The first hurdle - Nichelette v the huge mortgage

Nichelette · 22 December 2018 at 8:16PM

I'm starting this diary in anticipation, so that I have focus for 2019.

It's a bit of a long story, but to give the key facts I'm 32 and married. I graduated in 2008 into recession which wasn't the best, and live in the south east where house prices are absolutely insane. When I was younger I helped both of my parents a LOT financally which hasn't done me any favours. I won't go into detail as it's a very long story, but the outcome is I'm down a lot of cash. Rampant HPI made it harder to get a house, and I have to pay stamp duty as I'm sadly not legally a first time buyer as I was temporarily on my dad's mortgage to cover affordability after he was made redundant during the crash and took a lower paying job.

Anyway, my dream since I was about 10 was to have my own home. I had this book I would cut and stick all the houses I liked in, then I'd plan how I'd decorate and furnish them. It has always been my main aim to make sure we have some security in housing terms as the insecurity of renting has always worried me.

We have been saving hard and managed to reach 50k which has allowed us to buy what I'd call a 2 bed starter house. We're just on the verge of exchanging (hopefully!). My plan is to overpay as much as possible for many reasons. I've never liked being in debt and the amount we will owe is huge so I want to reduce it as quickly as possible.

House is 320k. Deposit is 32k and stamp duty is 6k. Fees and survey are probably around another 4k or so, but I've lost track to be honest.

The arrangement fee has been added to the mortgage, so we're looking at a starting figure of 289.5k :eek:.

We both work full time and don't have kids, so we can chuck quite a lot at it. The rate is fixed for 2 years, then the plan is to see if we can remortgage to something better.

The diary is to keep me focused as my DFW ones helped a lot in the past.

Whilst we have been waiting for the legal stuff to go through we have continued to save. I budget meticulously and record everything, but have been slacking since our offer was accepted as my plan is to move, see how much is left and plan from there. I think we will already have an emergency fund so we can start overpayments immediately.

I will do a proper SOA once we have moved and I have a proper idea of what bills will be, but I anticipate we're looking at around 2k. We take home about 4k so should be able to make some decent overpayments.

If there is anyone else out there with a humongous mortgage please feel free to join me, or anyone else for that matter. I'm sure you all have some very good advice

.

Thanks for reading if you got to the end!

Nichelette · 22 December 2018 at 8:25PM

Stats as of 16.06.19:

Overpayments in 2019 - £5897.11/£15,000
Daily interest - £20.36 :eek:
Projected overpayments to 2026 (because this is a long haul..:o) -

2019 - £15,326 - Overpaid 39.31% (broadly on target)
2020 - £33,748
2021 - £54,551
2022 - £76,527
2023 - £98,475
2024 - £120,397
2025 - £142,292
2026 - £151,417 (to May, when I'll be 40)

Beyond this? Move to house with bigger kitchen :rotfl:

SOA as of 10.05.19:

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 0
Number of cars owned.................... 2

Monthly Income Details
Monthly income after tax................ 1980
Partners monthly income after tax....... 2165
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 4145

Monthly Expense Details
Mortgage................................ 1161
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 20
Council tax............................. 140
Electricity............................. 37
Gas..................................... 37
Oil..................................... 0
Water rates............................. 50
Telephone (land line)................... 0
Mobile phone............................ 21.5
TV Licence.............................. 12.07
Satellite/Cable TV...................... 20
Internet Services....................... 25
Groceries etc. ......................... 120
Clothing................................ 20
Petrol/diesel........................... 120
Road tax................................ 13
Car Insurance........................... 50
Car maintenance (including MOT)......... 30
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 10
Pet insurance/vet bills................. 20
Buildings insurance..................... 10
Contents insurance...................... 10
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 50
Haircuts................................ 12
Entertainment........................... 400
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 2388.57

Assets
Cash.................................... 7500
House value (Gross)..................... 320000
Shares and bonds........................ 0
Car(s).................................. 2500
Other assets............................ 0
Total Assets............................ 330000

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 283246...(1161).....2.63
Total secured & HP debts...... 283246....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Sofa...........................91.52.....22.88.....0
Credit card....................3400......75........0
Total unsecured debts..........3491.52...97.88.....-

Monthly Budget Summary
Total monthly income.................... 4,145
Expenses (including HP & secured debts). 2,388.57
Available for debt repayments........... 1,756.43
Monthly UNsecured debt repayments....... 97.88
Amount left after debt repayments....... 1,658.55

Personal Balance Sheet Summary
Total assets (things you own)........... 330,000
Total HP & Secured debt................. -283,246
Total Unsecured debt.................... -3,491.52
Net Assets.............................. 43,262.48

Created using the SOA calculator at https://www.stoozing.com.
Reproduced on Moneysavingexpert with permission, using other browser.

beanielou · 22 December 2018 at 11:48PM

Happy shiny new diary

SDLT_Geek · 23 December 2018 at 7:33AM

Nichelette wrote: »

I have to pay stamp duty as I'm sadly not legally a first time buyer as I was temporarily on my dad's mortgage to cover affordability after he was made redundant during the crash and took a lower paying job.

House is 320k. Deposit is 32k and stamp duty is 6k.

Some research might save you £5k in stamp duty land tax. If you took a share in your dad's house then yes, you are right, you do not qualify as a first time buyer for SDLT purposes.

But you might well not have taken a share in your dad's house. It is irrelevant that you assumed liability on his mortgage. It would not matter if your name went onto the registered title. What matters is whether you had an underlying share in the property. Any share in the property, however small, would stop you now being a first time buyer. But there is a good chance that you had no beneficial interest at all.

This issue is dealt with briefly in HMRC guidance here:

https://www.gov.uk/government/publications/stamp-duty-land-tax-relief-for-first-time-buyers-guidance-note Chapter 3 middle paragraph and Chapter 8 Q16

explained in the pdf linked from here: https://www.blakemorgan.co.uk/news-events/blog/sdlt-first-time-buyers-relief/ at 3.2.

https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09764 (the last paragraph)

with some support here: https://www.blakemorgan.co.uk/news-events/blog/bank-mum-and-dad-concessionary-purchases/ (see the heading "Bare Trusts").

I suggest you get digging in old papers! How long ago was it that you were on your dad's mortgage?

Nichelette · 23 December 2018 at 6:35PM

Thank you for the advice. I thought I had researched the stamp duty to death (it's only due to a broker that I have been able to get off his mortgage which was necessary as the additional stamp duty was a lot of money).

I'm not really sure if I had a share or not, or how I would prove that either way. I was on the mortgage and the deed, so I assumed that was classed as 'ownership' for stamp duty purposes. All I can say is I have nothing financially to show for it, and have no claim on the house now.

Brief summary:

Mortgage was taken out in 2010 when my mum came off and I went on due to parents divorce

No money/anything changed hands, but I went on the mortgage and the deeds

At the time house value was approx 180k and mortgage was 100k

My dad has paid the full mortgage sum for the duration that I was on it

House is now worth approx 300k

I was removed from mortgage and deeds in September. I have no claim to the house and did not receive anything for this

I have not been living in the house for the last 3 years

Not sure if any of that is relevant though. To be honest I'm just grateful I'm no longer on it so husband and I can finally get on with our own lives.

SDLT_Geek · 23 December 2018 at 6:55PM

You could see if you can find the papers from 2010, especially to see if there was a transfer into joint names which might well have had clauses setting out the beneficial ownership. Or even better there might have been a "declaration of trust" in 2010. The 2010 divorce papers might spell out what was to happen to the beneficial ownership of the property.

It is possible that the paperwork from September 2018 when you came off the mortgage and deeds might make it clear whether or not you had a share in the property. I expect solicitors were involved, you could ask them for their file.

Nichelette · 23 December 2018 at 7:33PM

Thank you. I'm seeing my dad tomorrow. He has the paperwork so I'll have a look.

I don't believe there was any declaration of trust, I think divorce just stated that my dad had to sell the house or pay my mum off when youngest child left education, but I will double check that also.

I signed something to confirm I would have no interest in the property going forward when I came off, so I assume that means I had one before, but again I will look.

SDLT_Geek · 23 December 2018 at 8:04PM

Crossing my fingers for your Christmas Eve gathering!

Nichelette · 23 December 2018 at 8:52PM

Thank you

I've just updated the SOA post to give an indication of how things will be once we move. As I've mentioned we should already have an emergency fund, so we're left with approx 1700. We can overpay by 10% a year without penalty, though I doubt we'll do the whole 1700 as that does seem like an awful lot.

Mortgage is over 30 years due to affordability, but they didn't factor in that I'm excellent at budgeting

.

Our food costs are low as I'm veggie which saves a lot, and whilst husband is a meat eater he is often happy to eat the same as me and doesn't have meat with everything. I cook most of our food from scratch.

We both have a car at the moment (both old). Mine is really a back up as we live somewhere with really poor public transport so we need a car to get to work in case the other fails. We're moving into the actual village centre rather than the outskirts and will be within walking distance of the train station, so we will probably go down to one when mine is no longer viable. It's very cheap to run (tax and insurance are about £300/year).

I do a few things that get extra income - mostly surveys, shop & scan and matched betting. My husband occasionally gets overtime but sadly I never do. We both work for the same company and have very secure jobs which is part of the reason we're buying now as I'm a bit doubtful about where the economy is heading and would otherwise be more cautious. We're due an inflationary pay rise in April so we'll see what that is. I also have about 4k of student loan outstanding. I have about £100 deducted a month for this, so it should be gone in about 2.5 years.

greent · 24 December 2018 at 9:16AM

Hello and welcome! There are a few others I've seen with large mortgages. Tilly had a large mortgage but it's now paid off - but her diary is a good read

You sound very organised

x

billy2shots · 24 December 2018 at 9:44AM

Sound so like you have everything under control. Your gas and electric spends seem to be a bit to low. Is it definitely £44 a month combined?

Looks like you are well on top of things. Your mortgage amount isn't so worrying if your income far exceeds your outgoings allowing for plenty of 'spare cash'

To put it into context I have 2 kids, 2 cars and earn £3100 a month after tax (wife is very part time £300 a month) and have a £215k mortgage just about to start.
Mortgage repayments of £840 a month is a bit lower than yours but that's balanced out by your higher income.
I also live frugally so not expecting any problems.

It looks like you have done your sums well. Don't be daunted by the headline figure. Overpaying soon gets that number moving in the right direction. Remember, any overpayment is all capital and not interest so every little helps.

The first hurdle - Nichelette v the huge mortgage

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