After all the hassle of selling our previous house and getting everything ready to buy our current home, I was horrified at how much the monthly cost of our mortgage was! Any money from selling our first home went on paying a 5%, YES, 5% deposit on the new house and all the associated costs of moving. We used a service whose name I cannot remember, where you say how much stuff you need moving and people with vans quote how much they will do it for. We paid £400 for our entire lives to be moved and did other bits ourselves! Bargain!
Initial Mortgage £185,250 over 35 years with 5% deposit of £9750, MF date 2049 (£195,000) this equates to £930 in repayments a month. The APR was 4.99%, ouch!
I found the Mortgage Free Wannabe (MFW) boards on Money Saving Expert (MSE), I loved reading others diaries and exploring different concepts, such as how even the smallest overpayment (OP) could make a huge difference in the longevity of the mortgage, and ergo how much interest we would pay over the length of the mortgage! I was acutely aware that buying this home on 5% deposit, with what seemed like a high interest rate and very high to us monthly payments was a massive risk, but it felt so worth it! This home is the dream home (in our price range!haha).
So, discovering MFW and starting a diary I started to wonder, what OPs we could make, on discussion we agreed we could afford to increase the monthly payment to £1000. An OP of £70 a month, I did this almost straight away and that £70 was taken on our first payment day. Honestly, it is addictive to look on OP calculators! I will add the link for MSE:
Disclaimer!! Now, I have already said I am a Nurse, I am in no way a financial expert, more an interested novice! There are many things you could be doing instead of OP on a mortgage, eg, ensure any debts are on 0% if possible, OP on more expensive debts, put OP funds into a higher interest saving account than your mortgage etc. This is just what I chose to do! We had £1200 on a credit card, which was 0% and saving rates were pretty poor at that time!
The initial goal was very quickly established, reach 10% LTV by the time the current fixed rate mortgage ended to aim for a better % when we re-mortgaged. I quickly, and slightly depresingly calculated that without any OPs we took off a measly £163 off the capital every month, meaning that the rest was interest- £767. In the next post, I will bore you all some more with OPs, goals and all that jazz!