In the big house

A question about : In the big house

Hello there!

We have previously been mortgage free having repaid the mortgage on our old house in February 2011. However, we moved house in July 2014 and needed to take out a new one for Ј90400. Ј400 is the admin fee.

I really don't like having a mortgage and it is my aim to clear it as soon as we can. I am hoping that this diary will help us stay focussed and allow us to look back on what we have achieved. A little company along the way is welcome too !

Our mortgage is on a 5 year fixed rate at 3.09% and we are allowed to overpay 10% of the start balance each year without charge. We have online banking with Nationwide so we can always see our account and make overpayments easily.

As at 31 December 2014 our balance was Ј87350 and we had made overpayments of Ј2026.90 including the Ј400 admin fee. Our contractual payment is Ј432 and we intend to pay Ј200 minimum each month hoping that it will be cleared by July 2027.

Our short term goal is to reduce the balance to Ј84000 by the end of July 2015, at the end of the first year of our fixed rate. This is how we intend to do it:

Jan Ј300 (no water to pay for so will pay this towards the mortgage)
Feb Ј524 (no council tax or water)
Mar Ј200
Apr Ј200
May Ј200
Jun Ј200
Jul Ј200

I have already made an overpayment of Ј20 for January as we received an interest payment that i was not expecting. We get paid on the 20th each month so we will make our next overpayment on 20 Jan.
Hopefully all will go well!
Kind regards to all.
Flower

Best answers:

• Small overpayment of Ј15 transferred to mortgage today as son's school trip was cancelled so we received a refund of the amount paid.
  Total so far for Jan Ј35.00
  Flower
• Congratulations on the big house!! We moved to our big house last Feb and went from an almost paid off Ј35k mortgage to Ј245k. So I sympathise!! Our house is absolutely worth it though and assume yours is too.
  Good luck on your MF journey.
• Ditto here we went from 40k to 150k in June 2013. Plugging away with overpaying though. I started a diary a month ago and it really helps and motivates my money saving/ not wasting generally.
  Good luck
• Thanks for the encouragement pink teapot and corner cottage. We love our big house - a lot more space for our family and right where we want to be. I will have a read of your diaries !
  Flower
• Hi everyone,
  I'm interested in reading this post because this kind of thing has been on my mind a while.
  I bought my first house 3 years ago. I love the house and intend on owning it for a while. However it isn't my dream house and ideally I'd like to live here as long as I can whilst I pay off the mortgage and move to my dream place in a few years. Unless circumstances change, I'm not really interested in going up the ladder, I'd rather just go from the bottom to the top (top in my eyes anyway).
  I'm interested to know how you all made the 'mind' leap from being nearly or completely mortgage free to almost starting again. Did you do any contingency planning or preparations for taking on a new commitment?
• How 'loose' is your budget at the moment?
  We bought our first house very conservatively - small mortgage relative to salaries. As a result, we overpaid significantly and after three years had got the mortgage down from Ј100k to Ј35k. Then we moved to the big house!
  The first house was meant to be for longer, and we slightly regretted not buying bigger straight away. Though the new house would have been slightly beyond our possible maximum when we bought the first house.
  I was nervous taking on a big mortgage (Ј245k when we took it out). At the last house, if either of us had lost our jobs it wouldn't have been a problem. Now it would be, though we have emergency savings that would cover us for a while. We just had to get in the "f*** it!!" mindset and just go for it. On balance, it's absolutely worth it as far as we're concerned. Worth having the larger, nicer house, with the trade-off being the reduced feeling of security.
  What helped us a lot is that we've bought in a hugely popular area where very little comes up for sale. There's always demand, so if anything goes wrong and we need to sell, we'll be able to well before the savings run out, so long as we don't overprice it. This really helps. We did look at some very rural houses which were lovely but would be harder to sell if the need arose.
  So I guess our contingency planning comes down to "buy something we can sell easily if it all goes wrong"!
  I also became aware that in the first house we were going to end up mortgage-free by our late 30s. I would then have had to come up with a seriously good investments plan for our money from that point on. By ploughing money into a bigger house we've postponed having to worry about that.
  Come retirement, we could have this house plus some savings, or the smaller house plus some other investments, etc. Six of one, half a dozen of the other, but no matter what the housing market does, this house will always fall and rise relative to other houses. It's worth about twice as much as a nice bungalow in our area and that relationship should always be the case (roughly), so we'll be able to downsize when the time comes and free up some equity.
• *Subscribed*
  How much did you pay off the first time round and how long did it take you?
• Hello Johnboy and Princesslou and thank you pinkteapot for returning.
  We originally bought a 3 bed semi and we had intended to stay there - we bought it for Ј87000 in 2000 but had saved a deposit of Ј14000 so only needed a mortgage of Ј73000. It wasn't at the top of our budget but we were quite cautious as first time buyers. After a couple of years we started to make overpayments each month. When we finally repaid it less than 11 years later, I had no intention of moving. The children were almost 6 and 4 and it was lovely to have the extra money and the security.
  We realised that we were outgrowing the old house. We continued to save into ISAs, regular savers and work sharesave accounts and had intended to save enough over time to buy a bigger house without the need of another mortgage. But we soon realised that due to increasing house prices and lower interest rates it was best for us to sell our house and use some of our savings for a deposit plus fees for a new house.
  We have now moved to a 4 bed detached in the same road! It is our dream family home and we intend to stay here for a very long time.
  I have worked part time since the children were born and my husband has got a better paid job. We have kept some savings and continue to pay Ј600 a month into work sharesaves so feel we are putting ourselves in the best possible position for our family and for the future.
  Very interesting to hear your journey too pinkteapot. I think I remember reading some of your posts on the 'waiting to exchange' thread!
  Flower
• Hi Flower. I completely empathise with that sense of outgrowing the house! My thread is here: https://forums.moneysavingexpert.com/....php?t=4852190
  Though I don't update as often as I should. There is however a kitty picture at the end of p4.
  Will be reading your thread too!
• Just read your diary pinkteapot. You have done really well in your first year!
  Flower
• Great diary Flower1976.
  We're in our early thirties and we're busy overpaying too. We've got about 7 1/2 years left on our fixed rate and with interest rates it's making more sense to overpay on the mortgage than add to our ISAs.
  Good to see people who have done it once and are doing it again - will follow with interest. I need to get my diary going again.
• Pinkteapot - we certainly don't spend money on cars but we do like our family holidays! That is what we look forward to. It's hard to get the right balance sometimes. I was reading about budgeting for annual costs on your diary as this is what we started to do from last month for things like car tax, insurance, mot and service, Xmas, rugby season ticket, house maintenance etc. I put aside a sum each month so that the cost is spread out and the money is there when we need it.
  Yorkielass - thank you, it does make sense to overpay. We have savings for back up but I agree the interest savings made by overpaying to the mortgage makes it so worthwhile.
  Flower
• Hi there
  First payday of the year and overpayment of Ј300 made to mortgage. Also an unexpected payment of interest of Ј25.26 so transferred that across too.
  So that takes the total overpayment for January to Ј360.26.
  Not bad at all
  Flower
• Hi Flower,
  Congrats on being MFW before and now doing it again! Have just started my own thread/journey so will be following your story with interest
  SR
• Thanks saving raven, it was great being mortgage free for 3 years but also great having a bigger and better house now.
  Just had a small payment from quidco so have paid that straight to the mortgage - only Ј5 but still brings the balance down! So total overpayment for January is Ј365.26.
  Flower
• Another small payment from quidco so Ј2.50 paid to mortgage. Not much but it all brings the capital balance down!
  Total overpayment for January is Ј367.76.
  Think I will look to make another Ј32.24 to round that up to Ј400 for January - that's Ј100 more than I had planned for January!
  Flower
• Hoorah for OPing from Quidco - I can't believe I used to spend money online without it! My OH always gets a telling off if something is bought without going through it!
  Your OPs are fab this month - can't believe we're already nearly in Feb
  SR
• Subscribed! Your story sounds similar to ours.