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  • FIRST POST
    • labradorlove
    • By labradorlove 21st Feb 18, 8:46 PM
    • 52Posts
    • 91Thanks
    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
    • 17 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
    • 355 Posts
    • 509 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
    • 1 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
    • 355 Posts
    • 509 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
    • 23 Posts
    • 24 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
    • labradorlove
    • By labradorlove 21st Jan 19, 10:27 AM
    • 52 Posts
    • 91 Thanks
    labradorlove
    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!
    Originally posted by Scottish Twiglet

    Thank you Scottish Twiglet, that's some really good advice that I try and embed every month when I get paid, luckily I don't have to put anything aside on the car front yet as I don't have one, but I do have an emergency fund that me and my DF do put 20 a month in each, we're only on 290 at the moment but we have insurance for almost everything it's more for the excess side of things.


    Congrats on clearing your mortgage 7 years earlier! :J


    That's the main aim for us, not sure how much earlier we can achieve this as you never know what life will throw at you so just taking it bit by bit and doing the best we can.
    Mortgage left: 116,809.90
    Car savings: 2,500/40
    OP Target 2019: 2,500/0

    • labradorlove
    • By labradorlove 21st Jan 19, 10:56 AM
    • 52 Posts
    • 91 Thanks
    labradorlove
    Ok so I know I don't update on here much which makes it a pretty boring thread, but nothings been happening on the OP front the past 8-10 months, and I just want to add another update so I can keep track.


    Hopefully visit more regularly as I've managed to pay off a few debts and free up some money!

    Ok so first of all, the MBNA credit cards we took out for our garden to be done in May 2018, which equalled to 4,000 , we originally planned to be paying it back until Feb/March 2020. Instead we decided to smash it off with any free money, avoiding OP in the process and as of Friday just gone, the MBNA is now fully paid off, account closed and card cut up.....in just 8 months!! Super happy about that, which means me and DF now have an extra 300 each free from what we were paying off the CC with! As much as I would love to make us both throw 600 a month into OP's now, it's not fair for me to ask that of DF as he would like to build up his own personal savings and so would I.


    2. In other news, I got the job I applied for! which means more , I've been here 6 weeks now, still the same organisation, just higher up! And ten minutes before the interview I was uncontrollably shaking and almost had a panic attack, messaging my DF telling him I'm not going I can't do it , spoke to my line manager who gave me a few words of wisdom, took a deep breath and went in, sooo glad I did Which means I now have a better monthly income after tax, NI and over 100 pension a month, I take home 1392.....with a 2% pay rise coming up in April '19 and 600 increment rise in June '19 so looking forward to that as every penny counts!


    3. Forget the car malarkey, I keep saying I'm going to get one but every time I plan to save something else comes up, so I'm not jinxing it this time, I'm just going to OP and build savings, and when it happens, it happens


    4. Already started putting money away for Christmas 2019, 30 each from me and DF a month, means we'll have 720 by December, this will pay for everything, gifts for each other, his family, my family, alcohol etc. Already picked up some gifts in the January sales, boots 3 for 2 sale everything 50% off. Win!!!


    5. My 24 month phone contract with Vodafone finished at the beginning of Jan, didn't 'upgrade' won't fall for that trap again!! so 38 a month now down to 17 (sim only) *with 15% loyalty discount*


    6. The only debt me and DF now have is the big one! (Mortgage) and the sofa we got on finance from DFS, there's 600 left to pay and it's 0% interest so no rush for that we have agreed to pay it off in June 2019.


    So with my new income, it means after all my monthly outgoing, bills, shopping, gym, Christmas, emergency fund, etc. I have around 550 to play about with. Now because our fixed rate comes to an end in June 2019, and we are so close to reaching that 85% bracket, out of our February wages going to pay 450 OP each, a one off, and that will bring us to the 85% bracket to get a better interest rate for re negotiating. Then it'll be 100 a month each after that. so 100 in the OP and 450 in my savings, then at the end of the year we'll agree a sum we can match against each other to overpay, so say he has 4k savings and I have 3k, we might put 1k each into the mortgage. This is just whispers at the moment so we'll see how we stand when the time comes, but the 450 OP is a must to get us into that bracket.


    So lots and lots of updates in a short few months , but it helps to write about it and reflect on where we are, so come Dec 2019 I can look back and see what happened and if I achieved what I set out to achieve.


    Thanks for reading


    Will try and update every payday now and see where we are.


    Hope everyone elses journeys are going a little less rockier than mine!


    Labradorlove x
    Mortgage left: 116,809.90
    Car savings: 2,500/40
    OP Target 2019: 2,500/0

    • wishingthemortgaheaway
    • By wishingthemortgaheaway 21st Jan 19, 11:30 AM
    • 1,977 Posts
    • 10,820 Thanks
    wishingthemortgaheaway
    I don't think that counts as rocky at all. I think that counts as well thought out and thorough.

    Just a thought on the ltv, what are you basing it on? Original purchase price? Index linked house value prediction? Or current market value? When we first remortgaged we dropped a ltv bracket purely because the index linking valuation provided by our mortgage company said we did.
    The 100 payment countdown (each payment = 400) 2018 Starts at 13/100 o/s 34,750.
    Jan 18 14/100 Feb 15/100 March 18/100 April 19/100 May 20/100 June 21/100 Dec: 28/100
    MFW 2019 Challenge Member #59: 0/2860
    • labradorlove
    • By labradorlove 21st Jan 19, 2:07 PM
    • 52 Posts
    • 91 Thanks
    labradorlove
    I don't think that counts as rocky at all. I think that counts as well thought out and thorough.

    Just a thought on the ltv, what are you basing it on? Original purchase price? Index linked house value prediction? Or current market value? When we first remortgaged we dropped a ltv bracket purely because the index linking valuation provided by our mortgage company said we did.
    Originally posted by wishingthemortgaheaway

    I am basing the LTV on original purchase price, my mortgage is with Santander is that what they base it on when you re negotiate as we had it revalued after the garden had been done by an estate agents and they valued it at 140-145k we purchased in 2017 for 135k, would it be worth going in for a remortgage do you think?
    Mortgage left: 116,809.90
    Car savings: 2,500/40
    OP Target 2019: 2,500/0

    • wishingthemortgaheaway
    • By wishingthemortgaheaway 21st Jan 19, 2:24 PM
    • 1,977 Posts
    • 10,820 Thanks
    wishingthemortgaheaway
    It may depend on the provider but, getting a new fixed rate on our mortgage is based on the index linking valuation. And I've never swapped providers or actual mortgage.

    I guess it's worth a phonecall or popping into a branch at the right time. See what's on offer. If you can save hundreds/thousands by switching provider then it might be worth doing.
    The 100 payment countdown (each payment = 400) 2018 Starts at 13/100 o/s 34,750.
    Jan 18 14/100 Feb 15/100 March 18/100 April 19/100 May 20/100 June 21/100 Dec: 28/100
    MFW 2019 Challenge Member #59: 0/2860
    • kev2009
    • By kev2009 4th Feb 19, 2:38 PM
    • 355 Posts
    • 509 Thanks
    kev2009
    Hi labradorlove,

    Congrats on the promotion and great to hear you will be in the 85% LTV come June 2019! Must feel good! Will you being doing a new SOA now or updating your previous SOA?

    Will wait to her how things come when you renew your fixed term mortgage in June! Will give me some ideas on how to do mine next year

    Kev
    • labradorlove
    • By labradorlove 5th Feb 19, 1:29 PM
    • 52 Posts
    • 91 Thanks
    labradorlove
    Right, ok, so


    Contacted Santander to look at what new rates they're offering, we're going to go for a 5 year fixed rate instead of 2 years this time to be on the safe side because of Brexit. Our 2 year fixed rate at 2.21% ends on 02/06/2019


    Our options to stay with Santander


    5 Years fixed at 2.39% (no fee)


    or


    5 years fixed at 2.19% (999 fee)


    I'm a bit disappointed, I thought the more we pay off, the lower the interest rate would be, these are the options as they said they upped the value on our house from 135,000 to 156,000, so we're down as having a 75% LTV now which is good but just disappointed that even if we want to reduce the interest rate by 0.02% we'd have to pay a 999 fee. I've been looking on money supermarket and they're all working out at very similar rates with product fees but my fear with moving providers and remortgaging is that it won't be valued at 156,000 and that they'd offer higher rates. Stuck at the minute and got some thinking to do, been comparing on MSE mortgage comparison and the differences are around 500 max between all the ones I've found so looks like we'll probably be sticking with Santander, at least we don't have to pay the extra 900 we were going to pay to get us to 85% LTV if we're already down at 75%. Although DF has already paid 250 of overpayments so I'll match that on pay day.


    Feeling deflated


    Feeling the weight of this huge chunk of debt that doesn't appear to be going anywhere!


    Why can't a long lost wealthy uncle just show up out of the blue and come and pay off my mortgage, it's daylight robbery!!
    Mortgage left: 116,809.90
    Car savings: 2,500/40
    OP Target 2019: 2,500/0

    • labradorlove
    • By labradorlove 5th Feb 19, 2:00 PM
    • 52 Posts
    • 91 Thanks
    labradorlove
    Hi labradorlove,

    Congrats on the promotion and great to hear you will be in the 85% LTV come June 2019! Must feel good! Will you being doing a new SOA now or updating your previous SOA?

    Will wait to her how things come when you renew your fixed term mortgage in June! Will give me some ideas on how to do mine next year

    Kev
    Originally posted by kev2009

    Hi Kev


    Thank you


    I am going to do a new SOA in July as I want to wait until the April pay rise and my increment increase have been added


    Hope you're well
    Mortgage left: 116,809.90
    Car savings: 2,500/40
    OP Target 2019: 2,500/0

    • kev2009
    • By kev2009 6th Feb 19, 5:31 PM
    • 355 Posts
    • 509 Thanks
    kev2009
    Hi,

    Yes not bad thanks, yourself?

    Interesting read, I see the interest rates haven't move that much form your 2.19%, i was expecting them to have gone up to 2.5% at least. Comforting to know

    With regards to 2.39% or 2.19%, i'd look at how much extra you would be paying over the 5 years at 2.39% and then see does it add up to 999 or more and then decide is it worth it? In some ways might be better to go for the 2.39% as, if I understand correctly, the 999 gets added when you take it out and then it in turn attracts interests which will be added to the mortgage. So I suspect this will work out more than if you took the 2.39% mortgage with no fees as nothing is added to the mortgage and you just pay a little bit more each month.

    When i got my mortgage, i fixed for 5 years and I too went for the loan with the 999 fee simply because they had already said they could add it to the mortgage so i figured why now, i owe soo much already whats an extra 999 but now i'm working on reducing it, I don't want to see a sudden increase so would likely try and go for fee free mortgage if possible when i get to there in 2020. Also having just put down deposit etc, i needed to start building up some money so thought just add it for now.

    Kev
    • hovehouse
    • By hovehouse 11th Feb 19, 10:04 AM
    • 3 Posts
    • 1 Thanks
    hovehouse
    Found this thread because, being just six months in to my first ever (30-year!) mortgage, I'm already thinking about trying to bring that mortgage-free date closer and so have signed up to the forum for inspiration! Being someone who has taken out a mortgage at a time of 'historic low' interest rates, I'm already terrified every time interest rate increases are mentioned in the news... Will be following this diary and cheering you on from the starting line of this very long marathon!
    Last edited by hovehouse; 11-02-2019 at 10:06 AM. Reason: typo!
    • Elise1912
    • By Elise1912 13th Feb 19, 12:42 PM
    • 34 Posts
    • 65 Thanks
    Elise1912
    Good luck with it all! You lot have inspired me to do the same. I would LOVE to be mortgage free by the time I'm 50!
    • davidquizer
    • By davidquizer 28th Feb 19, 11:07 AM
    • 12 Posts
    • 23 Thanks
    davidquizer
    Well done to you. I paid off my mortgage in November, that was 15 years early! I overpaid for many years and the way I look at it is I've saved 15 years of interest. Always check your statement and when the loan starts reducing because of your overpayment its a fabulous feeling and will encourage you.
    • Roxie
    • By Roxie 2nd Mar 19, 8:47 AM
    • 578 Posts
    • 496 Thanks
    Roxie
    Hi,

    With regards to 2.39% or 2.19%, i'd look at how much extra you would be paying over the 5 years at 2.39% and then see does it add up to 999 or more and then decide is it worth it? In some ways might be better to go for the 2.39% as, if I understand correctly, the 999 gets added when you take it out and then it in turn attracts interests which will be added to the mortgage. So I suspect this will work out more than if you took the 2.39% mortgage with no fees as nothing is added to the mortgage.

    Kev
    Originally posted by kev2009
    Totally agree with this, I am also on a 5 year fix and chose the fee free option, I calculated the extra few s a month (I think it was a difference of around 5 a month for me) for the 60 monthly payments over 5 years of the fix came nowhere close to the 999 fee. Use the bank's online calculators for an idea of the difference you would pay each month and decide from there what is best for you.
    MFW 2019 no: 33 1300/5000
    MFW 2018 5000/5000
    MFW 2017 3500/3500
    • GCW
    • By GCW 9th Mar 19, 4:58 PM
    • 6 Posts
    • 0 Thanks
    GCW
    Would like to partake in this thread if I may


    I am 6 years into a 25 year mortgage and it's remortgage time again. I always look around for rates but it's always so difficult to know if you are getting the truly best deal out there.


    I'm with Nationwide. 1.09% fixed coming to an end in June. 152k left on the mortgage. LTV is around 50%.



    I prefer the security of a fixed rate. Nationwide are offering 1.59% for a 2 year fix, 1.74% for a 3 year fix and 1.89% for a 5 year fix.


    Like a previous poster has said, it's disappointing when you see the rate go UP as you work through your mortgage but I suppose the markets are different at different times.


    Rather annoyingly, the last time I remortgaged I got to the very end of the process and signed up for 1.19% only for Nationwide to then lower it to 1.09% at the very last moment - would have saved a lot of hassle/reserach if they had offered that up first time!


    Any advice on this process? Can I relaistically save decent money by swicthing provider?
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