Getting rid of a London-sized Mortgage

Tropically · 14 February 2017 at 3:37PM

Well, I am still feeling pretty down this month. I think I have £70 to get me through until the 25th. I had some small wins though. One reason why I spent so much last week is because we had been saving money by eating down our cupboards and they were totally bare. We had a tin of bamboo shoots, ackee and condensed milk and no other tins! That would make a very nasty meal mixed together. Anyway, we have put together a big Sainsburys order for lots of tins and necessities and we used nectar points to reduce it down from £100 to £50. We also looked for a lot of deals – almost accidentally got a free sample of cat food when we don’t have a cat! It arrived last night and my boyfriend also bought us steak for a romantic dinner tonight. He was really pushing for us to go out somewhere to make it special but honestly I just like spending time with him anywhere, especially at home. So staying home and eating steak is what we will be doing! Yum!

We have signed up for a veg box which I love. I think it’s very good value, as well. About £14 per week with 7 or 8 varieties of seasonal, organic vegetables – no potatoes. It has so far been a good supply and although I hope we don’t get veg-overload, I have been making a number of soups. I love making soups in the winter because it heats the house as well as cooking and then making me feel warm too. My boyfriend says this is a false economy because I could just heat the house and cook food for a less amount of time to get the same benefits. I have been very good this week and not been out to eat naughty food at all.

I am so waiting for spring! My parents got me a subscription to rocket gardens (after I learned about it from a MFW here!) and I can’t wait to plant everything. I want to measure how much I actually get from my garden to see if it is a net positive. It probably won’t be, but keeps me out of the bars at least.

My take home pay is going to go down, I am increasing my pension contributions to 10% because although I was contributing 5% matched before, it wasn’t going to be enough. I have tried to help my boyfriend overcome inertia with his current savings account which was getting something silly like 0.05%. He has now opened a S&S ISA and also has an appointment for a Santander Regular e-Saver where he can contribute up to £200 per month for 3% interest. It will be a good cash-on-hand account. He already banks with Santander so the actual effort required day to day for the change is minimal. He has set up direct debits for saving all of his new salary plus he can have an extra £100 for spending (I decided… haha).

No additional overpayments this month. None anticipated, I’m just hoping to get through the month without taking out of the ‘leftovers’ fund.

cookie9 · 14 February 2017 at 6:25PM

We all have good and bad months. Enjoy your steaks tonight. We are having a meal at home too tonight. Great food and wine for a lot less than a restaurant!

freshcotton · 14 February 2017 at 10:40PM

Hi, enjoyed reading your diary. You're making great progress. Suppose it must be difficult to start with such a big amount, but to get on the property market in London is a great achievement.

We have similar income amounts to yours, but don't spend as much, not that spending is a bad thing of course. £500 overpayment is very impressive.

I also just want to say how admirable it is that you have taken a refugee into your home, it reminds us that it's not all about money in the end.

Tropically · 17 February 2017 at 10:31AM

freshcotton wrote: »

We have similar income amounts to yours, but don't spend as much, not that spending is a bad thing of course. £500 overpayment is very impressive.

I follow your thread with interest! But I have no idea how you manage to spend so little! I love to do things and get antsy if I spend a full day in the house. Even though our house is very nice, I feel like when I am stuck in side my whole day is taken up by chores. I do have some indoor hobbies, like sewing, but I am out 4-5 days a week visiting friends, playing board games etc. When I try to reign it in, I feel sad. I should have people over more, though. That's cheaper and just as nice.

I resist a very very strong urge to buy a takeaway yesterday and as my boyfriend was out for some work leaving drinks, he also resisted the urge to get a kebab. We have a mysterydine this weekend somewhere quite nice and a house full of wine. I did not resist the urge to buy tickets to the Hokusai exhibit.The Great Wave off Kanagawa is being shown at the British Museum for the first time in a while. I also made lunch and breakfast every day this week except for my weekly coffee with my love, and another mysterydine breakfast. I got £80 back from work expenses which was a nice bonus and should see me through to the end of the month. I will make it!

I have put some things on gumtree and if they don't sell then I will try and stick them on ebay. How do I find these magical facebook groups that other people have such good luck with?

In February I am going to go back to cash for entertainment only, it was much more productive and I saved a tonne without reducing fun.

With respect to housing a refugee, I really believe in karma and that we should help other people out.

Tropically · 24 February 2017 at 2:13PM

Yay, it is payday!!

I had a decent week, I did not eat out once! Had our lovely mystery dine last Sunday and kept close to budget. I had a rough day yesterday, with a client yelling at me in a meeting. Everyone warned me and said that he does this, and to not take it personally. Nonetheless it still caught me off guard to be berated within 30 seconds of meeting someone. I have been ruminating over it constantly since. I need to meditate to get it out of my head.

No interest on the things on gumtree, except someone who wanted to trade. I have some items on ebay, and there is one which has a bid on it! There is another one that has a watcher. I'm hoping that it sells because I carried it from my parents housing thinking it would be a good seller. I might put some more items on today, knowing that it'll be pay day for most in the next 10 days.

This week I also paid off our 0% loan for the kitchen. Didn't pay any interest on it, and was stoozing in my Santander 1,2,3. Unfortunately since our balance has dropped on the 1,2,3 account, I'll have to see if it's worth keeping it given the new low interest rate.

I cut my boyfriends hair, so saved £5, woo.

I also made a £809 overpayment, which I think brings our LTV to about 29%. Although it works out a bit funny because we can only reduce our monthly amount, rather than our term, I think we've cut six months off our mortgage repayment.

It's very strange to think that two overpayments (£500 for Jan, $709 for Feb), about equal to 1 monthly repayment, at the beginning of the mortgage could basically mean saving £8100 in the future. Am I doing the math right?? My personal calculator says this but MSE's says I don't save anything. Maybe I've made a mistake in my calculator.

Tropically · 2 March 2017 at 10:12AM

Two wins this week.

I participated in some market research for £100 cash and also sold two items on ebay for about £40 profit. One was an item we found, so that's really great. I sold a third item but the buyer hasn't paid and it's been a couple of days.

I have my eye on some curtains, so I'm trying to make up the money for the curtains in extras.

KittyMoma · 2 March 2017 at 4:39PM

Hello, here to follow your diary. Good idea eating through your cupboard. I should do this. And the freezer too

Tropically · 22 March 2017 at 11:46AM

Almost month end, and had a pretty good month. Even though I prefer using debit cards to track my spending, it is so much easier to be good on the budget when just using cash for entertainment. I had one evening when I went a bit cray-cray but didn't do too much budget stress. It looks like I will have about £150 left over to put into the overpayment amount, provided I don't spend too much by Friday. I am out every night until then...

I am going on a friend-date with someone I met out once but am hoping to build a friendship with. Then on Thursday I am going to a restaurant opening. I can hopefully keep these to a reasonable budget.

I do still need the curtains. They emailed me a discount code of 5%, I might use some tricks to get it down further. I will provide a proper update after Friday!

mfmaybe · 23 March 2017 at 11:27AM

Hi Tropically, just had a read through your diary. Our mortgage was the same size as yours when we moved here, but we only paid a 10% deposit. It's now at £200k but it has taken us 9 long years, so your plans are admirable! We don't live anywhere near London either.

I knew you were going to say Cayman! Having lived there myself and then also had family there, I understand the lure of the cheap holiday. Sadly our free board and lodgings are no more

On the mortgage overpayment vs term, I had a similar issue. We have been overpaying by about £300/month for a few years. When I was remortgaging this time, I noticed my term hadn't gone down which confused me immensely. Essentially though, it's due to a mix of customer fairness and risk in lending. On the fairness point, basically any mortgage application assumes you will keep the mortgage for the whole life of the balance (even though in reality most people take out a new product after the cheap rate ends). So, you agree with your bank to have say 25 years to pay it off. You overpay for a few years and they reduce your term by (for example) 5 years as a result. Then you have children. Your income goes down and you have childcare costs. Suddenly meeting even the minimum payment is tough; and that's higher than it might have been because you now have 5 years less to get the balance paid off. In those circumstances a customer might say "well that's not fair, we had a contract for a 25 year repayment term, why do I suddenly have to pay it off 5 years early"? On the risk part, it's the flip side of the same coin. The bank has decided you can afford the repayment at the current rate. They haven't scored you on whether you could afford more each month, so their risk would be greater - in other words more people will default with a higher payment. So - overall, that's why reducing the term has to be a new application. Even though I can overpay as much as I want, when I want (currently on SVR), it still doesn't change the term. So that means at the end of a fixed interest period, when the new payment is produced,it would be lower than if you had never overpaid. It does of course reduce the interest you pay and still has the same benefit; but you do need to keep an eye on the level of overpayment.

That said, it doesn't explain why your bank make it so complicated regarding overpayments. Do they calculate daily interest? That's pretty important; if not then you must find out when they calculate interest and time your payments to be just before that point.

Will follow with interest, am hoping to start a MFW diary of my own soon as plans are afoot!

Tropically · 30 March 2017 at 1:52PM

mfmaybe wrote: »

I knew you were going to say Cayman! Having lived there myself and then also had family there, I understand the lure of the cheap holiday. Sadly our free board and lodgings are no more

It's such a gorgeous place and the lifestyle is so good! The free board is key to having a cheap holiday there!! My sister is a fancy-pants corporate lawyer so I don't mind eating her food and driving her car, given that she wouldn't move back here as the salaries are "too low." :rotfl::(:(:(:(

mfmaybe wrote: »

On the mortgage overpayment vs term, I had a similar issue. We have been overpaying by about £300/month for a few years. When I was remortgaging this time, I noticed my term hadn't gone down which confused me immensely. Essentially though, it's due to a mix of customer fairness and risk in lending. On the fairness point, basically any mortgage application assumes you will keep the mortgage for the whole life of the balance (even though in reality most people take out a new product after the cheap rate ends). So, you agree with your bank to have say 25 years to pay it off. You overpay for a few years and they reduce your term by (for example) 5 years as a result. Then you have children. Your income goes down and you have childcare costs. Suddenly meeting even the minimum payment is tough; and that's higher than it might have been because you now have 5 years less to get the balance paid off. In those circumstances a customer might say "well that's not fair, we had a contract for a 25 year repayment term, why do I suddenly have to pay it off 5 years early"? On the risk part, it's the flip side of the same coin. The bank has decided you can afford the repayment at the current rate. They haven't scored you on whether you could afford more each month, so their risk would be greater - in other words more people will default with a higher payment. So - overall, that's why reducing the term has to be a new application. Even though I can overpay as much as I want, when I want (currently on SVR), it still doesn't change the term. So that means at the end of a fixed interest period, when the new payment is produced,it would be lower than if you had never overpaid. It does of course reduce the interest you pay and still has the same benefit; but you do need to keep an eye on the level of overpayment.

That said, it doesn't explain why your bank make it so complicated regarding overpayments. Do they calculate daily interest? That's pretty important; if not then you must find out when they calculate interest and time your payments to be just before that point.

Will follow with interest, am hoping to start a MFW diary of my own soon as plans are afoot!

That's a really really good way of looking at it. And it does make sense - I agreed one thing with them and the right away want to change the terms of our agreement. In my head, we only have a two year agreement until the fixed term runs out, but in reality both of us (the bank and me) need to treat it like the 25 year partnership that it could be! I really must look into when they charge interest.

I look forward to reading your diary!

My boyfriend started his new job, which has caused some cash flow issues because they got the sort code wrong on his pay! :eek: It will be sorted in a few days, but because of that plus his celebrating his new job (a bit too much), we're a bit disjointed. I'm not sure when we can get the monthly overpayment in but it won't be until we've got his salary in the bank.

I have been selling some bits and bobs on ebay. I have net £56.33 and put that into the overpayment account, to build up to £500. I also completed some "retail intelligence" price checks, which has net me £15.55. Plus I have also been selling used makeup (go figure) and when people pay up, it should be £50 or so. I have a lot of branded makeup - urban decay pallets etc. and apparently some people don't mind if it's gently used.

We have the 'budgeted' £500 OP sitting in the joint account to be applied when my boyfriend's cash flow issues are resolved. The skimmed mortgage overpayment is sitting at £268. I hope we can apply it soon. After that, I might change our joint account to someone else. We only got £0.02 interest last month on a balance of £3,000 after you take the £5 Santander fee into account.

I am still being very well behaved on the entertainment front, using cash! If I get a chance, I'll post much budget vs actuals when I calculate it.

Getting rid of a London-sized Mortgage

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