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  • FIRST POST
    • OnlyGuyWhoLikesTwix
    • By OnlyGuyWhoLikesTwix 13th Mar 18, 10:41 AM
    • 11Posts
    • 7Thanks
    OnlyGuyWhoLikesTwix
    New MFW/ Calculations, homework checking and q's
    • #1
    • 13th Mar 18, 10:41 AM
    New MFW/ Calculations, homework checking and q's 13th Mar 18 at 10:41 AM
    I am finally in a position to start overpaying my mortgage. I've just done a mortgage retention with my lender, Clydesdale. All is well with that. I couldn't remortgage with a new lender as I was over my credit card balance a couple of times so was getting passed over. So I've taken a new 5-year retention, 5 years at 2.39%. OK not the best rate in the world but given my credit, it's had to happen.

    As it turns out, I inherited a bit of cash and have done only sensible things. I have cleared my credit cards and cut them up so I am only living on cash I have and I have paid off my car. I am therefore left with 5000 in spare cash which I am intent on putting into my ISA as my emergency fund.

    My mortgage amount is 145,000 on a 23 year term, 2.39% pa. I earn enough to easily pay the 683 and according to the calculator, that works to 328 per month as an overpayment

    So first question. My product allows me to overpay 10% per annum before incurring fees. How do I actually do it? Do I call my lender every month and give them a card number? Or do I bank transfer?

    Secondly, I take it the money I overpay reduces the capital on the loan (it's a repayment cap and interest mortgage). Does that mean I have to overpay slightly less each month? Or during the whole of the five years, will it always be a 328 per month thing?

    After all is said and done each month, including overpayments et al, I'm left with 600 per month to save. That is once the overpayment, fuel, food, broadband, car tax, services etc etc is all done, that's 600. While I'm sure I will have to do repairs to the house and at some point will need a boiler, or one month I may go mad and go on a trip, in five years I'll have saved approximately 37,000 should all go exactly as prescribed and nothing bad happens at all, ever (OK I know that's unlikely but five years is a long time to be making solid plans).

    I am under the assumption that if the overpayments go on unhitched for the full five year term, the amortisation calculator reckons my balance at the end of five years would be 64,383. I would assume that this, minus my savings would bring my balance to around the 27k mark.

    Does anyone actually offer mortgages for that amount? Or will I have to borrow more and likely overpay that too?

    Very excited by being mortgage free before 40 It means I can start my personal training business full time!
Page 1
    • getmore4less
    • By getmore4less 13th Mar 18, 11:14 AM
    • 32,035 Posts
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    getmore4less
    • #2
    • 13th Mar 18, 11:14 AM
    • #2
    • 13th Mar 18, 11:14 AM
    lets summarise.

    ...
    5-year retention, 5 years at 2.39%.
    ...
    5000 in spare cash emergency fund.
    ..
    145,000 on a 23 year term, 2.39% pa.

    683.43 pm payment
    ...
    I earn enough to easily pay the 683 and according to the calculator, that works to 328 per month as an overpayment
    Not clear :
    are you saying you can afford another 328 on top of the 683?
    or do you think 683 includes an overpayment?


    So first question. My product allows me to overpay 10% per annum before incurring fees. How do I actually do it? Do I call my lender every month and give them a card number? Or do I bank transfer?

    check with the lender most allow electronic payment to the account some will ammend the DD

    Secondly, I take it the money I overpay reduces the capital on the loan (it's a repayment cap and interest mortgage). Does that mean I have to overpay slightly less each month? Or during the whole of the five years, will it always be a 328 per month thing?

    Now you have confused me even more about this 328 where have you got that from?

    I'm left with 600 per month to save.
    ...
    Nice but I don't think you have done a full plan/budget looking forward

    I am under the assumption that if the overpayments go on unhitched for the full five year term, the amortisation calculator reckons my balance at the end of five years would be 64,383.

    If this 328 is a real overpayment that would make you full payment 1,011

    In 5 years with a 683 payment you will owe 120,000
    in 5 years with a 1,011 payment you will owe 99,000

    NO idea how you got 64383 from.

    This fails the does it look right test, 145k down to 64k over 5 years is 81k or 16,200py or 1,350pm before any interest is added.


    I would assume that this, minus my savings would bring my balance to around the 27k mark.

    Does anyone actually offer mortgages for that amount? Or will I have to borrow more and likely overpay that too?

    Very excited by being mortgage free before 40 It means I can start my personal training business full time!
    Originally posted by OnlyGuyWhoLikesTwix

    your numbers look off

    I would do some proper budget planing so you have some planed funds for
    While I'm sure I will have to do repairs to the house and at some point will need a boiler, or one month I may go mad and go on a trip,
    usual starting point is a SOA.
    http://www.stoozing.com/calculator/soa.php
    Last edited by getmore4less; 13-03-2018 at 11:16 AM.
    • OnlyGuyWhoLikesTwix
    • By OnlyGuyWhoLikesTwix 13th Mar 18, 11:47 AM
    • 11 Posts
    • 7 Thanks
    OnlyGuyWhoLikesTwix
    • #3
    • 13th Mar 18, 11:47 AM
    • #3
    • 13th Mar 18, 11:47 AM
    Hi. Thank you for your response and for fact checking. Let's see where things are right or wrong.

    So yes, I can afford 683 payment plus 328 overpayment. I am using the following calculator:
    world wide web .moneysavingexpert.com/mortgages/mortgage-overpayment-calculator


    And the figures I am using are:
    Current debt: 145,000
    Remaining term: 23 years
    Annual interest: 2.39%
    Mortgage type: Repayment
    One off overpayment is 0
    Recurring overpayment is 10 % annually.

    Hitting calculate gives me:
    "Normally you repay 684 per month. If you regularly overpay 328, you'd be mortgage free 11 years and 8 months earlier. Your total payment over this period would be 162,574."

    Looking at year 5 from the table below this, with overpayment, means at the end of the 5 year fixed rate I will owe 64,363

    As for full budget, I've used my last 16 months bank statements to calculate my standard outgoings (water, electricity, insurances, etc) e.g. things that go out on direct debits and also used a mean of what I spend on fuel, food, things that are variable expenditure allowing for overspends during Xmas, summer, etc here and there. I haven't taken into account salary increases, bonuses and am assuming they don't happen as I like to be very conservative when working this out.
    Mortgage when started: 186500 (2 year fixed when taken out in 2016)
    Current mortgage (13/03/2018): 146,922.15 (5yr fixed 2.39% + 10% overpayment limit)
    Mortgage free day: 0?/0?/2025
    • edinburgher
    • By edinburgher 13th Mar 18, 11:54 AM
    • 11,118 Posts
    • 59,698 Thanks
    edinburgher
    • #4
    • 13th Mar 18, 11:54 AM
    • #4
    • 13th Mar 18, 11:54 AM
    You need at least an estimated figure for home maintenance, it can be surprisingly expensive!

    While I'm sure I will have to do repairs to the house and at some point will need a boiler
    Not sure about the vintage of your home, but with even a relatively modern (70s) house, I find that little and often re. repairs helps to avoid big repairs down the line.
    • OnlyGuyWhoLikesTwix
    • By OnlyGuyWhoLikesTwix 13th Mar 18, 11:58 AM
    • 11 Posts
    • 7 Thanks
    OnlyGuyWhoLikesTwix
    • #5
    • 13th Mar 18, 11:58 AM
    • #5
    • 13th Mar 18, 11:58 AM
    You need at least an estimated figure for home maintenance, it can be surprisingly expensive!


    Not sure about the vintage of your home, but with even a relatively modern (70s) house, I find that little and often re. repairs helps to avoid big repairs down the line.
    Originally posted by edinburgher
    I do most house repairs myself. To be fair, my house really isn't in bad order and I maintain it quite well. I started working life in the building trade and keep on top of most things. That said, nothing has ever really gone wrong. I need a new front door but I have accounted for that already in the cash I have now and what I will save. I didn't feel it important to mention it, so didn't.

    My thought process is the money I put into my ISA is to cover any of those scenarios. If my job goes, if something goes wrong with the house, if the car gets killed, whatever may happen. Sure it takes it off my savings pot, but that's what they're there for. And if I never use them (I know, it's unlikely), then hurrah!
    Mortgage when started: 186500 (2 year fixed when taken out in 2016)
    Current mortgage (13/03/2018): 146,922.15 (5yr fixed 2.39% + 10% overpayment limit)
    Mortgage free day: 0?/0?/2025
    • getmore4less
    • By getmore4less 13th Mar 18, 12:50 PM
    • 32,035 Posts
    • 19,222 Thanks
    getmore4less
    • #6
    • 13th Mar 18, 12:50 PM
    • #6
    • 13th Mar 18, 12:50 PM
    Hi. Thank you for your response and for fact checking. Let's see where things are right or wrong.

    So yes, I can afford 683 payment plus 328 overpayment. I am using the following calculator:
    world wide web .moneysavingexpert.com/mortgages/mortgage-overpayment-calculator


    And the figures I am using are:
    Current debt: 145,000
    Remaining term: 23 years
    Annual interest: 2.39%
    Mortgage type: Repayment
    One off overpayment is 0
    Recurring overpayment is 10 % annually.

    Hitting calculate gives me:
    "Normally you repay 684 per month. If you regularly overpay 328, you'd be mortgage free 11 years and 8 months earlier. Your total payment over this period would be 162,574."

    Looking at year 5 from the table below this, with overpayment, means at the end of the 5 year fixed rate I will owe 64,363

    As for full budget, I've used my last 16 months bank statements to calculate my standard outgoings (water, electricity, insurances, etc) e.g. things that go out on direct debits and also used a mean of what I spend on fuel, food, things that are variable expenditure allowing for overspends during Xmas, summer, etc here and there. I haven't taken into account salary increases, bonuses and am assuming they don't happen as I like to be very conservative when working this out.
    Originally posted by OnlyGuyWhoLikesTwix

    That mortgage calculator is broken

    if you substitute the 10% annual for the 328 payment it says you need you get a better answer.



    I would never use and MSC mortgage calculators most have problems or are miss leading.

    They don't fix them when you report the errors.

    it fails the simple does it look right tests

    10% annually is 14,500 or 1208pm not 328pm in te first year.

    Also (684+328) * (23-11y8m) = 1012* 136 = 137,632

    You can't even pay of the capital with that calculations.
    • OnlyGuyWhoLikesTwix
    • By OnlyGuyWhoLikesTwix 13th Mar 18, 1:20 PM
    • 11 Posts
    • 7 Thanks
    OnlyGuyWhoLikesTwix
    • #7
    • 13th Mar 18, 1:20 PM
    • #7
    • 13th Mar 18, 1:20 PM
    That mortgage calculator is broken

    if you substitute the 10% annual for the 328 payment it says you need you get a better answer.



    I would never use and MSC mortgage calculators most have problems or are miss leading.

    They don't fix them when you report the errors.

    it fails the simple does it look right tests

    10% annually is 14,500 or 1208pm not 328pm in te first year.

    Also (684+328) * (23-11y8m) = 1012* 136 = 137,632

    You can't even pay of the capital with that calculations.
    Originally posted by getmore4less

    You're right, that doesn't work! Hmmmm, something is up there. Good spot!

    So my T's & C's say: "repayments of up to 10% of the outstanding balance per year are allowed without incurring penalties"

    So as my start balance is 145k, that means I can repay a maximum of 14,500 per year onto the original balance without incurring penalties. I take it that includes what I'm repaying per month as well?

    So to illustrate, according to another amortisation calculator, just doing the standard payments means that the balance in month 12 will be 140,212.13. So that means, I would have paid just short of 5k off the original balance leaving me the ability to overpay an extra 10k without penalty? So assuming I had the cash available, I could pay 830 per month to meet that 10k (if I had the cash spare) and still be ok?

    Then in the second year (months 13-24), should I happen to overpay that 10k, that will reduce the balanace to 130k meaning the total payments (including overpayments) can be upto 13k?

    Is that the right way to think it?
    Mortgage when started: 186500 (2 year fixed when taken out in 2016)
    Current mortgage (13/03/2018): 146,922.15 (5yr fixed 2.39% + 10% overpayment limit)
    Mortgage free day: 0?/0?/2025
    • sitesafe
    • By sitesafe 13th Mar 18, 1:34 PM
    • 445 Posts
    • 852 Thanks
    sitesafe
    • #8
    • 13th Mar 18, 1:34 PM
    • #8
    • 13th Mar 18, 1:34 PM
    Mine is 10% of the remaining balance at the start of each calendar year so if the balance was 50k then 10% would be 5k which you can overpay that year at any time. The overpayments amount is on top of the regular monthly payments.

    So I believe you can pay 14500 overpayment in addition to your normal fixed monthly payments.
    Last edited by sitesafe; 13-03-2018 at 1:38 PM.
    • OnlyGuyWhoLikesTwix
    • By OnlyGuyWhoLikesTwix 13th Mar 18, 1:37 PM
    • 11 Posts
    • 7 Thanks
    OnlyGuyWhoLikesTwix
    • #9
    • 13th Mar 18, 1:37 PM
    • #9
    • 13th Mar 18, 1:37 PM
    Thanks for your PM SiteSafe! I can't seem to find the calculator you mentioned...
    Mortgage when started: 186500 (2 year fixed when taken out in 2016)
    Current mortgage (13/03/2018): 146,922.15 (5yr fixed 2.39% + 10% overpayment limit)
    Mortgage free day: 0?/0?/2025
    • sitesafe
    • By sitesafe 13th Mar 18, 1:53 PM
    • 445 Posts
    • 852 Thanks
    sitesafe
    Thanks for your PM SiteSafe! I can't seem to find the calculator you mentioned...
    Originally posted by OnlyGuyWhoLikesTwix
    http://locostfireblade.co.uk/spreadsheet/Index.html

    This is the one I used.
    • OnlyGuyWhoLikesTwix
    • By OnlyGuyWhoLikesTwix 13th Mar 18, 2:09 PM
    • 11 Posts
    • 7 Thanks
    OnlyGuyWhoLikesTwix
    Wow that spreadsheet is pretty excellent! Makes a lot more sense.

    In fairness that MSE calc being wrong has sort of taken the wind out of the sales a little. I was basing a lot of my calculations on what it was telling me and to be honest I don't think I would have paid off the car finance had I known it was totally wrong. Should have figured, but been swimming in numbers for the last few days working things out hahaha.

    Oh well, it's done now. Now's to see if I can get up to that 830 per month. May be a stretch...
    Mortgage when started: 186500 (2 year fixed when taken out in 2016)
    Current mortgage (13/03/2018): 146,922.15 (5yr fixed 2.39% + 10% overpayment limit)
    Mortgage free day: 0?/0?/2025
    • OnlyGuyWhoLikesTwix
    • By OnlyGuyWhoLikesTwix 14th Mar 18, 8:47 AM
    • 11 Posts
    • 7 Thanks
    OnlyGuyWhoLikesTwix
    OK sorry guys I have new questions (inspired by another thread).

    I'm working with the spreadsheet above. Now, my mortgage fixed rate interest rate is 2.39%.

    I have 5000 sitting in my savings right now (not including my emergency fund) and have decided that 500 per month is a comfortable minimum overpayment per month, as in that's the lowest I can easily do though some months may be more.

    Now, if I overpay absolutely nothing, my year 5 balance is 119,875. Using my 5k lump sum and then 500 overpaid per month, my year 5 figure turns into 82,758.

    That's fine I understand all that and from cross-checking with a few other calculators, that does seem to be the case.

    However, I have been googling for high-interest ISAs. London Capital and Financial have such an ISA which is 5,000 minimum opening (that's fine!) and is three years at 8%. I understand that means I can't draw out for a minimum of 3 years, but I'm looking at 5 years when my fixed rate ends. Now I've used a couple of ISA interest rate calculators online and at the end of five years, the total value would be 44,053.

    Now 119,875 - 82,758.= 37,117. So looking at this, I could essentially make an additional 6936 by going the ISA route as opposed to overpayments.

    So again and please bear in mind this is new territory, is there anything wrong with my thinking? Anything I should be aware of or risks I haven't considered?

    EDIT: I've done a little more research and the LCF ISA that I found there is a very high risk investment which I am not going to do. However, still researching this idea and wondering if any other MFW are doing that?
    Last edited by OnlyGuyWhoLikesTwix; 14-03-2018 at 8:59 AM.
    Mortgage when started: 186500 (2 year fixed when taken out in 2016)
    Current mortgage (13/03/2018): 146,922.15 (5yr fixed 2.39% + 10% overpayment limit)
    Mortgage free day: 0?/0?/2025
    • getmore4less
    • By getmore4less 14th Mar 18, 9:21 AM
    • 32,035 Posts
    • 19,222 Thanks
    getmore4less
    It is quite simple IF you can find savings at a higher rate(net) than the mortgage rate then save.

    now there is the twist, people fix for a longer time often because they think rates will go up so that points to saving even if the current rates are not quite there they should be soon.

    there are safe rates at around 2% ,
    The current accounts and regular savers can squeeze a bit more.

    There is also stoozing not as easy but if you can find no fee balance transfers or purchase cards at 0% interest yo ucan juggle cashflow to overpay early.

    Quite a few MSErs are into P2P lending ans seem happy with the risk/return spreading their money and getting much better than 2.39%
    • OnlyGuyWhoLikesTwix
    • By OnlyGuyWhoLikesTwix 14th Mar 18, 10:49 AM
    • 11 Posts
    • 7 Thanks
    OnlyGuyWhoLikesTwix
    That's definitely the trick. Currently I have found nothing that offers above 2.39% net that would allow me to save at the rate that I would like. I could possibly work a combination of both overpayment, but for the few 5% AER ISAs I've found via First Direct et al, earning 98 over the year seems to almost not be worth the effort.

    However that entirely depends if the interest rate goes up or not... which is crystal ball time

    I've not heard of P2P but then I've never looked at investments before. I think I need to do some homework before I make any decisions as to what to do.
    Mortgage when started: 186500 (2 year fixed when taken out in 2016)
    Current mortgage (13/03/2018): 146,922.15 (5yr fixed 2.39% + 10% overpayment limit)
    Mortgage free day: 0?/0?/2025
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