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  • FIRST POST
    • labradorlove
    • By labradorlove 21st Feb 18, 8:46 PM
    • 47Posts
    • 89Thanks
    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 4
    • lhoney
    • By lhoney 23rd Nov 18, 11:17 AM
    • 14 Posts
    • 3 Thanks
    lhoney
    Yes, we pay it off the capital, but our term length and monthly payments are the same as before we started overpaying. The monthly payments will only change next time a recalculation is done (e.g. when there's an interest change or we go onto another fixed deal). Overpaying saves money by reducing the amount of interest paid. I don't want to reduce the term just yet because that would mean a higher monthly payment, so I wouldn't be able to overpay as much. I'm not currently on a fixed term deal, but will be getting another one soon.

    Most banks seem to work the maximum amount you can overpay before fees as 10% of the total remaining in the January of the year you're overpaying. E.g. if you owed 95,500 on the 1st of January, you can overpay by 9,550 until the following January.
    • kev2009
    • By kev2009 24th Nov 18, 11:52 AM
    • 306 Posts
    • 431 Thanks
    kev2009
    Hi,

    Thanks, interesting. I'm on a 5 year fixed (running out 2020) and i thought when i make a over payment i have to choose to either reduce the term or reduce the monthly payment, didn't realise i could keep both the same. Will discuss this when i phone them next month to make a small OP. My plan now is overpay and reduce monthly figure until 2020 when i renew for 5 years and then when i overpay to then reduce the term. I'm hoping by OP between now and 2020 i can help to offset any potential interest rate rises. If the rise doesn't come then win win i hope

    The figure the guy told me i could overpay, according to my spreadsheet matched a balance last November, not January hence my confusion.

    I'm with Santander for the mortgage and there online portal looks to be getting a overpayment feature added but last i checked a month or 2 ago, it wasn't ready, just said coming soon. Might check again at the end of this month but I might just phone them to be sure as first time i'm overpaying.

    Kev
    • Scottish Twiglet
    • By Scottish Twiglet 27th Nov 18, 1:45 AM
    • 1 Posts
    • 0 Thanks
    Scottish Twiglet
    Well done ... Regarding overpaying : great idea as it becomes the equivalent of offsetting (aka Australian Mortgage) pioneered in the UK by Intelligent Finance : now part of the Lloyds Banking Group. I used the following method and it worked a treat - enabling me to clear my mortgage 7 years earlier. If it's of any help this is what I did: [Step A] Kept to interest-only mortgage with the lowest fixed-rate over the longest term available and which permitted the usual penalty-free up to 10 percent of capital repayment. Usually it's anything between 2 to 5 yr fixed rate. This meant lowest monthly mortgage payment thus left maximum cash for the other steps [Step B] Divided total money left after compulsories (tax, national insurance, council tax,mortgage, etc) by 3. [Step C] Ensured all other monthly outgoings never exceeded the two-thirds. [Step D] Saved one third and made it work hardest possible in easy-access investment/s. [Step D] At mortgage anniversary reduced the mortgage capital by half of the savings - up to the penalty-free repayment limit (leaving the other half for unexpecteds such as car repair,etc). Every year the mortgage capital (and so the monthly repayments) went down leaving more cash to divide by 3 to repeat the process. Worked a treat coz every time the fixed rate ended, I re-mortgage for the much reduced capital coz the savings usually equated to more than the standard 10% deposit towards the new mortgage ... I advised my children to do this and their mortgage payments are now as painless as going out for a meal. ... Oops : NOT EXACT A QUICK REPLY but hey hum!
    • kev2009
    • By kev2009 1st Dec 18, 3:18 PM
    • 306 Posts
    • 431 Thanks
    kev2009
    Just to update, made a small OP today, just waiting for the payment to reflect in my account and to receive letter with details of new DD but i've given given a estimate of what that will be each month.

    Was easy to do, tried online but said was technical problem so did it over the phone, all easy to do.

    Now to see if i can meet next years target i have in mind or how close i can come to it

    Kev
    • John Blaze
    • By John Blaze 13th Jan 19, 9:23 PM
    • 22 Posts
    • 21 Thanks
    John Blaze
    I havent had a holiday in 15 years and have saved up to a grand a year to be mortgage free. I probably went to far in terms of sacrifice vs living life lol
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