76
    MBNA Card: 50 (interest free until Sept 2014, balance 4367)
    Lottery d/d: 18
    Life assurance: 10.84
    Nursery: 837.50 (or 670 if it is a 4 week month)
    DS1: 50 (we owe him 1745)

    TOTAL 2295.03

    Then for other things that we pay annually, I divide by 12 and put that much aside in a separate account to try to avoid a nasty surprise we can't pay:

    B&C Insurance: 12.00
    Cat (non food): 4.00
    Breakdown cover: 4.00 (required by my work)
    Car maintenance: 80.00
    Car tax: 2.50
    Car insurance: 55.00
    Merlin Pass : 21.00 (well worth it!)
    DS1 clothes etc: 20.00
    Christmas: 20.00
    OH driving: 40.00
    Holiday spends: 50.00

    TOTAL 308.50

    Also a regular OP of 52.77 to M2.


    TOTAL IN TO JOINT ACCOUNT: 2763
    TOTAL OUT OF JOINT ACCOUNT: 2603.53
    DIFFERENCE: 159.47



    The surplus is what we are using to do up the house. So bit by bit we are chipping away at what needs doing. One month might be a few tins of paint, the next month a piece of furniture, the next the flooring in the kitchen... and so on.



    So my TOTAL REGULAR OPS ARE:
    M1: 45.23
    M2: 172.77


    If nothing ever changed, this would have me saving a total of 33k in interest, and have M2 finished in 16.5 years and M1 finished in 20 years. To hit my target I need them both gone in 13 years. Yikes!


    My extra ops are going to be things like:
    • My own personal 'spends' money
    • Surveys
    • Cashback
    • Competition wins (won a pencil so far, doh!)
    • Selling things (and declutter too!)

    So no huge 10k payments or similar here! But I just think if I keep drip drip drip drip the pennies in to it, eventually they will all add up!

    I'm a fan of Tilly Tidies and have been doing that for over a year already...except I do it with my own personal spends account in to my DS's savings account! Maybe I should stop TT'ing in to there and pop it on the mortgage instead! It is ultimately his inheritance so he'd be getting it one way or t'other!


    I'd really like to get OH on board but he just isn't there yet. He loves the "mortgage free by XXX date" idea, he is amazed at the interest I'm saving us....but he's not prepared to give up any of his spends money or try to make any extra or tackle his own debt..... that one is a work in progress!!
    • turtlemoose
    • By turtlemoose 13th Mar 14, 1:34 PM
    • 1,527 Posts
    • 4,446 Thanks
    turtlemoose
    • #4
    • 13th Mar 14, 1:34 PM
    • #4
    • 13th Mar 14, 1:34 PM
    I'm a little obsessed with locoblade's op spreadsheet. I've been playing with it today, and looking what we might be able to op.

    On these assumptions:
    M1 continues to be tenanted with no major repairs. Baby #2 arrives first half of 2016. 12 months maternity leave, return to work full time. DS1 starts reception Sept 2016 and school 2017. Will have to pay full time nursery for bubba2 plus wraparound care for DS1 (nobody local to help). bubba 2 would start reception in Sept 2020 so we would have 2 x wraparound care to pay. Assume then we can start 400 OP on M2, that'd be paid of August 2027 (oh, one month after I turn 42!!!!). If we then OP'd 500 a month on M1 (max - nationwide) but saved another 400 and paid it off as a lump sum to finish, that'd be paid off Oct 2028 - I'd be 43.


    Not the plan!!!!


    I've *got* to think of a way to up the ante on this.
    • Welshlassie
    • By Welshlassie 13th Mar 14, 1:57 PM
    • 1,719 Posts
    • 2,996 Thanks
    Welshlassie
    • #5
    • 13th Mar 14, 1:57 PM
    • #5
    • 13th Mar 14, 1:57 PM
    Great going so far, sounds like you have a plan there that you can work to though.

    Good luck, will be following your progress.
    • quidsy
    • By quidsy 13th Mar 14, 2:11 PM
    • 2,024 Posts
    • 11,144 Thanks
    quidsy
    • #6
    • 13th Mar 14, 2:11 PM
    • #6
    • 13th Mar 14, 2:11 PM
    You have a great outlook, seem to be very focussed & have a sensible plan in place. but not to be a downer & not to intentionally insult your oh but he seems to be happy for you to stump up most of the money & effort for all this yet not make any changes to his own spending even with a large amount of personal debt.

    So I would suggest putting some kind of legal doc in place in terms of his share of the property should you split to prevent future arguments & also ensure you have a will & life insurance in place so that if something happens to you your childs financial wellbeing is protected. You may of course have already done this but i find people don't really like to think of the negatives whilst in a good relationship but regret the lapse when they go wrong.

    Best of luck with it.
    I don't respond to stupid so that's why I am ignoring you.

    2015 2 saver #188 = 45
    • turtlemoose
    • By turtlemoose 13th Mar 14, 3:11 PM
    • 1,527 Posts
    • 4,446 Thanks
    turtlemoose
    • #7
    • 13th Mar 14, 3:11 PM
    • #7
    • 13th Mar 14, 3:11 PM
    not to be a downer & not to intentionally insult your oh but he seems to be happy for you to stump up most of the money & effort for all this yet not make any changes to his own spending even with a large amount of personal debt.
    Originally posted by quidsy
    Don't worry, I'm more than aware of this! As it stands, OH's contributions to the joint pot are 72.87% of his net income (after CSA payment). Comparatively my contribution is 88.77% of my net income PLUS the childcare voucher comes from my salary sacrifice. I could put less in....but I don't want to, it's just not in my nature. I would rather be MF earlier and then loads of spare cash every month

    12 months ago he was contributing a mere 57% of his net income (the absolute bare minimum required to pay only essential bills, and no extras being put aside), so things have improved quite a lot!

    I can't drag him in to his lightbulb moment but we are on the road towards it (I hope anyway!). I wasn't completely fair, he does have 2 x payment plans with creditors (15pm and 1 pm) but he'll be dead before they are paid off at that rate......

    It is helping that the house needs doing up, I think. He will typically say "oh, I'd love to XYZ in the living room, let's do it this weekend!". I say "ok, great idea, I love it! That'll be 500. (consults spreadsheet) Assuming no unexpected bills, we can afford that in 19 weeks' time" (I always say weeks not months as sounds more ) Cue puzzled/disappointed look from OH. "however" muses turtlemoose, "if *you* were to put an extra ZZ in the pot every payday, we could afford it in only 2/3 months".

    I would suggest putting some kind of legal doc in place in terms of his share of the property should you split to prevent future arguments & also ensure you have a will & life insurance in place so that if something happens to you your childs financial wellbeing is protected.
    Originally posted by quidsy
    You are absolutely right. I have a death in service benefit from work - would be held in trust for DS, with my sister in control of it. My life assurance is the same, apart from paying off the mortgages first.

    I don't have a will, funnily enough I have been researching solicitors this week. I've got some annual leave in April and intend to book an appointment for then.

    OH and I have discussed something formal in place ref the house - we both agree we want something to protect our own interests (he got stung by the ex before with the house - I want to protect my own assets) so we are both on the same page about that....but we have been lazy and have not arranged it. From my limited research I believe a tenants in common agreement is what we need but I really do need to dedicate some time to sorting that out properly, and soon.
    • turtlemoose
    • By turtlemoose 18th Mar 14, 11:24 AM
    • 1,527 Posts
    • 4,446 Thanks
    turtlemoose
    • #8
    • 18th Mar 14, 11:24 AM
    • #8
    • 18th Mar 14, 11:24 AM
    I've been reading other mfw posts and feeling a bit disheartened by all the massive OP-ers. Great for them, but I feel a bit rubbish that I simply can't achieve that. Silly I know!

    I've been slacking on the decluttering front - so this week my task is to find 10 items to list on ebay at the weekend, and 10 items to take to the charity shop.
    • gallygirl
    • By gallygirl 18th Mar 14, 11:46 AM
    • 16,647 Posts
    • 109,921 Thanks
    gallygirl
    • #9
    • 18th Mar 14, 11:46 AM
    • #9
    • 18th Mar 14, 11:46 AM
    I've been reading other mfw posts and feeling a bit disheartened by all the massive OP-ers. Great for them, but I feel a bit rubbish that I simply can't achieve that. Silly I know!
    Originally posted by turtlemoose
    Yup, massive OP's are great, but we all started where you are - except mostly we didn't as we were all too stupid to realise what a difference a small OP would make. So, we're jealous of you, if that makes sense .
    A positive attitude may not solve all your problems, but it will annoy enough people to make it worth the effort
    Mortgage Balance = 0
    "Do what others won't early in life so you can do what others can't later in life"
    • Beckyy
    • By Beckyy 18th Mar 14, 12:08 PM
    • 2,755 Posts
    • 4,172 Thanks
    Beckyy
    HI, welcome! It sounds like you've had quite a journey already, and I'll wish you the best of luck on your MF one.

    What are the interest rates on the two mortgages?

    As a LL myself I would never OP my BTL mortgage whilst I had one on my own house really. Bearing in mind mortgage interest on rental properties is a tax deductible expense it doesn't really make sense to unless the interest rate is horrendous. Just my 2 pence but may be worth you OPing the money onto your own houses' mortgage rather than your BTL as you can only live in one house and that's the important one.
    • greent
    • By greent 18th Mar 14, 1:23 PM
    • 7,435 Posts
    • 75,393 Thanks
    greent
    HI, welcome! It sounds like you've had quite a journey already, and I'll wish you the best of luck on your MF one.

    What are the interest rates on the two mortgages?

    As a LL myself I would never OP my BTL mortgage whilst I had one on my own house really. Bearing in mind mortgage interest on rental properties is a tax deductible expense it doesn't really make sense to unless the interest rate is horrendous. Just my 2 pence but may be worth you OPing the money onto your own houses' mortgage rather than your BTL as you can only live in one house and that's the important one.
    Originally posted by Beckyy

    I'd agree with Beckyy here - we have a BTL (on int only) and I pay nothing off the capital each year - never have done and it's all offset against the income for tax purposes. Instead we've hammered our personal mortgage. May be worth looking at, it all depends on your figures - and, ultimately, your own viewpoint as to priorities x
    I am the master of my fate; I am the captain of my soul
    Repaid mtge early (orig 11/25) 01/09 124616 01/10 104927 01/11 89873 01/12 76317 01/13 52546 01/14 35356 01/15 12133 07/15 NIL
    BTL Mtge 12/16 69786. 2018 OPs (#18) 6484.71/7500
    Net sales 2018 713.44/1000 PAYDOX18 (#15) Done 18918.90
    • turtlemoose
    • By turtlemoose 18th Mar 14, 3:07 PM
    • 1,527 Posts
    • 4,446 Thanks
    turtlemoose
    My rental is 3.19%, my home is 4.89% (both fixed).

    The 45.23 a month OPing the rental at the moment will save 5k in interest over the term. If I add that to the my-house OPs, according to the spreadsheet it saves me...5k over the term.

    So I figured, either way, I'm saving 5k right?


    ALSO:

    The rental is with Nationwide so my OPs are building up a reserve that I could claw back if I had a long void period - current OP total is 1542 . I know they'd backdate the interest but it's a safety net if that property ends up sitting empty.


    Am I doing the right thing?
    • turtlemoose
    • By turtlemoose 18th Mar 14, 3:21 PM
    • 1,527 Posts
    • 4,446 Thanks
    turtlemoose
    Yup, massive OP's are great, but we all started where you are - except mostly we didn't as we were all too stupid to realise what a difference a small OP would make. So, we're jealous of you, if that makes sense .
    Originally posted by gallygirl

    thanks gallygirl, maybe one day I will be able to join the ranks of massive OPers, work my way up so to speak
    • HelenDaveKids
    • By HelenDaveKids 18th Mar 14, 3:47 PM
    • 3,156 Posts
    • 21,118 Thanks
    HelenDaveKids
    Well done and welcome.

    Nearly all of us started small, and as said, you have the fact your doing earlier as a huge positive. I only increased as I realised the affect.

    My only question would be, couldn't you redirect your lottery money into an op?
    Morgage till Nov 30 GOAL MFW Sept 2016
    Aug 11 - 100k Aug 2016.... It's GONE!!!!!
    2014 GOAL HIT 5 Stone! 2016 GOAL to be a MF marathon runner.
    "A goal without a plan is just a wish"
    • Hurdler
    • By Hurdler 18th Mar 14, 4:28 PM
    • 1,272 Posts
    • 5,176 Thanks
    Hurdler
    HI, welcome! It sounds like you've had quite a journey already, and I'll wish you the best of luck on your MF one.

    What are the interest rates on the two mortgages?

    As a LL myself I would never OP my BTL mortgage whilst I had one on my own house really. Bearing in mind mortgage interest on rental properties is a tax deductible expense it doesn't really make sense to unless the interest rate is horrendous. Just my 2 pence but may be worth you OPing the money onto your own houses' mortgage rather than your BTL as you can only live in one house and that's the important one.
    Originally posted by Beckyy
    Absolutely this. The friend who helped me get into the mind-set of renting out my first ever flat (pauses for reminisce ...) practically battered into me to have the BTL just washing its face while I had my own mortgage. That's why it doesn't figure ANYWHERE in my plans to overpay. It's like it isn't even there!

    (except my tenant is doing my head in a little... but that's a whole other story!)

    Also - I started with teeny overpayments - a hundred here, then half a monthly amount there until I ended up in a very well paid job which was a HORROR on every single level. The ONLY good thing I got from that was being able to throw money at the mortgage for nine months before I quit to take a job that paid less than half of what I was earning, but I sure as hell am a lot happier. Until players drag their stupid matches on past midnight when I am working a night shift. Then I want to decapitate them with their own tennis racquets... but that's a whole other story!
    Last edited by Hurdler; 18-03-2014 at 4:31 PM.

    Mortgage @ March 2008: 194,965 ; Lightbulb Moment: July 2011: 164,926; End Date: March 2033

    MORTGAGE FREE: September 2015
    • turtlemoose
    • By turtlemoose 18th Mar 14, 4:31 PM
    • 1,527 Posts
    • 4,446 Thanks
    turtlemoose
    Hi HDK, OH wants to do the lottery ....and I must admit I kinda like it too.... we ended up reaching a compromise, as we used to spend double that (oops) - so we halved it, we're still in the game but not spending as much iyswim.

    Just had 3 from pinec0ne so shall cash that in at home tonight and ping it off as an extra OP , yay!!
    • turtlemoose
    • By turtlemoose 18th Mar 14, 4:33 PM
    • 1,527 Posts
    • 4,446 Thanks
    turtlemoose
    But I save 5k either way, so why is it better to OP on my-house instead of tenant-house - it's my equity, my interest savings, no matter which property?

    I feel like I'm missing something REALLY obvious here....
    • edinburgher
    • By edinburgher 18th Mar 14, 4:37 PM
    • 11,245 Posts
    • 60,350 Thanks
    edinburgher
    Welcome

    A couple of questions:
    • Are you paying interest on the personal loan?
    • Do you have the money saved to pay off the 0% card?

    it's my equity, my interest savings, no matter which property?
    I thought mortgage interest was tax deductible for a BTL? So isn't it 'cheaper' to borrow BTL money (assuming identical headline mortgage rates)?
    • Hurdler
    • By Hurdler 18th Mar 14, 4:44 PM
    • 1,272 Posts
    • 5,176 Thanks
    Hurdler
    Welcome

    A couple of questions:
    • Are you paying interest on the personal loan?
    • Do you have the money saved to pay off the 0% card?



    I thought mortgage interest was tax deductible for a BTL? So isn't it 'cheaper' to borrow BTL money (assuming identical headline mortgage rates)?
    Originally posted by edinburgher
    Yep - that's my understanding...at least, the accountant makes me hang on hold for an utterly interminable amount of time to get a statement of interest from my mortgage lenders to apply against the income!

    Mortgage @ March 2008: 194,965 ; Lightbulb Moment: July 2011: 164,926; End Date: March 2033

    MORTGAGE FREE: September 2015
    • turtlemoose
    • By turtlemoose 18th Mar 14, 5:01 PM
    • 1,527 Posts
    • 4,446 Thanks
    turtlemoose
    ohhhhhh the penny has dropped, finally. More interest on the BTL is off set by tax relief, therefore the OP works harder on the residential mortgage, and of course my spreadsheet doesn't take this in to account as it does not include my tax bill.

    edinburgher: Yes there is interest on the loan (4.9%). The credit card - before the interest free ends, I've already been accepted for the new Nationwide 0.75% fee card, so I'll be transferring 2357.32 of it over there (The maximum I can). The balance will be 1835.36 when the 0% ends - I'd planned to tart it elsewhere on to 0% again. I'll start applying for the cards early, and if it looks like I'm not going to get a 0% then I will stop the mortgage OPs and throw them all at the credit card instead. However I'm pretty confident I'll get a 0% when I need it, Santander write to me often practically begging me to take a credit card with them!
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

189Posts Today

2,009Users online

Martin's Twitter