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  • FIRST POST
    • labradorlove
    • By labradorlove 21st Feb 18, 8:46 PM
    • 31Posts
    • 31Thanks
    labradorlove
    Journey to a mortgage free future
    • #1
    • 21st Feb 18, 8:46 PM
    Journey to a mortgage free future 21st Feb 18 at 8:46 PM
    After almost a year of reading peoples mortgage free diaries, I've finally decided to start my own! I'm not very good at sticking to things, especially diaries! but hopefully by starting this thread it will keep me on track of my own mortgage free journey

    Me and my fiance bought our first home together on the 2nd June 2017! It's just me, him and our furry child at the moment, who is laid at my feet while I post (the dog not my DF)

    We put down a 13,500 deposit on a 135,000 3 bed semi-detached house, not a lot of money, but we worked very hard and it got us on the property ladder with a good interest rate.

    Mortgage taken out 121,500 at 2.21% (fixed for 2 years) with Santander with a term of 27 years and 3 months

    I'd never considered over paying before my plan was to get on to the property ladder and that's that. But then while house hunting and reading all these diaries and journeys it just made sense to put our disposable income to some good use!! We don't drink a lot, neither of us smoke, neither of us have any debts apart from the mortgage we now have together, we love to save and there are no children on the scene yet! So what better time to start cutting that mortgage down?!

    I wanted to start overpaying straight away but they aren't lying when they say the first 6 months are the most expensive!

    So we managed to make our first over payment last month of 200, I was so excited ringing them up I couldn't wait for payday, such a good feeling knowing you're one step closer to paying it off, even if it's one out of a thousand steps!

    200 is the monthly target I am setting myself for this year, so anything I manage over is a bonus So far this month 100/200 has been paid. Waiting for DF payday to pay his half team work makes the dream work and all that.

    Looking forward to sharing my journey, and hearing about everyone elses

    Going now to get a nice early night before work and the gym tomorrow!

    Labradorlove x
    Last edited by labradorlove; 24-04-2018 at 8:30 AM. Reason: spelling grr
Page 2
    • GoingOn30
    • By GoingOn30 22nd Apr 18, 11:03 PM
    • 56 Posts
    • 42 Thanks
    GoingOn30
    350 on clothes for a holiday??! That would be my total spend on clothes for an entire year!
    Maybe you can sell some older clothes on ebay/fb to help recoup your losses?
    Keep up the saving, it will be so worth it in the end. Are you saving for a wedding too?
    • labradorlove
    • By labradorlove 23rd Apr 18, 10:30 AM
    • 31 Posts
    • 31 Thanks
    labradorlove
    350 on clothes for a holiday??! That would be my total spend on clothes for an entire year!
    Maybe you can sell some older clothes on ebay/fb to help recoup your losses?
    Keep up the saving, it will be so worth it in the end. Are you saving for a wedding too?
    Originally posted by GoingOn30

    I already had a clear out about 6 months ago, I'm not ready to depart with any more yet! I did win at bingo last weekend, a whole 265 so that went towards the cost of holiday clothes


    I am not saving for a wedding as we both just want it to be us two no fussing
    Mortgage left: 119,341
    Car savings: 2,500/500
    OP Target 2018: 2,400/400
    MBNA Card: 3,800/0

    • labradorlove
    • By labradorlove 23rd Apr 18, 11:19 AM
    • 31 Posts
    • 31 Thanks
    labradorlove
    So, I have recently taken out an MBNA All-In-One money transfer card, to pay for a new garden. It's 0% interest over 30 months for 3,800. I didn't really want to but we've decided a new garden is a must. It's something we've spoke about since moving in and originally we were going to save and then have it done (the most sensible option). But since our furry pup joined the family and dug up half of it and turned it into a swamp, we've decided it needs to be done sooner if we want to enjoy the summer in our garden.


    NTS - Must remember to set up a direct debit as soon as the card arrives


    We are planning to pay back 200 a month over 20 months instead of the 30 we've been allowed, which is do-able with our disposable income. It will however make over payments on the mortgage that little bit more of a challenge, but it only motivates me more . Plus I'm looking at it as an investment too. Where we live now is not our forever home so I'm hoping it will increase our house value if we were to sell in the future.


    Putting mortgage overpayments on hold until I am back off of my holiday, then I can get my finances in order, hoping to have money left over from allocated holiday spends too so hopefully I can over pay with what's left.
    Mortgage left: 119,341
    Car savings: 2,500/500
    OP Target 2018: 2,400/400
    MBNA Card: 3,800/0

    • kev2009
    • By kev2009 23rd Apr 18, 4:26 PM
    • 213 Posts
    • 306 Thanks
    kev2009
    Hi Labradorlove,

    Interesting diary, good luck with your MF endeavour.

    Just thought i'd mention it, I presume you have put money aside as a emergency fund? To help protect against any unforeseen costs or job loss?

    I am in a similar position to you, I have about the same amount of mortgage left to pay as you, I had to take mine over 30 years as I wouldn't fit in the 25 year term I ideally wanted, I suspect that was mainly due to there fact i'm single and therefore only 1 income so they probably went on the side of caution and chose a longer period with a lower rate in the hopes I could have some money left over to cover any unforeseen issues arising. I fixed mine for 5 years and that runs out in 2020 so with the potential theories of what the interest rate will be by then, some people I've read online (not on the forums but elsewhere) are predicting rates will be 3 - 4% but again its all guess work and no one knows for sure.

    I am also with Santander so will be interesting to see what the process is at the end of your 2 year fixed, i'm unsure what happens then. I mean i know i will revert to the variable rate but I believe Santander will write to advise of my options i.e to fix for another x years but i'm unsure if its as simple as logging in online, viewing the offer and going accept or if you need to provide some paper work etc like when you first took out the mortgage and if they need to re-value your house etc. Never been through this before as this is first house I've owned.

    I haven't paid any over payments at all so far, I was toying with the idea of do I overpay OR do I pay what I would overpay into a different account and then later on when my fixed term ends look to pay a lump sum when no limit on what could over pay or just let the accouont build up until it reaches the amount I owe and then pay it all off. So far I've been working on getting some money put aside to cover unforeseen issues, mainly from any potential job loss and taking a while to find a new role.

    My current plan is, if all things look ok, to make a over payment in a lump sum next year and then to do the same the following year to try and counteract the rate rise so that i'm not suddenly needing to find significantly more money each month.

    Also incidentally, when you make your over payment, are you paying it off from the capital or the interest? I believe the best way is to pay it off from the capital but I've yet to actually do this so can't say for certain.

    Best of luck and keep your updates coming, will be interesting to follow

    Kev
    • labradorlove
    • By labradorlove 24th Apr 18, 8:15 AM
    • 31 Posts
    • 31 Thanks
    labradorlove
    Hi Labradorlove,

    Interesting diary, good luck with your MF endeavour.

    Just thought i'd mention it, I presume you have put money aside as a emergency fund? To help protect against any unforeseen costs or job loss?

    I am in a similar position to you, I have about the same amount of mortgage left to pay as you, I had to take mine over 30 years as I wouldn't fit in the 25 year term I ideally wanted, I suspect that was mainly due to there fact i'm single and therefore only 1 income so they probably went on the side of caution and chose a longer period with a lower rate in the hopes I could have some money left over to cover any unforeseen issues arising. I fixed mine for 5 years and that runs out in 2020 so with the potential theories of what the interest rate will be by then, some people I've read online (not on the forums but elsewhere) are predicting rates will be 3 - 4% but again its all guess work and no one knows for sure.

    I am also with Santander so will be interesting to see what the process is at the end of your 2 year fixed, I'm unsure what happens then. I mean i know i will revert to the variable rate but I believe Santander will write to advise of my options i.e to fix for another x years but i'm unsure if its as simple as logging in online, viewing the offer and going accept or if you need to provide some paper work etc like when you first took out the mortgage and if they need to re-value your house etc. Never been through this before as this is first house I've owned.

    I haven't paid any over payments at all so far, I was toying with the idea of do I overpay OR do I pay what I would overpay into a different account and then later on when my fixed term ends look to pay a lump sum when no limit on what could over pay or just let the accouont build up until it reaches the amount I owe and then pay it all off. So far I've been working on getting some money put aside to cover unforeseen issues, mainly from any potential job loss and taking a while to find a new role.

    My current plan is, if all things look ok, to make a over payment in a lump sum next year and then to do the same the following year to try and counteract the rate rise so that i'm not suddenly needing to find significantly more money each month.

    Also incidentally, when you make your over payment, are you paying it off from the capital or the interest? I believe the best way is to pay it off from the capital but I've yet to actually do this so can't say for certain.

    Best of luck and keep your updates coming, will be interesting to follow

    Kev
    Originally posted by kev2009

    Hi Kev,


    Thank you for reading! In regards to the emergency fund, it's only something we've spoke about this month after reading other diaries on here. So I opened a savings account with Santander, as we have a 123 select account they have given us 5% aer fixed, we have only put in 20 each this month with the holiday being this month too, but we all have to start somewhere.
    Before reading on here I naively assumed I'd be covered by Life Insurance if either of us lost our job but I can't remember what type of life insurance we have I will have to read up on it.


    The rising interest rates are something that I do think about it makes me wish we'd have tied in for a few more years but being FTB ourselves we weren't really that clued up, we just went with the lowest interest rate. It will be interesting to see what they offer us in/before June 2019 as we should be 85% LTV then so hopefully the rate will be worth fixing for 5-10 years. But I'll keep updating my diary then you might have a better understanding for when yours ends too!


    And with your overpayments I think it depends on how much you're looking to over pay. From what I've read, it's better to overpay as soon as you can afford to as it knocks interest off there and then whereas if you leave it a year, that's a years worth of interest you've built up. With ours, we have an overpayment limit of around 12k a year which we wouldn't come close to reaching unless our circumstances changed. But it might be better for you to reach your limit then put anything over to the side for that lump sum after your fixed rate ends/until you have enough to pay the full mortgage. We pay off the capital and they give you an option to reduce your monthly payment or reduce your term time but we chose term time.


    Good luck to you on your journey and I hope you find the best way to be mortgage free
    Mortgage left: 119,341
    Car savings: 2,500/500
    OP Target 2018: 2,400/400
    MBNA Card: 3,800/0

    • deckarkhipova
    • By deckarkhipova 25th Apr 18, 3:32 AM
    • 3 Posts
    • 5 Thanks
    deckarkhipova
    keep going and good luck!!!
    why a signature?
    • kev2009
    • By kev2009 29th Apr 18, 5:10 PM
    • 213 Posts
    • 306 Thanks
    kev2009
    Hi Kev,


    Thank you for reading! In regards to the emergency fund, it's only something we've spoke about this month after reading other diaries on here. So I opened a savings account with Santander, as we have a 123 select account they have given us 5% aer fixed, we have only put in 20 each this month with the holiday being this month too, but we all have to start somewhere.
    Before reading on here I naively assumed I'd be covered by Life Insurance if either of us lost our job but I can't remember what type of life insurance we have I will have to read up on it.


    The rising interest rates are something that I do think about it makes me wish we'd have tied in for a few more years but being FTB ourselves we weren't really that clued up, we just went with the lowest interest rate. It will be interesting to see what they offer us in/before June 2019 as we should be 85% LTV then so hopefully the rate will be worth fixing for 5-10 years. But I'll keep updating my diary then you might have a better understanding for when yours ends too!


    And with your overpayments I think it depends on how much you're looking to over pay. From what I've read, it's better to overpay as soon as you can afford to as it knocks interest off there and then whereas if you leave it a year, that's a years worth of interest you've built up. With ours, we have an overpayment limit of around 12k a year which we wouldn't come close to reaching unless our circumstances changed. But it might be better for you to reach your limit then put anything over to the side for that lump sum after your fixed rate ends/until you have enough to pay the full mortgage. We pay off the capital and they give you an option to reduce your monthly payment or reduce your term time but we chose term time.


    Good luck to you on your journey and I hope you find the best way to be mortgage free
    Originally posted by labradorlove
    Hi labradorlove,

    Many thanks.
    Similarly to you, when i bought my place, i was a FTB and I was looking at mortgages and tbh I was immediately thinking 10 year fixed sounds the best way to go as I will know exactly what i'm paying each month for 10 years but my mortgage adviser advised me to go for 5 years due to:-

    1) Interest rates were reducing and was no signs of them going back up and if they did it would be a small amount.
    2) My situation could change as in maybe come into some money through inheritance and then If i wanted to pay the mortgage off i'd have to pay a early repayment fee which i forget exactly but its a few thousand pound just for the privilege of paying my mortgage off - didn't sound appearing.

    So i decided to take his advise as he does this for a living and fixed for 5 years. Like yourself, I have a similar yearly limit and also like you there is no way I can save that amount each year, based in my single income, so my plan has been to save what I can each year and then in year 4 I want to pay the full 10% off and then a couple of months before my fixed rate ends in year 5, to then if possible pay off another 10% (or whatever I can afford). I will obviously keep an eye on interest rates and decide closer to the time but my thinking is IF i can pay these 2 over payments, that will go some way to offsetting the potential interest rate rise and hopefully meaning I continue to pay the same amount as I do now each month (or less ideally).

    When I call up Santander i'll have to seek there advise as I just thought IF i overpay 10% and say keep the term the same and the monthly payment the same, i guess the actual monthly payment will reduce and i'd effectively be making a over payment each month then? Will need to read a bit more about this... I was hoping to overpay and keep the term the same and then continue to pay the same each month however if it means i'm paying x over payment per month that will reduce my second years amount I can pay so will have to consider it.

    My overall plan is to finish my mortgage in 15 - 20 years, i don't want to go the full 30 year term if i can avoid it.

    I don't have any cover if i'm out of work, it is something I've considered but I believe they will all want probably 20 - 30 quid a month? to enable me to keep a income sufficient to enable me to cover my mortgage + bills each month so part of me thinks am i better just building up savings to cover it and not pay the 20-30? or maybe more? I mean if I pay into it for 5 years and i'm still working i could of had that money in my hand, I guess like any insurance its a gamble as to whether you benefit or not..

    Enjoy your Holiday!

    Kev
    • kev2009
    • By kev2009 21st May 18, 5:09 PM
    • 213 Posts
    • 306 Thanks
    kev2009
    Hi Labradorlove,

    How are things going? Any updates?

    I started looking at the over payment side and having it reduce my mortgage payments and then making a 1 off over payment each year and for me it works out i'd owe an extra 500-600 quid. Not the end of the world so i'm now considering making a small 1 off over payment this year, no where near the 10% amount but it should be enough to get me nearer to my original figure i was predicting i'd owe at the end of year 5 until i realised i was reducing the term i believe.

    Still got a few months to decide, got a few large bills coming up over the next few months so will have to play it by ear.

    Looking forward to your update.

    Kev
    • freedomby30
    • By freedomby30 22nd May 18, 10:31 PM
    • 38 Posts
    • 73 Thanks
    freedomby30
    We were 22 too once!
    We were 22 when we bought our first house. 151k with a 120800 mortgage. Everyone thought we were nuts, even before we told them about our overpaying.

    We are now 3 and a half years on and only 5,999 away from having paid off a third of our mortgage!!!!!! (and have 301.94 sat there to op tomorrow!)

    We would have paid alot more but we have done costly repairs to the property and accidentally bought a second house

    Our plan is to pay off the mortgage by age 30 hence the user name!

    Well done on the cheap interest rate, ours is 4.09% can't wait to reduce it next year as we are just about to cross the 60% ltv bracket

    Anyways welcome and good luck!!
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