Chapter 3: the large London mortgage

lessavyfav · 15 August 2017 at 9:32PM

Hello!

I've had a few diaries before, never had too much by way of debt - but now myself and partner have a giant London-sized mortgage of £499,000.

We're first time buyers and it's much bigger than anyone else's mortgage I've read on here — frightening. But the truth is, we're double-income, no kids, earning decent money between us so the mortgage is being comfortably paid each month (I say that, two months in!). I'm feeling good about it all.

We have a 35 year mortgage, 2 years fixed at 2.14% but I'd like to reduce the term by a lot more if possible. So far we've done £350 OP and I'd like to do the same again this month. Very crude calculations tell me if we continue to do this over the term at the same interest rate, we can wipe off more than 8 years. But that doesn't feel enough for me, I want to do it even sooner!

We have plenty of renovations to do, a car to buy and plans for a kid or two, so we won't be in such a fortunate position over the next few years, but that's even more motivation to overpay while we can.

Want to keep this diary to keep me accountable, by way of adding extra payments doing surveys, sweeping spare money at the end of the month, keeping an eye on the food and entertainment budget, and my least favourite thing: selling things on ebay. Must remember to build and keep aside the emergency fund too!

Just signed up to prolific and am already a yougov participant (but cashed out £50 not that long ago so back to square one!). Lots more to do!

Tropically · 15 August 2017 at 10:04PM

Hello fellow Londoner!! I too have a large London mortgage. Houses are just not affordable, and renting is pretty awful! My overall happiness is probably 1.5x what it was renting. You can do this! Look, you've already knocked some off! You could post a Statement of Accounts if you wanted. We've taken in a lodger which has been a nice boost over the last couple months.

shangaijimmy · 16 August 2017 at 8:23AM

Shiny new diary...

Spend an hour on a spreadsheet (it'll become your prized possession), go through some permutations and make goals. I like to have a monthly as its great for motivation, and then a 6month challenging goal, 1 yr goal, 2 yr, 5yr etc.. I try to tie in my 2yr goal with the current mortgage deal. Bite sized chunks doesn't make it seem so big! Then get yourself prepped to join the 2018 challenge as the sense of community is great (not to mention seeing your progress in green).

You've already made a great start, you've started a diary and have made plans. Welcome aboard, you'll be addicted to making £5 OP's soon enough!

lessavyfav · 18 August 2017 at 9:52PM

Tropically - thanks for dropping by, I just had a read of your diary and you are doing brilliantly! I think getting a lodger is a fantastic way to pay off things sooner, but I can't imagine living with other people other than my partner these days. I'm too much of a weirdo :rotfl:

shangaijimmy - good advice there, I tend to be good at starting a spreadsheet but not so good at keeping it updated. We should definitely be setting shorter term achievable goals for overpayments. I'll take a look at the 2018 challenge for sure, thanks for the tip.

this week I..
- Made another £350 payment the same day I wrote my last post, and will no doubt put a little more in before payday depending on how much we spend on holiday the days before!
- Did okay with lunches this week: 3 out of 5 lunches brought in from home with the other days going el cheapo. But could do better.
-found out the nroadband bill is going up next month, disappointed with our supplier doing this for the second time in two years. It sucks they don't reward you for your loyalty so might look elsewhere.

Staying in tonight, and no plans for tomorrow other than maybe finally getting out in the garden, which is overdue. Sunday will be a day out already paid for, so pretty low key and low cost.

lessavyfav · 4 September 2017 at 7:46PM

Last month we managed to make £350 overpayment but it was a very expensive month — we have a lot on in September but most of it paid for already, so hopefully this month is a little better!

We've had someone to come round to give us a quote on some work on the house - we most definitely need walls/ceilings smoothed out, some brickwork rendered, new electrics and new radiators (plus moving them around). It's not going to be cheap but will mean we can finally begin to put up our shelves, art, etc. We've held off because our walls are glossy and gross, and all patchy.

I'm going to tackle my first DIY job soon - painting our front door! I'm petrified of screwing it up, but I'm sure it can't go too wrong, can it?

Almost 70% paid off my balance transfer and should be on schedule to pay it off by January - cannot wait till I get that £150 per month to use to save/overpay/spend on myself!

Got to buckle down this month, more homemade meals, less drinks after work!

SavvySaver007 · 24 September 2017 at 1:04PM

Good luck on your quest - it's fantastic you have had your lightbulb moment so early on, I know many others wish they had! You're making great inroads already to reducing your mortgage and are definitely taking all the right steps. I am a complete overpayment addict now, and will happily save money wherever I can in order to put some more ££ towards the mortgage. These boards are a fab source of motivation so make sure to keep posting and keep us updated!

sleepygirl126 · 24 September 2017 at 1:24PM

I totally echo the others...I wish I'd had my lightbulb moment when I bought my house at 25 and then again when I bought my ex husband out...I'm constantly trying to persuade younger friends to overpay when they've got no responsibilities or kids...it's a damn sight harder on one wage with a dependent DS! Well done you!

lessavyfav · 6 December 2017 at 7:06PM

How's it been so long since my last update? I was never good at committing to diaries, some things never change!

I have been updating my signature monthly though, mortgage is going down, so is the credit card, while my S&S ISA and Regular Saver are going up. So that's a positive. I didn't get to make an overpayment to the mortgage last month as it was VERY expensive: most Christmas presents bought, lots of friends round (stupid me insisting that no one should bring anything), a car stereo, etc. This month only a small overpayment of £100 but better than nothing. Already I see our LTV is 87% which is much better than I thought!

A lot has happened since I last posted - I quit my job as I was miserable and decided to start up my own freelance consultancy. It's been a bit slow but I've at least been able to spend the time relaxing, contacting builders/contractors (which is a proper job in itself as it so turns out), exercising, and contacting recruiters and new potential jobs. I have a job lined up until Xmas that pays well so I am happy. Two weeks of work on this job is almost my entire salary at my old job! Must remember I need to keep aside money for things like pension though.

So with this new change, there is definitely uncertainty when it comes to finances, but also big potential. Am hoping the New Year brings a lot more stable, longer term contract roles too!

Although it's busy this month, we don't have hugely crazy calendars so I'm hoping spends will be better than they were last month. It needs to be because I earned a lot less!

Some aims for 2018:
- Keep saving £400 per month into Regular Saver
- Only £380 left to pay on the CC which frees up approx £130 per month from April. Use £100 of this to build up an emergency fund, the rest for treating myself (nails, house stuff)
- Overpayments of $335 per month (have committed to £4000 in the mortgage challenge), of course this is split with my OH
- Open a LISA for retirement
- Shop less at M&S food — it's our nearest supermarket and costs a fortune! Going to try getting weekly veg boxes and other things from cheaper places. I'd like to give Farmdrop a go..
- Pay back my parents money they lent us. They've never set a timeframe, but it was £14,000. We have £6,315 aside, so need £7,685. I've been putting this one off and dipping into it to buy house stuff, but it's getting out of hand!!

I'm sure I'll have more to add to the goals, I need to be more specific around projected spending, like holidays and gifts. Time to have a think...

michelle09 · 8 December 2017 at 4:10PM

Wow, I thought our 300k was a little crazy. Unsurprisingly, another Londoner here! Well good luck, and you're right, knocking off as much as possible saves so much money. You're on nearly £30/day in interest so every little will help.

For your parent's money, is it worth giving them back the £6000 you've already saved up? That way you can't dip into it for other things.

M&S is lovely, but yeah, it's a hefty price tag. I keep checking out TopCashBack because you can quite often pick up deals on food delivery. (We got £13 back on a £26 spend at Asda last Christmas).

lessavyfav · 29 December 2017 at 12:53AM

Hi Michelle, a bit slow on the reply but thanks for your comment!

My parents live overseas and their thinking was that they'd just like the money over here to spend when the come to visit us, that way no more money is wasted on international money payments/lost on bad exchange rates, etc. So the temptation still remains! And sadly we ended up borrowing a bit of that money recently fixing a roof issue

Frustrating but i think we should have paid it back next month. That's my main focus for the next few pays.

My most recent freelance job is going well and pays good (not that they've paid me yet - why must every contract start with payment hiccups?) I am there till end of Feb, possibly longer, which would be amazing for the bank balance, so fingers crossed they keep me for a bit longer!

We're hosting NYE at ours this year, and I'm pretty happy with how much I've spent — usually I would go overboard with buying the most expensive meats, freak out about not having enough time and get spare 'cheat' meals which wind up costing a lot more..this time I've got the guests to bring dessert and cheeses, and I'm sorting starters, mains and most of the booze. I did buy some of the champagne a while back on offer (and have some gifted in the fridge too, as well as a bottle of hendrick's from over a year ago unopened). Very much looking forward to it and feeling more confident in my cooking and entertaining abilities lately, fingers crossed.

Been DIY'ing with the OH, it's so much slower and harder than I thought but at least it feels like we're achieving things and not just being slack by paying someone - probably what we would have done originally had someone been available..tomorrow is another DIY day, and hopefully some clean up time — so over the dust!

Going to make the venture to ASDA near us too. Oh how different it will be compared to the lovely M&S Food Hall, but I know I can no longer go on spending crazy amounts on the basics for the sake of my laziness.

getmore4less · 29 December 2017 at 10:14AM

How's it been so long since my last update? I was never good at committing to diaries, some things never change!

With a relatively long term goal like this one sometimes a visual aid helps.

Fairly easy to do with a spreadsheet is say a graph with the amount owing line over say the first 2 years for different full terms/payments and plot your progress monthly to see where you are on the curve.
one data point might be the amount owing end of year 1
£499k @ 2.19%
35y £1700pm £489,407
30y £1900pm £487,103
25y £2160pm £483,838
20y £2570pm £478,893

As the term gets shorter is costs more per month to knock another year off

you could also do an imaginary "what if" for say a rate of 4% and see where the target is with rate rises.

The other thing to remember is once at 40% tax pension options can be better financially long term.

Chapter 3: the large London mortgage

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